Bell Tel. Co. of Pennsylvania v. F.C.C.

• Decision Date: 11 September 1974
• Docket Number: MCI-N,No. 74-1386,74-1386
• Citation: 503 F.2d 1250
• Parties: THE BELL TELEPHONE COMPANY OF PENNSYLVANIA and the American Telephone and Telegraph Company, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and The United States of America,Respondents, MCI Telecommunications Corporation andew York West, Inc., etal., Intervenors.
• Court: U.S. Court of Appeals — Third Circuit

Page 1250

503 F.2d 1250

THE BELL TELEPHONE COMPANY OF PENNSYLVANIA and the American

Telephone and Telegraph Company, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and The United States of

America,Respondents, MCI Telecommunications

Corporation and MCI-New York West, Inc.,

etal., Intervenors.

No. 74-1386.

United States Court of Appeals, Third Circuit.

Argued June 27, 1974.

Decided Sept. 11, 1974.

Irving R. Segal, Schnader, Harrison, Segal & Lewis, John B. King, Philadelphia, Pa., Charles A. Horsky, Michael Boudin, E. Edward Bruce, Charles E. Lister, Washington, D.C.

Charles Ryan, Alfred C. Partoll, Harold S. Levy, New York City, for petitioners; F. Mark Garlinghouse, New York City, of counsel.

Thomas E. Kauper, Asst. Atty. Gen., Carl D. Lawson, Seymour H. Dussman, Dept. of Justice, Washington, D.C., Ashton R. Hardy, Gen. Counsel, Joseph A. Marino, Associate Gen. Counsel, Philip V. Permut, Federal Communications Commission, Washington, D.C., for respondents.

Michael L. Glaser, Francis E. Fletcher, Jr., Glaser & Fletcher, P.C., Washington, D.C., James T. Roche, Vienna, Va., for intervenor, Data Transmission Co.; John M. Scorce, Vienna, Va., of counsel.

Wm. Warfield Ross, William R. Weissman, C. Coleman Bird, Wald, Harkrader & Ross, Jack Werner, Laurence Singer, Washington, D.C., for intervenor, The Western Union Telegraph Co.; Richard C. Hostetler, Upper Saddle River, N.J., of counsel.

Max L. Lieberman, Pelino, Wasserstrom, Chucas & Monteverde, Philadelphia, Pa., for intervenor, N-Triple-C, Inc.

Thormund A. Miller, Richard S. Kopf, San Francisco, Cal., Herbert E. Forrest, Steptoe & Johnson, Washington, D.C., for intervenor, Southern Pacific Communications Co.

W. Theodore Pierson, Jr., Mark J. Tauber, Washington, D.C., for intervenor, CML Satellite Corp.; Marvin R. Jawer, Washington, D.C., of counsel.

Harry M. Plotkin, Gary M. Epstein, Arent, Fox, Kintner, Plotkin & Kahn, Michael H. Bader, Kenneth A. Cox, William J. Byrnes, Haley, Bader & Potts, Washington, D.C., for intervenors, MCI Telecommunications Corp. and MCI-New York West, Inc., John R. Worthington, Kaye L. O'Riordan, Washington, D.C., of counsel.

John D. Jackson, David A. Irwin, Germantown, Md., for intervenor, American Satellite Corp.

Richard H. Strodel, Wheeler & Wheeler, Washington, D.C., for intervenor, Western Tele-Communications, Inc.

Jay E. Ricks, Robert R. Bruce, Hogan & Hartson, Washington, D.C., for intervenor, CPI Microwave, Inc.

Thomas J. O'Reilly, Washington, D.C., for intervenor, United States Independent Telephone Association; Chadbourne, Parke, Whiteside, Washington, D.C., of counsel.

Alan Y. Naftalin, Koteen & Burt, Washington, D.C., Francis J. DeRosa, New York City, for intervenor, RCA Global Communications, Inc.

Before HASTIE, WEIS and GARTH, Circuit Judges.

OPINION OF THE COURT

GARTH, Circuit Judge.

Petitioners Bell Telephone Company of Pennsylvania and American Telephone and Telegraph Company call upon us to review ¹ an order of the Federal Communications Commission dated April 23, 1974 (FCC Docket No. 19896). ² The order, relevant portions of which are found in the appendix to this opinion, essentially requires the petitioners to provide certain communications services and facilities to other carriers and prohibits the petitioners from engaging in discriminatory practices. Specifically, the first two paragraphs of the order (P53-54) require the American Telephone and Telegraph Company and affiliated Bell System companies (hereinafter 'A T & T') to furnish to MCI Telecommunications Corp. (MCI) and to all other specialized common carriers the interconnection facilities necessary to provide private line services. ³ The order requires that A T & T must provide the interconnection necessary for the delivery of two particular elements of private line service, Foreign Exchange service (FX) and Common Control Switching Arrangements. ⁴ The order further directs A T & T to cease and desist from practices which delay interconnection for the specialized common carriers and which deny services to these carriers on a par with A T & T's own private lines service division, the Long Lines Department. The third paragraph of the order (P55) rejects tariffs submitted by A T & T to the extent that such tariffs are inconsistent with prior contracts entered into between A T & T and Western Union.

