New Comm Wireless Services v. Sprintcom, Inc.

• Decision Date: 05 April 2002
• Docket Number: No. 01-2541.,No. 01-2603.,01-2541.,01-2603.
• Citation: 287 F.3d 1
• Parties: NEW COMM WIRELESS SERVICES, INC., d/b/a Movistar, Plaintiff, Appellee, v. SPRINTCOM, INC., and Sprint Spectrum LP, Defendants, Appellants. Centennial Puerto Rico License Corp., Intervenor, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 1

287 F.3d 1

NEW COMM WIRELESS SERVICES, INC., d/b/a Movistar, Plaintiff, Appellee, v. SPRINTCOM, INC., and Sprint Spectrum LP, Defendants, Appellants Centennial Puerto Rico License Corp., Intervenor, Appellant.

No. 01-2541.

No. 01-2603.

United States Court of Appeals, First Circuit.

Heard February 7, 2002.

Decided April 5, 2002.

Miguel J. Rodríguez Marxuach, with whom Fernando J. Gierbolini was on brief, for defendants-appellants.

Antonio L. Roig-Lorenzo, with whom Edgardo Rodríguez-Quilichini and O'Neill & Borges were on brief, for intervenor-appellant.

Eycko O. Lugo-Rivera, with whom Carlos Berreteaga was on brief, for appellee.

Before BOUDIN, Chief Judge, SELYA and LIPEZ, Circuit Judges.

SELYA, Circuit Judge.

These interlocutory appeals implicate the brave new world of wireless communications. In the underlying action, the district court sided with plaintiff-appellee New Comm Wireless Services ("Movistar") and issued a preliminary injunction against two related companies, SprintCom and Sprint Spectrum (collectively, "Sprint"). After clearing a path through the technological thicket, we reverse.

I. BACKGROUND

We divide our discussion of the relevant background into four segments. Except as otherwise indicated, the facts are not disputed.

A. The Wireless Revolution.

The wireless telephone system challenges traditional concepts of the communications infrastructure. Instead of poles and wires, service carriers use Signal IDs ("SIDs") to connect subscribers to their networks. Each SID operates within a basic trading area ("BTA") — a specific geographic region, customarily linked with a major urban center. The Federal Communications Commission licenses wireless communications companies to broadcast in particular BTAs and maintains a list of usable SIDs. The private sector then takes over: CIBERNET (a private company) administers the assignment of particular SIDs to licensed service carriers for specific BTAs. Thus, a service carrier licensed to broadcast in a given BTA (say, Pittsburgh) may apply for an SID for that BTA, and CIBERNET will assign one (say, 4171).

In this arcane endeavor, substance trumps form. Thus, even though SIDs are assigned to particular BTAs, the reality is that an SID may be broadcast in any BTA, as long as the carrier is appropriately licensed. If a carrier is licensed in, say, Richmond and Charlotte, it might choose to use the same SID in both cities. The net result is that few SIDs are broadcast in the BTAs to which they originally were assigned.¹

To operate a wireless communications network, each handset must have a method by which it can access the service carrier's SID. This phenomenon — sometimes called "hooking" — is effected through a computer program known as a preferred roaming list ("PRL"). The PRL is installed in the subscriber's handset so that the handset will search for known SIDs in rank order and connect to the first available signal.

Since the BTA designation of a given SID has no necessary correlation with the SID's broadcast location, the construction of the PRL is vitally important. PRLs typically divide SIDs into "geo groups"— that is, groups of signals that are actually broadcast in particular regions. Within each geo group, SIDs are preferentially ranked. The PRL searches first for the most favored signal in a geo group and, if unsuccessful, works its way sequentially through the remaining SIDs in that group. It is therefore essential that service carriers, when programming their PRLs, have accurate information as to which SID is broadcast in which market, and that they place SIDs not only in the proper geo groups but also in the appropriate sequence within each geo group. The erroneous placement of an SID may either force a customer to roam onto an unwanted network or cause the handset to fail completely.

The number of BTAs in which a portable telephone can operate depends, then, on the number of SIDs programmed into the PRL for that instrument. Since subscribers usually want their telephones to function in as many regions as possible, carriers often enter into roaming agreements with other carriers. This process entails an exchange of SID information and augmentation of the parties' PRLs to increase the coverage area. Thus, if a subscriber leaves the area in which his service carrier broadcasts and enters a new area in which the carrier has established a roaming agreement with a local carrier (i.e., a carrier that serves the new area), the subscriber's handset automatically will hook into the local carrier's network.

