Rogers Radio Communications Services, Inc. v. F.C.C.

• Decision Date: 04 January 1985
• Docket Number: 83-2216,Nos. 83-2215,s. 83-2215
• Citation: 751 F.2d 408
• Court: U.S. Court of Appeals — District of Columbia Circuit
• Parties: ROGERS RADIO COMMUNICATIONS SERVICES, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, American Telephone & Telegraph Company, Illinois Bell Telephone Company, Intervenors. ROGERS RADIO COMMUNICATIONS SERVICES, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Illinois Bell Telephone Company, American Telephone & Telegraph Company, Intervenors.

Page 408

751 F.2d 408

243 U.S.App.D.C. 32

ROGERS RADIO COMMUNICATIONS SERVICES, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee,

American Telephone & Telegraph Company, Illinois Bell

Telephone Company, Intervenors.

ROGERS RADIO COMMUNICATIONS SERVICES, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of

America, Respondents,

Illinois Bell Telephone Company, American Telephone &

Telegraph Company, Intervenors.

Nos. 83-2215, 83-2216.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 14, 1984.

Decided Jan. 4, 1985.

Philips Bowerman Patton, Washington, D.C., with whom Jeremiah Courtney, Washington, D.C., was on the brief, for appellant in No. 83-2215 and petitioner in No. 83-2216. Dennis C. Brown, Washington, D.C., also entered an appearance for Rogers Radio Communications Services, Inc.

Carl D. Lawson, Counsel, Federal Communications Commission, Washington, D.C., with whom Bruce E. Fein, General Counsel, Daniel M. Armstrong, Associate General Counsel, and Jane E. Mago, Counsel, Federal Communications Commission, Washington, D.C., were on the brief, for appellee in No. 83-2215 and respondent in No. 83-2216. Barry Grossman and Andrea Limmer, Attys., Dept. of Justice, Washington, D.C., also entered appearances for appellee, United States of America in No. 83-2216.

Alfred Winchell Whittaker, Washington, D.C., with whom Charles R. Cutler and John A. Zackrison, Washington, D.C., were on the brief for intervenor, Illinois Bell Telephone Company in Nos. 83-2215 and 83-2216.

Judith A. Maynes and Richard J. Cunningham, New York City, were on the brief for intervenor, American Telephone & Telegraph Company in Nos. 83-2215 and 83-2216.

Before MIKVA, STARR, Circuit Judges, and BAZELON, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge STARR.

STARR, Circuit Judge:

This appeal grew out of a dispute between Rogers Radio Communications Services ("Rogers Radio" or "Rogers"), and Illinois Bell Telephone ("IBT"), the intervenor in this lawsuit, over IBT's refusal to grant Rogers' request for access to one of IBT's telephone services. IBT and Rogers are presently competitors in the one-way paging market, a service we will describe more fully below. Notwithstanding their status as competitors, Rogers must rely upon IBT, a wireline carrier, to provide it with access to the telephone communications network through various services. In a petition to dismiss or deny IBT's application to expand its one-way paging system, Rogers charged IBT with discriminatory and anticompetitive activity in violation of Sec. 201(a) of the Communications Act. 47 U.S.C. Sec. 201(a) (1976). Rogers later filed a separate complaint with the Commission alleging anticompetitive and discriminatory conduct on the part of IBT and seeking an award of money damages. In both its hearing before an Administrative Law Judge and on review of that decision by the Review Board, Rogers lost on the merits of its complaint. Rogers now brings this appeal, challenging the FCC's denial of Rogers' request for review of the Review Board's decision both to deny Rogers' anticompetitive claim and to affirm the grant of IBT's expansion application.

I

The facts of this case are lengthy, inasmuch as the steps leading up to the appeal before us span an entire decade. In summary fashion, Rogers Radio has been operating as a nonwireline radio common carrier ("RCC") in the Chicago metropolitan area for a number of years. Rogers provides, among other things, one-way paging service to its customers. One-way paging is a service commonly used by physicians and other "on-call" professionals. The subscriber to such a service is provided with a code number; that number is either relayed by telephone to a paging service operator who transmits the code via radio signal to the paging "beeper" or, alternatively, the code is punched in on a touch-tone telephone and an automatic machine at the paging service then relays a radio signal "beep" to the subscriber.