Inasmuch as the two matters before the Commission involve completely distinct legal issues, we shall treat the issues separately.

I. FX and CCSA

A. Background

To evaluate the FCC's mandate regarding FX and CCSA, it is necessary to examine the agency's prior involvement with the specialized common carriers. The Commission first considered the provision of private line services by specialized common carriers in In re Applications of Microwave Communications, Inc., 18 F.C.C.2d 953 (1969) (Docket No. 16509), reconsideration denied, 21 F.C.C.2d 190 (1970). MCI had proposed to construct facilities for the development of interoffice and interplant communication between St. Louis and Chicago. MCI agreed to be responsible only for the transmissions between microwave transmitters, leaving it to the individual customers to arrange for 'loop service' (i.e. interconnection between MCI's transmitter/receiving terminals and the customer's own equipment). Concluding that it would be inconsistent with the public interest to deny MCI's applications, the Commission granted construction permits for this proposed point-to-point service. Recognizing that MCI's customers might have difficulties in obtaining loop service, the FCC declared:

Since (the existing carriers) have indicated that they will not voluntarily provide loop service, we shall retain jurisdiction of this proceeding in order to enable MCI to obtain from the Commission a prompt determination on the matter of interconnection. Thus, at such time as MCI has customers and the facts and details of the customers' requirements are known, MCI may come directly to the Commission with a request for an order of interconnection.

18 F.C.C.2d at 965 (1969).

Less than two years later, the FCC conducted a full-scale investigation into the provision of private line services. See Specialized Common Carrier Services, 29 F.C.C.2d 850 (Docket No. 18920), reconsideration denied, 31 F.C.C.2d 1106 (1971). The Notice of Proposed Rule Making, issued in 1970, indicated that the FCC was concerned with five basic issues:

A. Whether as a general policy the public interest would be served by permitting the entry of new carriers in the specialized communications field; and if so:

B. Whether comparative hearings on the various claims of economic mutual exclusivity among the applicants are necessary or desirable in the circumstances;

C. What standards, procedures and/or rules should be adopted with respect to such technical matters as the avoidance of interference to domestic communications satellites in the 6 GHz band, the avoidance or resolution of terrestrial frequency conflicts and route blockages both vis-a-vis the facilities of established carriers and among the applicants, and the use of frequency diversity;

D. Whether some measure of protection to the applicants' subscribers is called for in the area of quality and reliability of service; and

E. What is the appropriate means for local distribution of the proposed services?

24 F.C.C.2d 318 (1970). Of these five issues, the first and last have special relevance to the instant proceedings. As to issue 'A', the Commission concluded that:

. . . there is a public need and demand for the proposed facilities and services and for new and diverse sources of supply, competition in the specialized communications field is reasonably feasible, there are grounds for a reasonable expectation that new entry will have some beneficial effects, and there is no reason to anticipate that new entry would have any adverse impact on service to the public by existing carriers such as to outweigh the considerations supporting new entry. We further find and conclude that a general policy in favor of the entry of new carriers in the specialized communications field would serve the public interest, convenience, and necessity.

29 F.C.C.2d at 920 (1971). The Commission's conclusion with regard to issue 'E' was as follows:

We reaffirm the view expressed in the Notice (paragraph 67) that established carriers with exchange facilities should, upon request, permit interconnection or leased channel arrangements on reasonable terms and conditions to be negotiated with the new carriers, and also afford their customers the option of obtaining local distribution service under reasonable terms set forth in the tariff schedules of the local carrier. Moreover, as there stated, 'where a carrier has monopoly control over essential facilities we will not condone any policy or practice whereby such carrier would discriminate in favor of an affiliated carrier or show favoritism among competitors.' In view of the representations of A T & T and G T & E in this proceeding, upon which we rely, and the self-interest of other independent telephone companies in not losing potential new business, there appears to be no need to say more on this question at this time. Should any future problem arise, we will act expeditiously to take such measures as are necessary and appropriate in the public interest to implement and enforce the policies and objectives of this Decision.

29 F.C.C.2d at 940 (1971).

A T & T did not appeal the order entered in Specialized Common Carrier Services. ⁵ Presumably as a result of this 1971 decision, A T & T and MCI began negotiating for the provision of interconnection services. However, in the late summer of 1973, A T & T and its affiliates broke off negotiations with MCI and submitted tariffs to public utility commissions in each of the states in which MCI sought interconnection. Pending approval of these tariffs, A T & T announced that it would not provide interconnection to...