Cellco P'ship v. Fed. Commc'ns Comm'n

• Decision Date: 04 December 2012
• Docket Number: 11–1136.,Nos. 11–1135,s. 11–1135
• Citation: 700 F.3d 534
• Parties: CELLCO PARTNERSHIP, Appellant v. FEDERAL COMMUNICATIONS COMMISSION, Appellee Bright House Networks, LLC, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

700 F.3d 534

CELLCO PARTNERSHIP, Appellant

v. FEDERAL COMMUNICATIONS COMMISSION, AppelleeBright House Networks, LLC, et al., Intervenors.

Nos. 11–1135, 11–1136.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 20, 2012.

Decided Dec. 4, 2012.

On Petition for Review of and On Appeal from an Order of the Federal Communications Commission.

Helgi C. Walker argued the cause for appellant. With her on the briefs were Thomas R. McCarthy, Brett A. Shumate, Henry Weissmann, Michael E. Glover, and John T. Scott III. Andrew G. McBride entered an appearance.

Peter Karanjia, Deputy General Counsel, Federal Communications Commission, argued the cause for appellee. With him on the brief were Catherine G. O'Sullivan and Finnuala K. Tessier, Attorneys, U.S. Department of Justice, Austin C. Schlick, General Counsel, Federal Communications Commission, Richard K. Welch, Deputy Associate General Counsel, and Laurence N. Bourne, Counsel.

Richard P. Bress argued the cause for intervenors. With him on the brief were James H. Barker, Matthew A. Brill, Alexander Maltas, Carl W. Northrop, Michael L. Lazarus, Caressa D. Bennet, Michael R. Bennet, Jill Canfield, Daniel L. Brenner, Jessica L. Ellsworth, Peter M. Connolly, and Douglas E. Hart.

Carl W. Northrop, Michael L. Lazarus, Andrew Morentz and Mark A. Stachiw were on the brief for intervenor MetroPCS Communications, Inc. in support of appellee.

Thomas J. Sugrue, Luisa Lancetti, Howard J. Symons, and Russell H. Fox were on the brief for intervenor T–Mobile USA, Inc. in support of appellee.

Harold Feld was on the brief for amici curiae Public Knowledge, et al. in support of appellee.

Before: TATEL, GARLAND, and GRIFFITH, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

The Federal Communications Commission has long imposed “roaming” requirements on wireless telephone companies. Roaming occurs when wireless subscribers travel outside the range of their own carrier's network and use another carrier's network infrastructure to make a call. Until the issuance of the rule challenged in this case, mobile carriers' obligation to permit roaming extended only to voice-telephone services. Recognizing the growing importance of mobile data in a wireless market in which smartphones—cellphones that can connect to the internet—are increasingly common, the Commission adopted a rule requiring mobile-data providers to offer roaming agreements to other such providers on “commercially reasonable” terms. Cellco Partnership, more commonly known as Verizon, challenges the “data roaming rule” on multiple grounds. Most significantly, Verizon argues that the Commission lacks statutory authority to issue the rule and that the rule unlawfully treats mobile-internet providers as common carriers. We disagree on both counts. Title III of the Communications Act of 1934 plainly empowers the Commission to promulgate the data roaming rule. And although the rule bears some marks of common carriage, we defer to the Commission's determination that the rule imposes no common carrier obligations on mobile-internet providers. In response to Verizon's remaining arguments, we conclude that the rule does not effect an unconstitutional taking and is neither arbitrary nor capricious. We therefore reject Verizon's challenge to the data roaming rule.

I.

The Communications Act of 1934, 47 U.S.C. §§ 151 et seq., endows the Federal Communications Commission with broad authority to oversee wire and radio communication in the United States. Title II of the Act authorizes the Commission to regulate common carrier services, including telecommunications services like landline telephone services. See id. §§ 201 et seq. It also sets forth the duties of common carriers, including the obligations to “furnish ... communication service upon reasonable request,” id. § 201(a), to charge “just and reasonable” rates, id. § 201(b), and to refrain from “mak[ing] any unjust or unreasonable discrimination in charges ... or services,” id. § 202(a). Although the Act's definition of “common carrier” is unsatisfyingly circular, see id. § 153(11) (defining a “common carrier” as “any person engaged as a common carrier for hire”), the Commission has interpreted it to exclude providers of “information services,” defined as “the offering of a capability for generating, acquiring, storing, transforming, processing, ... or making available information via telecommunications.” Id. § 153(24). See Appropriate Regulatory Treatment for Broadband Access to the Internet Over Wireless Networks, 22 F.C.C.R. 5901, 5919 ¶ 50 (2007) ( “Broadband Classification Order ”).

