Central Texas Telephone Co-Op., Inc. v. F.C.C.

• Decision Date: 11 March 2005
• Docket Number: No. 03-1405.,03-1405.
• Citation: 402 F.3d 205
• Parties: CENTRAL TEXAS TELEPHONE COOPERATIVE, INC., et al., Petitioners v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents Sprint Corporation, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 205

402 F.3d 205

CENTRAL TEXAS TELEPHONE COOPERATIVE, INC., et al., Petitioners v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents Sprint Corporation, Intervenor.

No. 03-1405.

United States Court of Appeals, District of Columbia Circuit.

Argued November 18, 2004.

Decided March 11, 2005.

Gregory W. Whiteaker argued the cause for petitioners. With him on the briefs were Michael R. Bennet and Rebecca L. Murphy.

Richard K. Welch, Counsel, Federal Communications Commission, argued the cause for respondents. With him on the brief were Catherine G. O'Sullivan and Andrea Limmer, Attorneys, U.S. Department of Justice, John A. Rogovin, General Counsel, Daniel M. Armstrong, Associate General Counsel, and Lisa E. Boehley, Counsel. Nancy C. Garrison, Attorney, U.S. Department of Justice, and Joel Marcus, Counsel, Federal Communications Commission, entered appearances.

Luisa L. Lancetti and Charles W. McKee were on the brief for intervenor Sprint Corporation in support of respondents.

Before: SENTELLE, RANDOLPH, and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge.

Petitioners are rural telephone carriers. Pursuant to 28 U.S.C. § 2342(1) and 47 U.S.C. § 402(a), they seek review of an October 7, 2003, Memorandum Opinion and Order of the Federal Communications Commission dealing with telephone number portability between wireless carriers. Telephone Number Portability — Carrier Requests for Clarification of Wireless-Wireless Porting Issues, CC Docket No. 95-116, 18 F.C.C.R. 20,971, 2003 WL 22299213 (2003) ("October Order"). The issues are whether the Commission adopted the October Order in violation of the procedural requirements of the Administrative Procedure Act and the Regulatory Flexibility Act, and whether the Order is arbitrary and capricious.

I.

Under § 251(b)(2) of the Telecommunications Act of 1996, all local exchange carriers (LECs) must "provide, to the extent technically feasible, number portability in accordance with requirements prescribed by the Commission." 47 U.S.C. § 251(b)(2). The 1996 Act also imposes a "duty" on LECs "to establish reciprocal compensation arrangements for the transport and termination of telecommunications." 47 U.S.C. § 251(b)(5). The Act defines "number portability" as

the ability of users of telecommunications services to retain, at the same location, existing telecommunications numbers without impairment of quality, reliability, or convenience when switching from one telecommunications carrier to another.

47 U.S.C. § 153(30). Congress viewed number portability as a means of encouraging competition: a customer is less likely to switch carriers if he cannot retain his telephone number. Cellular Telecomms. & Internet Ass'n v. FCC, 330 F.3d 502, 513 (D.C.Cir.2003) ("CTIA").

In July 1996, the Commission issued rules and deployment schedules to implement number portability. See Telephone Number Portability, 11 F.C.C.R. 8352, 1996 WL 400225 (1996) ("First Portability Order"), on recons., 12 F.C.C.R. 7236, 1997 WL 106479 (1997), further recons., 13 F.C.C.R. 21,204, 1998 WL 729760 (1998). Adopting the statutory definition of "number portability" in a regulation, 47 C.F.R. § 52.21(1), the Commission required LECs to begin implementing number portability to other LECs, and "to all telecommunications carriers, including commercial mobile radio services (CMRS) providers." First Portability Order, 11 F.C.C.R. at 8355 ¶ 3 (emphasis added). Although § 251(b)(2) imposed number portability only on LECs, the Commission relied on other statutory provisions to require CMRS — wireless — carriers to port numbers among themselves and to and from LECs. 11 F.C.C.R. at 8431-32 ¶ 153; see CTIA, 330 F.3d at 508.