Which SID is found by a subscriber's PRL is a matter of consequence beyond mere convenience. Most customers have contracts that provide for a certain number of prepaid minutes, and therefore receive a discount when their handsets hook into their carrier's SID. Once a user begins roaming on another carrier's network, however, that carrier typically will charge higher rates to the roamer. Moreover, the subscriber's own carrier ordinarily receives no share of the proceeds from a call that is placed on a "roamed" carrier's network.

Most roaming agreements involve carriers that operate in different regions. One notable exception comprises what is called "home-on-home" roaming. The signatories to a home-on-home agreement operate in the same territory, but one of them usually cannot provide a signal to the entire region. To compensate for this deficiency and ensure its subscribers comprehensive service, it enters a home-on-home agreement with a competitor. Under such an agreement, a subscriber's handset will roam to the second carrier's signal when it is unable to hook into the subscribed carrier's signal — and this phenomenon occurs even though both carriers operate in the customer's "home" region.

B. When Opposites Attract.

The controversy before us involves a study in contrasts: a roaming agreement between Sprint (a large, well-established carrier with approximately 13,000,000 customers throughout the United States) and Movistar (a local carrier with approximately 190,000 customers, all in Puerto Rico). At the time Movistar approached Sprint, the latter was not yet broadcasting a signal in Puerto Rico (although it was licensed to do so). To close this gap in its network, Sprint had entered into roaming arrangements with other service carriers, including Centennial Puerto Rico (Centennial). It aspired to broadcast its own signal in Puerto Rico, however, and had told any roaming partner that asked (including Centennial) that it planned to use the 5142 SID (an SID assigned to Sprint for the Virgin Islands BTA).²

Movistar was in a start-up mode. When Sprint and Movistar signed the roaming agreement (July 7, 1999), Movistar had been licensed and assigned SIDs to broadcast in both the San Juan and Mayaguez BTAs, but its service was not yet up and running. Movistar's marketing strategy was to advertise its embryonic network as capable of providing "automatic roaming" to customers traveling within the continental United States. This made Sprint an attractive roaming partner, for Sprint boasted of having established a "nationwide network."

Sprint drafted the Sprint/Movistar roaming agreement, using a form that it had developed for that purpose. In this document, the parties agreed to permit reciprocal roaming in areas in which one of them had no accessible SID. The agreement obligated Movistar to "take all actions necessary" to ensure that any Movistar customers who roamed "in a geographic service area where Sprint PCS is a carrier" would use the Sprint network, but imposed no reciprocal obligation upon Sprint.

To effectuate the agreement, Sprint and Movistar needed to exchange lists of SIDs so that the numbers could be programmed into their respective PRLs (and then loaded onto their customers' handsets). To this end, they attached to the agreement schedules listing the BTAs in which each party was licensed and the corresponding SIDs that CIBERNET had assigned. Sprint's list contained well over 100 BTAs, whereas Movistar's contained only two. These schedules revealed, inter alia, two critically important facts: (1) Sprint was licensed to broadcast in San Juan and Mayaguez; and (2) Sprint had been assigned the 5142 SID (albeit designated by CIBERNET for the Virgin Islands).

Having executed the roaming agreement, Movistar's next step was to triage the Sprint information and load the data into its customers' handsets. This required the creation of a PRL, but Movistar had no expertise in that field. It decided to rely on the handset manufacturers to create the needed PRL and assigned one of its engineers, Pedro Sepúlveda, to oversee this operation. Sepúlveda, though, had no knowledge of the workings of a PRL.³

A handset manufacturer (Nokia) instructed Sepúlveda to get the relevant SID information from Sprint. Sepúlveda contacted Sprint — which did not know either that Movistar lacked even the most elementary knowledge of how to design a PRL or that it planned to rely entirely on handset manufacturers in that regard — and Sprint agreed to give him a PRL containing all of its broadcasting information. This task fell to Robert Lamb, one of Sprint's in-house development analysts. When Lamb asked Sepúlveda for specifications, Sepúlveda gave him only one: Movistar's SID in San Juan (5205).

Lamb then constructed the program. As he had done in developing designs for many other roaming partners, he inserted into the PRL every SID that Sprint was broadcasting or planning to broadcast, dividing them into geo groups corresponding to the BTAs in which the SIDs would actually be used. Thinking that Movistar would want its customers to pick up a signal whenever one was available, he positioned Sprint for home-on-home roaming (just as he had always done in PRLs for other roaming partners). To that end, he placed the intended Sprint SID for Puerto Rico, 5142, in the Puerto Rico geo group.

Unbeknownst to Lamb, Movistar had decided to look...