Title III of the Act empowers the Commission to regulate radio transmissions, including traditional radio, broadcast television, and mobile telephony. See id. §§ 301 et seq. Although mobile telephony involves radio transmission and thus falls under the Commission's Title III authority, the Act provides that some mobile-telephone services are also subject to Title II's common carriage requirements. See id. § 332(c)(1)(A). In particular, section 332 specifies that providers of “commercial mobile services,” such as wireless voice-telephone service, are common carriers, whereas providers of other mobile services are exempt from common carrier status. See id. § 332(d)(3), (c)(2).

The Commission has previously determined and here concedes that wireless internet service both is an “information service” and is not a “commercial mobile service.” See Broadband Classification Order,22 F.C.C.R. at 5915–21 ¶¶ 37–56; Verizon's Br. 11 n. 6, 19 n. 11. Accordingly, mobile-data providers are statutorily immune, perhaps twice over, from treatment as common carriers. See id. Given that mobile-voice providers are considered common carriers, the exclusion of mobile-data services from the common carriage regime subjects cellphone companies like Verizon, which provide both services, to a bifurcated regulatory scheme. Cf. National Association of Regulatory Utility Commissioners v. FCC (NARUC I), 533 F.2d 601, 608 (D.C.Cir.1976) (noting that a single entity “can be a common carrier with regard to some activities but not others”). Even though wireless carriers ordinarily provide their customers with voice and data services under a single contract, they must comply with Title II's common carrier requirements only in furnishing voice service. Likewise, the Commission may invoke both its Title II and its Title III authority to regulate mobile-voice services, but may not rely on Title II to regulate mobile data.

The Commission's foray into roaming began in 1981 when it adopted a limited voice roaming requirement as part of the original cellular-service rules. See An Inquiry Into the Use of the Bands 825–845 MHz and 870–890 MHz for Cellular Communications Systems and Amendment of Parts 2 and 22 of the Commission's Rules Relative to Cellular Communications Systems, 86 F.C.C.2d 469, 502 ¶¶ 75–76 (1981); see also Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other Providers of Mobile data services, 26 F.C.C.R. 5411, 5412 ¶ 3 & n. 2 (2011) (“Data Roaming Order ”) (explaining origins of roaming regulation). As cellphones grew ubiquitous and nationwide travel more frequent, the need for more robust roaming regulations became clear. Although some carriers were voluntarily entering into roaming arrangements with other providers—under which the subscribers of one carrier could roam on the network of the other—in many cases subscribers of smaller carriers remained unable to use their mobile phones when traveling outside their home networks. Seeking to promote nationwide access to cellphone service, the Commission in 2007 dramatically expanded carriers' roaming obligations by mandating that they offer roaming agreements to other carriers on a just, reasonable, and nondiscriminatory basis. See Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers, 22 F.C.C.R. 15817, 15818 ¶¶ 1–3 (2007)(“2007 Voice Roaming Order”). In using this classic common carriage standard, the Commission expressly invoked Title II, explaining that mobile-voice providers have “a common carrier obligation” to provide roaming. See id. at 15818 ¶ 1. Three years later, in 2010, the Commission further expanded and clarified voice providers' roaming obligations in ways not relevant to this case. See Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other Providers of Mobile data services, 25 F.C.C.R. 4181, 4190–4201 ¶¶ 18–40 (2010) (“2010 Voice Roaming Order ”). Under these Voice Roaming Orders, subscribers of a small carrier in Nebraska, for example, can travel to New York and use Verizon's cell towers to make phone calls. Demonstrating the success of the orders, most cellphone users experience no service disruption when traveling beyond their provider's service range.

The roaming regulations, however, extended only to mobile-voice services. Absent an obligation to permit roaming, some mobile-data providers were voluntarily entering into data roaming agreements, but this was often not the case, especially on “advanced ‘3G’ data networks.” See Data Roaming Order, 26 F.C.C.R. at 5424–27 ¶¶ 24–27. Conscious of the increasing importance of mobile internet and seeking to promote nationwide access, the Commission began formal consideration of whether and how it might institute a data-roaming requirement. See 2007 Voice Roaming Order, 22 F.C.C.R. at 15845–47 ¶¶ 77–81. To that end, when the Commission issued the 2007 Voice Roaming Order, it sought comment on the propriety of extending roaming obligations to data services as well as on the potential “legal and policy basis for doing so.” Id. at 15845 ¶ 79. In the 2010 Voice Roaming Order, the Commission again requested input about a potential data roaming rule. See 2010 Voice Roaming Order, 25 F.C.C.R. at 4207–24 ¶¶ 50–91.

Approximately two dozen parties, including...