Southwestern Bell Telephone Co. v. F.C.C.
| Decision Date | 05 April 1994 |
| Docket Number | 91-1446,91-1447,91-1417,91-1453,Nos. 91-1416,91-1454 and 93-1360,91-1440,s. 91-1416 |
| Citation | 19 F.3d 1475 |
| Parties | SOUTHWESTERN BELL TELEPHONE COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, EDS Corporation, Ameritech Operating Companies, Metropolitan Fiber Systems, Pacific Bell and Nevada Bell, WilTel, Inc., Bell Atlantic Telephone Companies, NYNEX, MCI Telecommunications Corporation, Intervenors. SOUTHWESTERN BELL TELEPHONE COMPANY, Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, EDS Corporation, Metropolitan Fiber Systems, Pacific Bell and Nevada Bell, WilTel, Inc., Bell Atlantic Telephone Companies, NYNEX, MCI Telecommunications Corporation, Intervenors. U S WEST COMMUNICATIONS, INC., Petitioner, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, Bell Atlantic Telephone Companies, NYNEX, Ameritech Operating Companies, Southwestern Bell Telephone Company, WilTel, Inc., Pacific Bell and Nevada Bell, MCI Telecommunications Corporation, Metropolitan Fiber Systems, Inc., Intervenors. (Two Cases) SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY and South Central Bell Telephone Company, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, NYNEX, Ameritech Operating Companies, Southwestern Bell Telephone Company, WilTel, Inc., MCI Telecommunications Corporation, Pacific Bell and Nevada Bell, Metropolitan Fiber Systems, Inc., Bell Atlantic Operating Companies, Intervenors. (Two Cases) The BELL ATLANTIC TELEPHONE COMPANIES, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents, NYNEX, Ameritech Operating Companies, Southwestern Bell Telephone Company, WilTel, Inc., MCI Telecommunications Corporation, Pacific Bell and Nevada Bell, Metropolitan Fiber Systems, Inc., Intervenors. (Two Cases) U S WEST COMMUNICATIONS, INC., BellSouth Telecommunications, Inc., Bell Atlantic Telephone Companies, Southwestern Bell Telephone Company, Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United Sta |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Robert B. McKenna, Denver, CO, argued the cause, for petitioners. With him on the briefs were Robert M. Lynch, Richard C. Hartgrove, Robert J. Gryzmala, St. Louis, MO, M. Robert Sutherland, Atlanta, GA, and Lawrence W. Katz, Washington, DC. Leo J. Bub, San Antonio, TX, entered an appearance in No. 91-1416. William B. Barfield and R. Frost Branon, Jr., Atlanta, GA, entered appearances in Nos. 91-1446 and 91-1447. John Thorne, Michael D. Lowe, Washington, DC, J. Manning Lee, McLean, VA, Mark J. Mathis, Philadelphia, PA, James R. Young and Lawrence W. Katz, Washington, DC, entered appearances in Nos. 91-1453 and 91-1454. Durward D. Dupre, St. Louis, MO, entered an appearance in No. 93-1360.
Laurence N. Bourne, Counsel, F.C.C., Washington, DC, argued the cause, for respondents. With him on the brief was Renee Licht, Acting General Counsel, F.C.C., Daniel M. Armstrong, Associate General Counsel, F.C.C., John E. Ingle, Deputy Associate General Counsel, F.C.C., Anne K. Bingaman, Asst. Atty. Gen., U.S. Dept. of Justice, Robert B. Nicholson and Robert J. Wiggers, Attorneys, U.S. Dept. of Justice, Washington, DC.
On the joint brief for intervenors Electronic Data Systems Corp., MCI Telecommunications Corp., and WilTel, Inc., were Randolph J. May, Richard S. Whitt, Frank W. Krogh, Donald J. Elardo, Eric Fishman and William L. Fishman, Washington, DC. Floyd S. Keene, Milwaukee, WI, Alfred Winchell Whittaker, Andrew D. Lipman, Washington, DC, James P. Tuthill, Margaret deB. Brown, John W. Bogy, Stanley J. Moore, San Francisco, CA, John Thorne, Michael D. Lowe, Washington, DC, J. Manning Lee, McLean, VA, Mark J. Mathis, Philadelphia, PA, Donald W. Boecke, William T. Lake, J. Roger Wollenberg, Washington, DC, entered appearances.
Before: MIKVA, Chief Judge, WALD and EDWARDS, Circuit Judges.
Opinion for the Court filed by Circuit Judge WALD.
