Virgin Islands Telephone Corp v. Fed. Commun. Comm'n, 98-1575

• Decision Date: 21 December 1999
• Docket Number: No. 98-1575,98-1575
• Citation: 198 F.3d 921
• Parties: (D.C. Cir. 1999) Virgin Islands Telephone Corporation, Petitioner v. Federal Communications Commission and United States of America, Respondents AT&T Corporation, Intervenor
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 921

198 F.3d 921 (D.C. Cir. 1999)

Virgin Islands Telephone Corporation, Petitioner v. Federal Communications Commission and United States of America, Respondents

AT&T Corporation, Intervenor

No. 98-1575

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 13, 1999

Decided December 21, 1999

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

Daniel E. Troy argued the cause for petitioner. With him on the briefs was Carl J. Hartmann, III.

Lisa A. Burns, Counsel, Federal Communications Commission, argued the cause for respondents. With her on the brief were Christopher J. Wright, General Counsel, John E. Ingle, Deputy Associate General Counsel, Joel I. Klein, Assistant Attorney General, U.S. Department of Justice, and Robert B. Nicholson and Robert J. Wiggers, Attorneys. Daniel M. Armstrong, Associate General Counsel, Federal Communications Commission, and Pamela L. Smith, Counsel, entered appearances.

Gene C. Schaerr, Mark C. Rosenblum, and James J.R. Talbot were on the brief for intervenor.

Before: Sentelle, Rogers and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge:

Petitioner, the Virgin Islands Telephone Corporation, is a provider of local telephone service in the U.S. Virgin Islands. AT&T Submarine Systems, Inc. ("AT&T-SSI"), a wholly-owned subsidiary of intervenor, AT&T Corporation, constructs and maintains undersea fiber optic telecommunications cable systems, or, submarine cable systems. In this appeal, petitioner contends that in granting AT&T-SSI's application for cable landing rights as a noncommon carrier, the Federal Communications Commission ("Commission") ignored Congress' clear directive in the 1996 Telecommunications Act ("1996 Act") to apply a new regime for distinguishing between common carrier and private carrier services. Petitioner maintains that, under the 1996 Act, "telecommunications services" is defined in a manner that no longer permits the Commission to apply the two-part test of National Association of Regulatory Utility Commissioners v. FCC, 525 F.2d 630 (D.C. Cir. 1976) ("NARUC I"). In petitioner's view, AT&T-SSI would be offering telecommunications "to such classes of users as to be effectively available directly to the public" as defined by the 1996 Act if its customers used the capacity they bought from AT&T-SSI to provide service to the public. Because the Commission's interpretation of an ambiguous new term in the 1996 Act to mean "essentially" the same thing as "common carrier"--and thus governed by the NARUC I framework--is reasonable, we deny the petition.

I.

AT&T-SSI filed with the Commission an application for authority to land and operate a submarine cable system extending between St. Thomas and St. Croix in the Virgin Islands, pursuant to 47 U.S.C. 34 (1994).¹ In the application, AT&T-SSI expressed its intention to sell the capacity to common carriers on an indefeasible right of use ("IRU") basis.² Petitioner and TelefOnica Larga Distancia de Puerto Rico, Inc. ("TLD"), a long distance service provider in the U.S. Virgin Islands-Puerto Rico market, filed petitions to deny AT&T-SSI's application. Petitioner and TLD asserted that the proposed submarine cable system should be operated on a common carrier basis and that AT&T-SSI should accordingly resubmit its application and seek authorization to construct or operate the proposed system under 47 U.S.C. 214.³ Shortly after the petitions to deny were filed, petitioner filed a petition for a declaratory ruling that the proposed submarine cable system should be operated as a common carrier facility.

While the AT&T-SSI application was pending, Congress enacted the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified in scattered sections of 47 U.S.C.) ("1996 Act"). The 1996 Act, among other things, introduced two new terms, "telecommunications carrier" and "telecommunications service," and defined them as follows:

The term "telecommunications carrier" means any provider of telecommunications services, except that such term does not include aggregators of telecommunications services (as defined in section 226 of this title). Atele communications carrier shall be treated as a common carrier under this chapter only to the extent that it is engaged in providing telecommunications services, except that the Commission shall determine whether the provision of fixed and mobile satellite service shall be treated as common carriage.