Rogers has been provided interconnection with telephone wireline service through IBT, which until January 1984 was one of the Bell operating companies. Sometime during 1972, Rogers began using automatic machine answering devices in its one-way paging system with the intention ultimately of eliminating through full automation the need to employ operators to answer incoming calls. That intention, however, was never fully realized for business reasons unrelated to this case. ¹ In August 1972, IBT and Rogers entered into a contract enabling Rogers to interconnect its machines to "local" Chicago telephone lines. The local lines enabled Rogers to receive calls from customers located either in the city of Chicago or in the inner metropolitan area ("Inner-Met"). At that time, a small number of Rogers' customers were situated in the area immediately outside the Chicago metropolitan area ("Outer-Met"). These customers had to incur long distance telephone charges in order to access Rogers' paging service. With the objective of expanding its Outer-Met customer base, Rogers sought to obtain from IBT the Inward-bound Wide Area Telephone Service (INWATS) ² for Rogers' paging service. INWATS would enable Outer-Met customers to access Rogers' paging terminal free of any long distance charge.

In February 1974, two INWATS lines were installed at Rogers' paging terminal. The two lines were ordered from IBT for "a telecommunications service" offered by Rogers. J.A. at 514. At that time, Rogers Radio was equipped to provide three distinct types of telecommunications services. In addition to its one-way paging service, Rogers also furnished message forwarding and message relay services. There is no evidence in the record suggesting that at the time the first two INWATS lines were installed at Rogers' facility IBT was aware that those lines were to be used in connection with Rogers' one-way paging service. It was not until the spring of 1974 that Rogers explicitly requested, orally, INWATS interconnection for its machine-answered paging service. ³

Prior to Rogers' request for INWATS interconnection to its machines, some fundamental regulatory questions had been raised in the industry generally as to whether WATS (both inbound and outbound) was compensatory when interconnected with a system that typically produced short times of use, referred to in the industry as "holding times." ⁴ Specifically, AT & T had conducted studies in 1973 to determine at what point the holding time becomes so short as to render the service noncompensatory to the wireline carrier. The results of these studies were submitted to the FCC with AT & T's January 1974 interstate WATS tariff restructure filing. One of the purposes of that filing was to establish a minimum average time requirement (MATR) in order to ensure that the service would be compensatory as to all users. Use of a MATR would allow the telephone company to structure its INWATS rates to take account, to some extent, of the length of a call. In imposing a MATR of, say, one minute, the telephone company would bill its customer "on the basis of (1) total conversation time, or (2) number of completed calls multiplied by one minute, whichever is greater." If the second alternative is employed, the subscriber is billed "the appropriate additional period charge" for the amount of time the total "exceeds the initial period for the class of service involved." ⁵

On July 1, 1974, while Rogers' request for INWATS interconnection was winding its way through IBT and AT & T, the new interstate WATS tariff, complete with a MATR, became effective. ⁶ Sometime during the summer of 1974, after consulting with AT & T, IBT notified Bernard Kahn, Rogers' Executive Vice President, that Rogers' request for INWATS interconnection to its machines had been denied. Two reasons were given: (1) the holding times for Rogers' calls were so short as to render noncompensatory IBT's provision of INWATS service to Rogers; and (2) such interconnection would violate the resale prohibition contained in the relevant intrastate tariff. ⁷

That was not, however, the end of the matter. IBT offered Rogers the option either of interconnecting the manually-answered paging service with INWATS or of interconnecting either the manually-answered paging service or the automatic answering machines with IBT's foreign exchange (FX) lines. The FX option is, in fact, the very service which IBT uses in connection with its own machine-answered, one-way paging service, "Bellboy." ⁸ Hence, while declining Rogers' request to expand its INWATS interconnection, IBT (1) left the existing INWATS interconnection in place, (2) offered Rogers precisely the same service utilized by its affiliate once it went into competition with Rogers, ⁹ and (3) did not provide INWATS interconnection to its own Bellboy service or to any of Rogers' other competitors.

While the foregoing drama was unfolding in the Chicago metropolitan area, the question of INWATS interconnection continued to loom large at the national level, following on the heels of AT & T's 1973 studies. In 1975, negotiations began between AT & T and RCC representatives (including Rogers' trade association) to address both the need for MATR's in the intrastate tariffs and the concern over the inclusion of one-way paging services within the resale prohibition. On August 24, 1976, the negotiations culminated in a Memorandum of Understanding ("Memorandum") with respect to the MATR. In the Memorandum, the RCC's agreed to the MATR concept in exchange for the specific exclusion of one-way paging services from the resale prohibition.

In March 1977, the FCC formally approved the Memorandum. The compensation and resale prohibition problems having thus been resolved, IBT wrote to Rogers promptly thereafter, on March 18, 1977, offering to interconnect Rogers' machines with INWATS under a rate structure that included a MATR. Rogers, however, chose not to...