Time Warner Telecom, Inc. v. F.C.C.
| Decision Date | 16 October 2007 |
| Docket Number | No. 06-1466.,No. 05-5153.,No. 05-4769.,No. 06-1467.,05-4769.,05-5153.,06-1466.,06-1467. |
| Citation | 507 F.3d 205 |
| Parties | TIME WARNER TELECOM, INC., Petitioner in No. 05-4769, v. FEDERAL COMMUNICATIONS COMMISSION; and United States of America, Respondents. Earthlink Inc., Petitioner in No. 05-5153, v. Federal Communications Commission, Respondent. Comptel, Petitioner in No. 06-1466, v. Federal Communications Commission; United States of America, Respondents, Montana Sky Networks Inc, d/b/a Montanasky.Net, Intervenor. ACN Communications Services Inc.; Broadwing Communications, LLC.; Integra Telecom Inc.; McLeodUSA Telecommunications Services, Inc.; Mpower Communications Corp.; and Pac-West Telecomm, Inc., Petitioners in No. 06-1467, v. Federal Communications Commission; and United States of America, Respondents. |
| Court | U.S. Court of Appeals — Third Circuit |
Before: FUENTES, GREENBERG, and LOURIE,* Circuit Judges.
The petition under review arises from an order of the Federal Communications Commission ("FCC"), which substantially limits federal regulation of high-speed Internet access service provided over traditional telephone lines (referred to as "wireline broadband Internet access service"). The dispute centers, in large part, on the FCC's decision to relieve telephone companies of decades-old regulations that required them to grant competing Internet service providers nondiscriminatory access to their wirelines in order to reach consumers. The FCC contends that these regulations "imposed significant costs" on telephone companies, "thereby impeding innovation and investment in new broadband technologies and services." (FCC Br. at 43.) Presumably, the FCC's order now allows telephone companies to enter into individually negotiated arrangements with entities that seek access to their broadband wireline facilities.
Petitioners, who are independent Internet service providers, competing telecommunications service providers, cable modem providers, and various public interest organizations, argue that the FCC's order allows telephone companies to deny competitors access to their wirelines, thereby resulting in decreased competition and consumer choice in the market for broadband Internet service.1 For the reasons stated below, we conclude that the FCC's order is based on a reasonable interpretation of the Communications Act of 1934, 48 Stat. 1064 (), and a proper exercise of agency discretion. Accordingly, we will deny the petition for review.2
We discuss in some detail the complex technical and regulatory context for the FCC's order, which is set forth at Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, 20 F.C.C.R. 14853 (2005) ("Wireline Broadband Order").
Before the advent of broadband technology, consumers accessed the Internet using "dial-up" connections provided over the interconnected system of telephone wires known as a local exchange.3 See Nat'l Cable & Telecomm. Ass'n v. Brand X Internet Svcs., 545 U.S. 967, 974, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005) ("Brand X"). With a dial-up connection, consumers use computer modems to make calls which Internet service providers ("ISPs") link to the Internet by providing consumers with a physical connection and "the ability to translate raw Internet data into information they may both view on their personal computers and transmit to other computers connected to the Internet." Id. Dial-up connections, also referred to as "narrowband" connections, transmit data at relatively slow speeds. Id. at 974-75, 125 S.Ct. 2688.
By contrast, "broadband" connections, which are increasingly replacing dial-up connections, are much faster and are principally provided by: (1) cable modem service and (2) Digital Subscriber Line (DSL) service. DSL service, the type of transmission at issue in the Wireline Broadband Order, involves the use of "[t]wo DSL modems [that] are attached to a telephone loop, one at the subscriber's premises and one at the telephone company's central office." WorldCom, Inc. v. FCC, 246 F.3d 690, 692 (D.C.Cir.2001). If the line carries telephone service and high-speed data transmission, the telephone company — also known as the local exchange carrier ("LEC") — separates the streams and sends ordinary voice calls to the telephone network and data traffic to a "packet-switched data network" where it is routed to an ISP.4 Id. LECs use their transmission facilities to provide consumers with Internet access service, in which case they are referred to as "facilities-based ISPs." See Brand X, 545 U.S. at 975, 125 S.Ct. 2688; Wireline Broadband Order, 20 F.C.C.R. at 14858 ¶ 5. They also lease their wires on a wholesale basis to independent ISPs, referred to as "nonfacilities-based ISPs," who use the wires to reach their customers. See Brand X, 545 U.S. at 975, 125 S.Ct. 2688; Wireline Broadband Order, 20 F.C.C.R. at 14864-65 ¶ 16 n. 43.
There are three key developments in the regulatory history of telecommunications and data processing services that are significant to this petition for review: (1) Congress's passage of the Communications Act in 1934; (2) the FCC's issuance of its Computer II ruling in 1980; and (3) the passage of the Telecommunications Act in 1996. We discuss each in turn.
