APPEALS COURT WEIGHS FCC E911 MANDATES FACED BY RURAL CARRIERS
U.S. Appeals Court, D.C., questioned Tues. how costs of Enhanced 911 upgrades that rural and other wireless carriers pass on to customers are any different from public safety costs faced by other industries such as automakers and airlines. U.S. Cellular Corp., Corr Wireless Communications and Rural Cellular Assn. challenged 1999 FCC decision to eliminate cost-recovery mechanism for carriers as precondition to their obligation to furnish E911 caller location services. Commission lifted that requirement as it related to commercial carriers based on concerns that difficulties with putting state cost recovery legislation into effect were dramatically slowing E911 rollouts. Challenge by rural carriers centered on concerns that compared to larger carriers with urban customer bases, they must spread such costs over smaller subscriber base covering larger areas. But Judges David Tatel and Merrick Garland pressed U.S. Cellular attorney Thomas Van Wazer on how public safety costs and mandates at issue in this case were different from similar requirements imposed on other industries that also must pass on costs to customers. “Don’t auto makers pass that along?” Tatel asked. “Couldn’t Ford say we're not going to install any seatbelts because they are very expensive?”
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FCC’s rationale for lifting cost-recovery mechanism for carriers cited factors such as extent to which they could pass such costs on to subscribers because they weren’t rate regulated. In oral argument that ran nearly twice as long as scheduled, Van Wazer stressed that PSAPs operated more as business than as govt. agency because of volume of equipment and services they bought, characterization to which FCC attorney Roberta Cook later took exception. (FCC didn’t alter cost-recovery mechanism requirements for PSAPs, eliminating it only as precondition for carriers.) While Garland and Tatel questioned how safety requirements imposed on PSAPs and carriers were different from those in other agencies that ultimately were passed on to customers, their questions appeared somewhat less pointed when Van Wazer emphasized different impact of those obligations on wireless vs. wireline carriers. PSAP infrastructure was built to fit into LEC infrastructure. For later obligations imposed on wireless carriers, he said, “the FCC said you have to have technology and fit it into a PSAP infrastructure built on 1950s technology. It’s a square peg in a round hole.” He contended that if wireless carriers had been given flexibility to create 911 location information system that wasn’t dependent on LEC network, they could have done so more efficiently and at less cost.
Garland and Tatel quizzed Van Wazer heavily on why PSAPs were businesses and whether police departments or public schools would fall under that definition. “What about FAA?” Tatel asked. Under that line of reasoning, judge said, airlines could say that public safety requirements they faced to comply with FAA monitoring shouldn’t be enforced because FAA was business that should pass along such costs itself. Garland raised similar issues, drawing analogy with EPA requirements that smokestacks have certain scrubbing equipment for air emission controls. Because EPA buys significant equipment to monitor compliance, Garland asked whether that made that agency a business, as well. Speaking of need to sort out such distinctions, Garland said: “This is very important to your case.” How PSAPs are different from federal agencies that impose public safety requirements but also buy equipment themselves was point that Garland and Tatel returned to several times in questions. “I truly don’t understand your argument,” Tatel told Van Wazer at one point.
Such cost issues also exist on wireline side, with several mechanisms, including special tariffs, in place to address cost recovery, FCC’s Cook said. “Wireline customers are not receiving these services for free,” she told 3-judge panel, which also included Circuit Judge Karen Henderson. In general, cost-recovery mechanism for carriers “was a huge problem” that agency had little choice to address to prevent jeopardizing progress of entire E911 program, Cook said. “States are free to adopt whatever cost recovery mechanisms they wish to adopt,” she said, countering distinctions between cellphone and landline relationships to PSAPs drawn by rural carriers. She also disputed notion that PSAPs function as businesses, saying they shouldn’t be characterized as consumers of wireless services because they provide service themselves. “They are not customers,” she said.
Challenge by rural wireless carriers also focused on concerns that eliminating carrier cost-recovery mechanism as prerequisite to E911 obligations would violate statutory ratemaking requirements and universal service directives. Challenge also questioned whether FCC decision to rescind precondition of cost recovery, which reversed earlier decision, was done in compliance with Administrative Procedure Act. Carriers also contended that FCC had failed to explain in order why it turned away from other alternatives that wouldn’t have placed same burdens on small businesses, which court challenge said violated Regulatory Flexibility Act. Finally, carriers asked whether FCC order violated takings clause of 5th Amendment of Constitution. In general, rural carriers argued that on one hand, FCC imposed substantial costs of E911 location information technology on them while at same time preventing them from recovering costs from PSAPs requesting E911 service. Rural carriers contended that FCC must comply with principle of cost causation, which is that carrier’s costs must be recovered from party that causes such costs. In this case, rural carriers are pointing to party that causes these costs as PSAPs.
Speaking to reporters after oral argument, Van Wazer said that if court were to agree with that broader cost causation argument, it could have broader impact on E911 program overall. Otherwise, potential remand by court could be tailored to how those issues affected rural wireless carriers, he said. Petitions for reconsideration that carriers had filed at FCC before court challenge had been tailored to deal with issues that affected rural firms, he said.