Petitioners Southwestern Bell Telephone Company, US West Communications, Inc., BellSouth Telecommunications, Inc., and the Bell Atlantic Telephone Companies challenge a series of Federal Communications Commission ("FCC" or "Commission") orders which prescribed rates for so-called "dark fiber" communications services, directed petitioners to provide these services as a general offering, and, finally, denied permission to withdraw dark fiber service altogether. In re Bell Atlantic Tel. Cos. Revisions to Tariff F.C.C. No. 1, 6 F.C.C.R. 1436 (1991) ("Suspension Order"), 6 F.C.C.R. 4776 (1991) ("Suspension Review Order"), 6 F.C.C.R. 4891 (1991) ("Prescription Order"); In re Southwestern Bell Tel. Co., 8 F.C.C.R. 2589 (1993) ("Section 214 Order") ( permission to withdraw offering). Petitioners claim that in issuing these orders the FCC exceeded its jurisdiction because they had offered dark fiber only on an individualized basis, thereby placing this service beyond the FCC's authority over common carrier offerings under title II of the Communications Act of 1934, as amended, 47 U.S.C. Secs. 201-227 (1988 & Supp. III 1991). We find that the Commission has not sufficiently supported its conclusion that petitioners' dark fiber service was ever offered on a common carrier basis and accordingly remand to the Commission for reconsideration of its orders.
In the 1970s scientists explored the possibility of transmitting information by sending light waves in the form of a concentrated laser beam through glass fibers. This method of communication proved far superior to the conventional forms of transmission of information via copper, coaxial cable, and microwave. Petitioners began to provide fiber optic telecommunications services on an individualized basis in 1985. Their initial "DS3" service combined high speed transmission equipment and associated fiber optic cable tailored to the specific needs of each customer. However, because of the specific characteristics of fiber optic technology, the electronic and other equipment necessary to power or "light" the glass fiber may be installed at either or both ends of the fiber. This feature permits petitioners to offer the fiber optic lines alone and allow subscribers to use customized equipment at their own end to send information along these routes. The provision of the fiber optic lines without the necessary electronic equipment to power the fiber is commonly known as "dark" fiber service, and is distinguishable from the original DS3 service for which petitioners light the fiber on behalf of their customers.
With the permission of the FCC, petitioners offered dark and lit fiber service, as well as certain other special services, on an individual case basis ("ICB") where each service contract was negotiated separately and specifically tailored to the particular needs of each customer. See In re Investigation of Access and Divestiture Related Tariffs, 97 F.C.C.2d 1082, 1143 (1984). These ICB contracts were then filed with the FCC. 1 In early 1988 the Bell Atlantic Telephone Companies and other Local Exchange Carriers ("LECs") proposed revisions to their ICB rates for DS3 (lit fiber) service which triggered an FCC investigation into whether these tariffs exhibited "unjust or unreasonable discrimination" in violation of section 202(a) of the Communications Act, 47 U.S.C. Sec. 202(a). See In re Local Exchange Carriers' Individual Case Basis DS3 Service Offerings, 4 F.C.C.R. 8634 (1989) ("ICB Order").
At the conclusion of that investigation, the Commission explained that " 'ICB' pricing is usually used when a carrier adopts a practice of developing a price for a particular service or facility in response to each customer request for the service or facility." ICB Order, 4 F.C.C.R. at 8641 p 63. While it was theoretically possible to construct nondiscriminatory ICB tariffs, the Commission "presume[d] that ICB pricing ... is discriminatory." Id. at 8642 p 67. Therefore "once exchange carriers have sufficient experience with a service such as the provision of DS3 [lit fiber] facilities to permit the development of averaged rates, they must file such rates." Id. at 8642 p 68. Accordingly, it ordered those companies with sufficient DS3 experience to file averaged tariffs for their lit fiber service, 2 but refrained from requiring the LECs to file averaged tariffs for dark fiber because of the carriers' apparent lack of experience in that area. Id. at 8645 p 88.
On reconsideration, the Commission decided on the basis of new information that several carriers indeed had "sufficient experience in the provision of dark fiber service to support the development of averaged rates." In re Local Exchange Carriers' Individual Case Basis DS3 Service Offerings, 5 F.C.C.R. 4842, 4845 p 31 (1990) ("ICB Reconsideration Order"). While the record upon which the original ICB Order was based identified only 20 or so dark fiber ICBs, the Commission subsequently learned that Southwestern Bell had more than 120 dark fiber ICBs, Bell Atlantic had four ICBs consisting of 32 dark fibers in addition to 52 ICBs (any of which may involve more than one dark fiber installation), BellSouth had nine ICBs consisting of 34 fibers, and U S West had at least 12 ICBs consisting of 52 fibers. ICB Reconsideration Order, 5 F.C.C.R. at 4845 p 32.
In deciding to exercise title II jurisdiction over petitioners' dark fiber service, the Commission declined to examine the specific circumstances surrounding these offerings. Instead, the FCC decided that by filing the ICBs the carriers had acceded to the common carriage status necessary to support the Commission's jurisdiction. Id. at 4847 n. 15. Accordingly, the FCC...
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