Mountain Communications, Inc. v. F.C.C.

• Decision Date: 16 January 2004
• Docket Number: No. 02-1255.,02-1255.
• Parties: MOUNTAIN COMMUNICATIONS, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. T-Mobile USA, Inc., et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 644

355 F.3d 644

MOUNTAIN COMMUNICATIONS, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents T-Mobile USA, Inc., et al., Intervenors.

No. 02-1255.

United States Court of Appeals, District of Columbia Circuit.

Argued November 18, 2003.

Decided January 16, 2004.

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

Benjamin J. Aron argued the cause for petitioner. With him on the briefs was Robert H. Schwaninger, Jr.

Charles W. McKee argued the cause for Wireless Carrier intervenors T-Mobile USA, Inc., et al., in support of petitioner. With him on the briefs were Luisa A. Lancetti, Doanne F. Kiechel, Thomas J. Sugrue, David M. Wilson, Laura R. Handman, Jonathan E. Canis, and Douglas I. Brandon.

Stewart A. Block, Counsel, Federal Communications Commission, argued the cause for respondents. On the briefs were R. Hewitt Pate, Assistant Attorney General, U.S. Department of Justice, Catherine G. O'Sullivan and Nancy C. Garrison, Attorneys, John A. Rogovin, General Counsel, Federal Communications Commission, John E. Ingle, Deputy Associate General Counsel, and Laurel R. Bergold, Counsel.

Robert B. McKenna, Jr. argued the cause for intervenors Qwest Communications International Inc., et al., and amici curiae Verizon Telephone Companies. With him on the brief were Michael E. Glover, John M. Goodman, and Edward H. Shakin.

Before: SENTELLE and GARLAND, Circuit Judges, and SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge SILBERMAN.

SILBERMAN, Senior Circuit Judge:

Mountain Communications, Inc. is a paging carrier that petitions for review of an FCC order dismissing its complaint against Qwest-the local exchange carrier (LEC) serving the areas where Mountain operates-for charging petitioner two types of fees. The dispute between the carriers as to one of the fees evaporated at oral argument, but we hold that the FCC's decision as to the other was arbitrary and capricious.

I.

Mountain serves customers in three Colorado local calling areas: Colorado Springs, Walsenburg, and Pueblo. All three local calling areas are within the same Local Access and Transport Area (LATA), and Qwest is the provider of local service within each of those local calling areas. Calls from a Qwest customer to another Qwest customer in the same local calling area are local calls, but if a Qwest customer were to call from one of these local calling areas to another, he or she would incur a toll.

Though Mountain services all three local calling areas, it uses a single point of interconnection (POI) with Qwest, as it is entitled by statute. See 47 U.S.C. § 251(c)(2)(B) (providing that LECs must provide interconnection facilities with other carriers "at any technically feasible point within the [incumbent local exchange] carrier's network"); see also 47 C.F.R. § 51.321(a); In re: Developing a Unified Intercarrier Compensation Regime, 16 FCCR 9610, 9650-51 ¶ 112 (2001). The POI is located in Pueblo. Customers in each of the three calling areas have pager numbers associated with their individual local calling areas. It is therefore the paging customer's residence that correlates with the paging number, and a call from a telephone in a local calling area to a pager associated with the same local calling area will seem to the calling party to be a local call. But Mountain's maintenance of a single POI in Pueblo, however, means that every call to a Mountain customer, regardless of the place where the call originated, must pass through Pueblo before Qwest hands it off to Mountain and Mountain delivers it to the pager. Thus, a Colorado Springs resident attempting to page a Colorado Springs Mountain customer dials a Colorado Springs exchange, but the call is first routed to Pueblo before being rerouted to Colorado Springs.

Qwest has sought to collect fees from Mountain for these types of calls-calls that originate and terminate in Colorado Springs or Walsenburg but go through Mountain's POI in Pueblo. Qwest considers these calls to be toll calls, but does not charge its own customer-the caller-for placing such calls, perhaps because it lacks the technological ability to do so. See Starpower Communications, LLC v. Verizon South, Inc., 2003 FCC LEXIS 6245, at *23 ¶ 17, 2003 WL 22518057 (Nov. 7, 2003) (attributing such a technological incapacity to Verizon). Instead, Qwest determines whether a customer's call is a toll call by comparing the number of the caller with the number of the person receiving the call. If both are Colorado Springs numbers, Qwest does not charge the customer a toll even if the call is routed to Pueblo and then back to Colorado Springs.