The regulatory issues raised in the Wireline Broadband Order trace back to the enactment of the Communications Act in 1934, which established the FCC's "broad authority to regulate interstate telephone communications." Global Crossing Telecomm., Inc. v. Metrophones Telecomm., Inc., ___ U.S. ___, 127 S.Ct. 1513, 1516, 167 L.Ed.2d 422 (2007). Title II of the statute heavily regulated the activities of local telephone companies by imposing upon them certain "common carrier" obligations.5 See id. at 1517. For example, Title II required telephone companies to charge consumers "just and reasonable" rates and to file and make publicly available their rate schedules (known as "tariffs"); authorized the FCC to set rates if the ones offered by a carrier were not just and reasonable; prohibited carriers from constructing new wirelines without first obtaining a certificate of public convenience and necessity from the FCC; and established liability for carriers that violated the statute. Communications Act, ch. 652, §§ 201-03, 205-06, 214, 48 Stat. 1068, 1070-71, 1072-73, 1075-76 (1934) (prior to 1996 amendments). These common carrier provisions remain essentially unchanged, see 47 U.S.C. §§ 201-03, 205-06, 214, although, as discussed below, Congress has since amended Title II to include additional common carrier obligations. See generally 47 U.S.C. §§ 201-276 ().
In 1966, the FCC initiated the Computer Inquiry proceedings to address the regulatory issues presented by the growing convergence of traditional telephone communications and data processing services. The FCC issued three important rulings in connection with the proceedings, known as "Computer I," "Computer II," and "Computer III."
In Regulatory and Policy Problems Presented by the Interdependence of Computer and Communication Services and Facilities, 28 F.C.C.2d 267, ¶ 2 (1971) ("Computer I"), the FCC addressed "the nature and extent of regulatory jurisdiction and control" which it would "exercise over the furnishing of data processing and communications services, or some combination thereof," by telephone and data processing companies. With respect to telephone companies subject to Title II common carrier requirements, the FCC was concerned that "without appropriate regulatory safeguards, the provision of data processing services by common carriers could adversely affect the statutory obligation of such carriers to provide adequate communications services under reasonable terms and conditions and impair effective competition in the sale of data processing services."6 Id. ¶ 8.
To address the concern, the FCC, pursuant to its rulemaking authority, required "maximum separation of activities which are subject to regulation [i.e., traditional telephone...
To continue reading
Request your trial
-
COOPER UNIVERSITY HOSP. v. Sebelius
...that past conflicting FCC rulings render its statutory classification in this order arbitrary and capricious. Time Warner Telecom, Inc. v. F.C.C., 507 F.3d 205, 219 (3d Cir.2007). Thus, in Thomas Jefferson University v. Shalala, 512 U.S. 504, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994), the Supr......
-
Gottlieb v. Carnival Corp.
...inter alia, that the FCC lacked authority to create the rules). Other circuits have done the same. See Time Warner Telecom, Inc. v. FCC, 507 F.3d 205, 208 n. 2 (3d Cir.2007) (review of an FCC Report and Order that substantially limited federal regulation of high-speed internet access over t......
-
Line Sys., Inc v. Sprint Nextel Corp.
..."defer to an agency's reasonable interpretation of any ambiguities in a statute which it administers." Time Warner Telecom, Inc. v. Fed. Commc'ns Comm'n, 507 F.3d 205, 214 (3d Cir. 2007). The FCC has recognized that communications through commercial mobile radio service providers involve di......
-
Ad Hoc Telecom. Users Committee v. F.C.C.
...expertise, and predictive market judgments. See EarthLink, Inc. v. FCC, 462 F.3d 1, 12 (D.C.Cir.2006); see also Time Warner Telecom, Inc. v. FCC, 507 F.3d 205, 221 (3d Cir.2007). The FCC's forbearance decision in this case readily satisfies the applicable arbitrary and capricious standard o......
-
Rethinking broadband internet access.
...14862-65 ¶¶ 12-17 (2005), [hereinafter Wireline Broadband Order], petition for review denied sub nom. Time Warner Telecom, Inc. v. FCC, 507 F.3d 205 (3d Cir. (113.) Id. at 14860-61 ¶ 9 & n.15, 14875-79 ¶ 41-46 & n.107, 14804-98 ¶ 77-85. (114.) Id. at 14904 ¶ 96. (115.) Appropriate F......
-
Creating effective broadband network regulation.
...Report and Order and Notice of Proposed Rulemaking, 20 F.C.C.R. 14,853, 14,862 (2005), aff'd sub nom. Time Warner Telecomm., Inc. v. FCC 507 F.3d 205 (3d Cir. (29.) Appropriate Regulatory Treatment for Broadband Access to the Internet Over Wireless Networks, Declaratory Ruling, 22 F.C.C.R. ......
-
Building on What Works: An Analysis of U.S. Broadband Policy.
...Rulemaking, 20 FCC Rcd. 14853, paras. 21-31 (2005) [hereinafter Wireline Broadband Order], aff'd, Time Warner Telecom, Inc. v. FCC, 507 F.3d 205 (3d Cir. (53.) See id.; see also Nuechterlein & Weiser, supra note 15, at 69-71. For a time, the FCC separately required incumbent local excha......