47 U.S.C. 153(44) (Supp. III 1997).

The term "telecommunications service" means the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.

Id. 153(46). For the purposes of this appeal, the key aspects of these definitions are that "any provider of telecommunications services," except for "aggregators" of such services, is designated a "telecommunications carrier" and that to the extent that a telecommunications carrier is engaged in providing "telecommunications services," it "shall be treated as a common carrier." Id. 153(44). In other words, whether a carrier will be subject to common carrier regulation pursuant to 153(44) turns on whether it offers "telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public." Id. 153(46).

The International Bureau ("Bureau") granted AT&T-SSI's application for a cable landing license on a non-common carrier basis. See AT&T Submarine Systems, Inc., 11 F.C.C.R. 14885 p 1 (1996) ("Bureau Order").⁴ Observing that "[t]he Commission has not yet addressed the issue of how, if at all, the 1996 Act's introduction of the concept of a 'telecommunications carrier' affects the applicability of NARUC I standard," id. p 15, the Bureau decided that, in any event, AT&T-SSI is not a common carrier because it is neither a "telecommunications carrier" under the 1996 Act nor a "common carrier" under the NARUC I standard. Id. pp 13-15.

In examining whether AT&T-SSI is a "telecommunications carrier," or a provider of "telecommunications service," under the 1996 Act, the Bureau looked to the Commission's interpretation of the term "commercial mobile service," as defined in the Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, Title VI, 107 Stat. 312, 379-401 (codified in scattered sections of 47 U.S.C.) ("1993 Budget Act"). The 1993 Budget Act defined "commercial mobile service" as "any mobile service ... that is provided for profit and makes interconnected service available (A) to the public or (B) to such classes of eligible users as to be effectively available to a substantial portion of the public, as specified by regulation by the Commission." 47 U.S.C. 332(d)(1). The Commission subsequently read "available ... to the public" as "offered without restriction on who may receive it" and declared that whether a service was available to "such classes of eligible users as to be effectively available to a substantial portion of the public" depended on "several relevant factors such as the type, nature, and scope of users for whom the service is intended." Implementation of Sections 3(n) and 332 of the Communications Act, Regulatory Treatment of Mobile Services, 9 F.C.C.R. 1411 p 265 (1994) ("CMRS Order"). The Commission also stated that a service will not be considered "available to the public" or "effectively available to a substantial portion of the public" if it is "provided only for internal use or only to a specified class of eligible users under the Commission's Rules." Id.

Noting the similarity in the definitions of the terms "telecommunications service" and "commercial mobile service," the Bureau concluded that under the 1996 Act, "whether a service is effectively available directly to the public depends on the type, nature, and scope of users for whom the service is intended and whether it is available to 'a significantly restricted class of users.' " Bureau Order p 25. The Bureau applied these criteria to AT&T-SSI's proposed facility and found that:

AT&T-SSI ... will make available bulk capacity in itssystem to a significantly restricted class of users, includ-ing common carrier cable consortia, common carriers,and large businesses. Potential users are further limitedbecause only consortia, common carriers, and large busi-nesses with capacity in interconnecting cables or otherfacilities and, in many cases, operating agreements withforeign operators, will be able to make use of the cable asa practical matter.

Id. The Bureau rejected the argument that AT&T-SSI will be making a service effectively available directly to the public because AT&T-SSI's customers will use the capacity to provide a service to the public, noting that "[s]uch an interpretation is contrary to the plain language of the [1996 Act] by focusing on the service offerings AT&T-SSI's customers may make rather than what AT&T-SSI will offer."⁵ Id. p 26. Therefore, the Bureau concluded that AT&T-SSI will not be offering a service "directly to the public, or to such classes of users to be effectively available directly to the public" and that, consequently, AT&T-SSI is not a "telecommunications carrier" providing "telecommunications service" under the 1996 Act. Id. p 29.

The Bureau then considered whether AT&T-SSI should nevertheless be regulated as a common carrier under NARUC I. The NARUC I test has two parts: "[W]e must inquire, first, whether there will be any legal compulsion ... to serve [the public] indifferently, and if not, second, whether there are reasons implicit in the nature of [the] operations to expect an indifferent holding out to the eligible user public."NARUC I, 525 F.2d at 642. The Commission has subsequently interpreted this two-part test to mean that a carrier has to be regulated as a common carrier if it will "make capacity available to...