MCI Communications Corp. v. American Telephone & Tel. Co.

• Decision Date: 15 April 1974
• Docket Number: No. 74-1104.,74-1104.
• Parties: MCI COMMUNICATIONS CORPORATION et al. v. AMERICAN TELEPHONE & TELEGRAPH COMPANY and the Bell Telephone Company of Pennsylvania, Appellants.
• Court: U.S. Court of Appeals — Third Circuit

496 F.2d 214 (1974)

MCI COMMUNICATIONS CORPORATION et al. v. AMERICAN TELEPHONE & TELEGRAPH COMPANY and the Bell Telephone Company of Pennsylvania, Appellants.

No. 74-1104.

United States Court of Appeals, Third Circuit.

Argued April 2, 1974.

Decided April 15, 1974.

Irving R. Segal, Schnader, Harrison, Segal & Lewis, Philadelphia, Pa., Charles Ryan, J. Hugh Roff, Jr., New York City, John B. King, Philadelphia, Pa., for appellants.

Lewis A. Rivlin, David J. Taylor, Vernon I. Zvoleff, Peabody, Rivlin, Lambert & Dennison, Michael H. Bader, Kenneth A. Cox, William J. Byrnes, Haley, Bader & Potts, Washington, D. C., Raymond W. Midgett, Jr., Dechert, Price & Rhoads, Philadelphia, Pa., for appellees; John R. Worthington, Washington, D. C., of counsel.

Before VAN DUSEN, WEIS and GARTH, Circuit Judges.

OPINION OF THE COURT

VAN DUSEN, Circuit Judge.

This appeal challenges a December 31, 1973, district court order granting a mandatory preliminary injunction in the nature of mandamus, pursuant to 47 U.S.C. § 406,¹ ordering defendants to provide plaintiffs with four specific types of interconnection services² and "such other interconnection facilities as are necessary to enable plaintiffs to furnish the interstate services they are authorized by the FCC to perform." Plaintiffs³ (referred to in this opinion frequently as MCI) provide intercity transmission capability by microwave facilities, including, but not limited to, data transmission. Defendants (referred to in this opinion frequently as AT&T) supply local distribution service for MCI but contend that the district court erred in requiring them to supply the interconnection services described in the December 31, 1973, district court order.

The district court relied on these two Federal Communications Commission (hereinafter FCC) rulings as constituting the orders requiring defendants to provide the interconnection services mandated in its order:

A. Specialized Common Carrier Services, 29 F.C.C.2d 870 (1971).

B. Letter from Chairman of the FCC to the American Telephone & Telegraph Company dated October 4, 1973.

Assuming these documents constituted orders, their terms were only general in imposing any duty to provide interconnection services on defendants and their terms did not specify the furnishing of the inter-exchange service,⁴ FX service and CCSA⁵ service, to which plaintiffs contend they are entitled.

The Specialized Common Carrier Services proceeding was instituted by a Notice of Inquiry to Formulate Policy, Notice of Proposed Rule Making and Order docketed as follows (24 F.C.C.2d 317 (1970)):

"In the Matter of Establishment | of Policies and Procedures | for Consideration of | Application To Provide Specialized | Common Carrier Services | in the Domestic Public Point-to-Point > Docket No Microwave Radio Service | 18920" and Proposed Amendments | to Parts 21, 43, and 61 of | the Commission's Rules |

The Purpose of This Proceeding was stated as follows (871-72 of 29 F.C.C. 2d):

"The Notice undertook to resolve in an overall policy and rule making proceeding certain basic policy and procedural questions (see paragraph 17 below) which appeared common to all of the applications and oppositions, prior to consideration of each proposal on its individual merits (Notice, paragraphs 3, 23-24). . . . . We further emphasized that after the broad policy and procedural questions in this proceeding have been decided, there may remain other specific, factual questions to be resolved by appropriate procedures when the applications are processed (Notice, paragraphs 3, 24). We stated (paragraph 24):

"Once these issues have been determined, we will consider each proposal on its individual merits and follow such procedures as may be necessary to resolve any remaining questions pertinent to the particular set of applications. Each applicant will, of course, be required to make a satisfactory showing that it is qualified and that the service it seeks to offer is technically and economically sound and would otherwise serve the public interest."