Qwest claimed in response to Mountain's complaint before the FCC that it was entitled to charge Mountain for the tolls it was unable to charge its own customers. According to Qwest, Mountain could avoid the toll charges by establishing a POI in each of the three local calling areas-doubtless at an increased cost. Then, if a paging call were placed from a local number to another local number, no toll would be charged to anyone. If, on the other hand a paging call were made from one local calling area to another, Qwest would transport the call to Mountain's POI-without crossing a local calling area boundary-at which time Mountain would assume responsibility for delivering the call across the local calling areas, presumably at Mountain's expense.

Mountain claimed before the FCC that the Commission's regulations, specifically 47 C.F.R. § 51.703(b), which states that LECs such as Qwest "may not assess charges on any other telecommunications carrier for telecommunications traffic that originates on the LEC's network," prohibit Qwest from charging for transmitting calls from Qwest customers to Mountain's POI. Mountain also relied on a recent FCC decision, TSR Wireless, LLC v. U.S. West Communications, Inc., 15 FCCR 11166, 11184 ¶ 31 (2000), which interpreted that regulation and rejected a similar effort on the part of an LEC to charge a paging carrier for transmitting calls to the paging carriers' POI, where the POI and the caller are in the same LATA but different local calling areas.

The Commission rejected Mountain's contention. The FCC said that in its TSR decision it had cautioned,

nothing prevents [the LEC] from charging its end users for toll calls completed [between local calling areas]. Similarly, section 51.703(b) does not preclude [the paging carrier and the LEC] from entering into wide area calling or reverse billing arrangements whereby [the paging carrier] can `buy down' the cost of such toll calls to make it appear to end users that they have made a local call rather than a toll call.

15 FCCR at 11184 ¶ 31 (emphasis added). This buy-down arrangement is the same concept behind conventional 800 numbers, where the called party is billed for the toll ordinarily incurred by the calling party.

The Commission concluded that here, by establishing a POI in Pueblo and then asking Qwest for lines to connect local customer numbers in Walsenburg, Colorado Springs, and Pueblo to the POI, Mountain made it appear to Qwest customers that they were making local calls from Colorado Springs numbers to Colorado Springs paging numbers-even though they passed through a Pueblo POI. "By configuring its interconnection arrangement in this manner, Mountain prevents Qwest from charging its customers for what would ordinarily be toll calls to access Mountain's network." Mountain Communications, Inc., Qwest Communications Int'l, Inc., 17 FCCR 15135, 15138 ¶ 5 (2002). The Commission determined that Mountain had obtained a wide area calling service, which is similar to a wide area calling arrangement, and therefore Qwest was entitled to charge Mountain for that service.

II.

Although petitioner does not quarrel with the Commission's caveat in TSR-that the regulation does not prohibit a wide area calling arrangement-it insists that this case is no different than TSR; the Commission has simply turned 180 degrees without explanation, and adopted a position at odds with its own regulation and the statutory provision allowing Mountain to make use of one POI within a LATA. We are befuddled at the Commission's efforts to explain away its TSR decision; the facts seem-and are conceded to be-identical, but the results are opposite. In TSR, the FCC prohibited U.S. West, the LEC, from charging TSR, the paging carrier, for the costs of transporting calls from U.S. West customers to TSR's POI.¹ In that case, just as in the present situation, the paging carrier served separate local calling areas (Yuma and Flagstaff, Arizona), both of which were within the same LATA and served by the same LEC. TSR used a single POI, and a U.S. West customer wishing to page a TSR customer within the same local calling area would have to place a call that would be routed across local calling area boundaries. US West attempted, as Qwest attempts here, to charge the paging carrier a fee for transporting those calls to the paging carrier's POI. The FCC ruled that such a charge would violate 47 C.F.R. § 51.703(b), because the calls originated on U.S. West's network, and an LEC may not charge another carrier for traffic originating on the LEC's network. See TSR, 15 FCCR at 11176 ¶ 18, 11181 ¶ 25, 11184 ¶ 31.² The FCC concedes that the facts of TSR are identical to those presented here, but argues that the present network configuration nevertheless may be considered wide area calling, even if the same configuration in TSR was not so considered.

The Commission's attempt to stretch the concept of a wide area calling arrangement (essentially an agreement) to a wide area calling "service" is logically inconsistent with its TSR decision.³ The premise, according to the Commission's TSR reasoning, of a wide area calling arrangement is that the LEC can charge a toll call to its customers. In that event the paging carrier has an incentive to "buy...