At the same time, the Commission refused to impose location portability on either LECs or wireless carriers. The Commission defined location portability as "the ability of users of telecommunications services to retain existing telecommunications numbers without impairment of quality, reliability, or convenience when moving from one physical location to another." 47 C.F.R. § 52.21(j). For LECs, what the Commission meant by "physical location" was not certain. Among the possibilities were "the customer's physical location, the end of the wire's physical location, or the rate center's physical location." In the Matter of StarNet, Inc., 355 F.3d 634, 638 (7th Cir.2004). Every 10-digit number is assigned to a rate center, which is a specific geographic location the LEC designates with the approval of a state regulatory commission. For wireline customers, service is fixed at the rate center; the LEC uses the rate center to determine whether a call is a local call or a toll call. The service areas of wireless carriers tend to be larger; because wireless service is mobile, wireless customers can travel out of a rate center and make calls without incurring toll charges. For wireless carriers, the Commission said it would impose "service provider portability." Its regulation defining service provider portability used the same language as the regulatory (and statutory) definition of number portability — namely, "the ability of users of telecommunications services to retain, at the same location, existing telecommunications numbers without impairment of quality, reliability, or convenience when switching from one telecommunications carrier to another." 47 C.F.R. § 52.21(q). The Commission indicated what it meant by "moving from one physical location to another" when it wrote: "Today, telephone subscribers must change their telephone numbers when they move outside the area served by their current central office." First Portability Order, 11 F.C.C.R. at 8443 ¶ 174. (A "central office" is a "switching unit, in a telephone system which provides service to the general public, having the necessary equipment and operations arrangements for terminating and interconnecting subscriber lines," 47 C.F.R. Pt. 36 Appendix — Glossary.)

To address technical issues regarding number portability, the Commission turned to the North American Numbering Council (NANC), a federal advisory committee consisting of representatives of the telecommunications industry. In May 1997, the NANC submitted its recommendations regarding wireline-to-wireline porting. Largely adopting the NANC's recommendations in a Second Portability Order, 12 F.C.C.R. 12,281, 1997 WL 522644 (1997), the Commission also decided that if a state regulatory authority imposed a separate location portability requirement on LECs, this would have to be limited to carriers with a local presence in the same rate center in order to ensure proper rating and routing of calls. The NANC did not address geographic limitations with respect to the obligation of wireless carriers to furnish service provider portability. The Commission therefore requested the NANC to make recommendations regarding wireless carriers, "such as how to account for differences between service area boundaries for wireline versus wireless services and how to implement number portability in a roaming environment." Id. at 12,334 ¶ 91. In 1998, The NANC later reported that it had been unable to reach a consensus about intermodal porting, that is, porting between wireless carriers and LECs.

After granting extensions for deploying wireless-to-wireless porting and intermodal porting, the Commission set November 24, 2003, as the date by which LECs had to port to wireless carriers and wireless carriers had to port numbers among themselves in the nation's 100 largest population centers. In other areas, wireless porting had to occur 6 months later. As the deadlines approached, the Cellular Telecommunications & Internet Association (CTIA) filed petitions with the Commission seeking declaratory rulings holding, among other things, that LECs had a duty to port numbers to those wireless carriers whose service areas overlapped the wireline rate center associated with the number, and that wireless carriers had a duty to port numbers to other wireless carriers if their service areas overlapped.

CTIA filed its petitions pursuant to 47 C.F.R. § 1.2, which states that the "Commission may, in accordance with section 5[(e)] of the Administrative Procedure Act, on motion or on its own motion issue a declaratory ruling terminating a controversy or removing uncertainty." CTIA alleged that certain LECs and rural wireless carriers were narrowly construing their obligation to port numbers to CMRS carriers, claiming that they did not have to port numbers to CMRS carriers that had neither a presence in the rate center from which the ported number originated nor a direct interconnection with the customer's original carrier. The Commission published notices in the Federal Register seeking comments on the issues CTIA raised. 68 Fed.Reg. 7323 (Feb. 13, 2003); 68 Fed.Reg. 34,547 (June 10, 2003).

Among the 100 comments filed with the Commission were those of the Rural Telecommunications Group (RTG), of which at least some petitioners are members. As relevant to this case, the RTG asserted "that in order for one wireless carrier to request number portability from another, the requesting carrier must have a local point of presence, local numbering resources, and local interconnection with the porting out carrier in the rate center with which the ported number is associated." October Order, 18 F.C.C.R. at 20,977 ¶ 19. If these requirements were not imposed, according to the RTG, number portability "will lead to massive customer confusion and discrimination against small and rural carriers." Id.

The Commission issued two opinions and orders in response to CTIA's petitions. The first, handed down on October 7, 2003, the October Order, dealt only with wireless-to-wireless porting. The second, issued on November 10, 2003, dealt with wireline-to-wireless porting. Only the October Order is before us in this case.

The October Order rejected the...