As to MCI, paragraph 7 of the decision provided (874 of 29 F.C.C.2d):

"There are also pending applications by 17 MCI associated companies for portions of a proposed nationwide network to provide specialized private line communications services. The various MCI carriers propose to provide `customized\' communications channels tailored to the exact requirements of subscribers needing interoffice and intracompany communications, to meet newly developing data and specialized communications needs of the public at significantly low cost. . . . . Originally, MCI did not propose to provide end-to-end service. It was contemplated that local loop interconnection would be accomplished by the subscriber\'s private facilities or, for subscribers requiring only voice grade channels, by use of local land-lines of existing telephone companies. MCI has since filed a petition for rule making (RM 1700) to allocate the frequencies 38.6-40 GHz for a local Carrier Distribution Service."

The opinion continued at page 878 (paragraph 17) to list the issues to be considered, including issue E stated as follows:

"E. What is the appropriate means for local distribution of the proposed services?"⁶

At page 940-41 of 29 F.C.C.2d, the FCC concluded as to Issue E:

"157. 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 AT&T and GT&E in this proceeding,⁷ 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.

"158. We also conclude that new carriers should have the option of constructing their own independent local facilities to provide end-to-end service. However, this record does not afford an adequate basis for any determination as to what radio frequencies should be made available for use in this conjunction. . . .

"159. Accordingly, we have decided to issue a further notice of proposed rule making on MCI\'s proposal to allocate the frequencies 38.6-40 GHz for a local carrier distribution service, and to include comparative consideration of frequencies in the other regions of the spectrum that have been suggested (11 GHz, 18 GHz, 30 GHz and 50 GHz . . . . We will issue the further notice as soon as possible and expedite the further proceedings on this question. For, we realize that this aspect should be resolved at an early date so that those authorized entrants contemplating local construction can plan and build such facilities without delay to the inauguration of the system.

. . . . . .

"We also conclude that further proceedings are necessary for a resolution of Issues D and E herein, and will retain full jurisdiction over those aspects of this proceeding."

Footnotes in decision omitted.

In Appendix C to the Decision, the comments of the participants on Issues A, B & E were summarized, but no significant claim by MCI of the right to have FX, CCSA or similar interconnection services (as opposed to the term "local distribution of proposed services") furnished by AT&T appears in either the decision or its appendices.

The October 4, 1973, letter order of the FCC was primarily focused on the contention of defendants that tariffs covering interconnections with plaintiffs should be filed with the state commissions, as opposed to with the FCC. It concluded with this language:

"We do not accept the conclusion stated in your letter of September 28th that the arrangements described therein, including your proposal to file the subject tariffs with the state commissions, `will achieve the Commission\'s objective stated in the Specialized Common Carrier case that the specialized carriers be afforded interconnection facility arrangements on reasonable terms and conditions\'. To the contrary, we are of the view that effective implementation of our policy objectives and the statutory scheme of the Communications Act require that you promptly file tariff schedules with this Commission in accordance with Section 203 of the Communications Act which tariff schedules will provide the interconnection facilities essential to the rendition by the specialized carriers of all their authorized services on terms and conditions which are just, reasonable and non-discriminatory. Until such tariffs are filed and effective, there should be no delay in honoring requests of specialized carriers for interconnection facilities required by such carriers to terminate the services they are authorized by the Commission to furnish. Such facilities can be provided under contracts on an interim basis and we assume that this will be done."

On December 13, 1973, the FCC released at Docket 19896 a Memorandum Opinion and Order To Show Cause (484a) reciting conflicting points of view between plaintiffs and defendants, as well as certain differences between Western Union and defendants, which contained this wording:

"4. These matters raise interrelated questions concerning the lawfulness of the actions taken by AT&T and the Bell System companies with respect to the provision of interconnection facilities to the

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