D.C. CIRCUIT UPHOLDS FCC RULES ON PAGING INTERCONNECTION, USF
U.S. Appeals Court, D.C., sided with FCC twice Fri. in 2 separate rulings, backing regulations on pricing for traffic that travels between ILECs and paging companies and upholding unrelated order on formula for Universal Service Fund (USF). In first case, D.C. Circuit unanimously rejected petitions by LECs, including Qwest,, that sought to overturn agency’s interpretation of regulations that bar LEC from assessing charges on another carrier for local traffic that originates on LEC’s network. That case turned on Qwest challenge involving one-way paging company TSR Wireless, which Qwest had charged for dedicated transmission facilities needed to pass paging calls on to its customers. Court also struck down challenge by National Exchange Carrier Assn. (NECA) to FCC order on USF formula. It said NECA had failed to demonstrate Common Carrier Bureau decision to retain 1998 formula for calculating those payments was arbitrary and capricious.
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In paging case, FCC concluded that charges such as those levied by Qwest on TSR for dedicated transmission facilities needed to pass paging calls to TSR customers weren’t legal. In unanimous ruling, D.C. Circuit agreed, citing 1997 decision by 8th Circuit, St. Louis, on reciprocal compensation. Eighth Circuit overturned parts of FCC interconnection order. But while deciding against Commission on rules covering several interconnection issues, 8th Circuit still upheld application of rule barring any LEC from charging paging company for completing LEC-originated calls, D.C. Circuit said. When local caller dials number of paging service customer, call starts out on LEC network but is handed off to paging carrier, which ultimately completes call. Judges Stephen Williams, Douglas Ginsburg and Judith Rogers heard case and Williams wrote opinion. “The Commission’s explanation seems compelling; its interpretation prevents LECs from redesignating the ’traffic’ charges as ‘facilities’ charges,” court wrote.
“The opposite reading would create an apparently artificial distinction, giving LECs an incentive to game the system by providing dedicated facilities at the paging providers’ expense in cases where they could conveniently carry the traffic at their own expense,” Williams wrote. Court also rejected LEC arguments that paging carriers could use that FCC interpretation to demand “unnecessary and expensive facilities.” LECs didn’t establish “that such ‘gold-plating’ is likely,” court said. Decision said paging carriers have to pay for facilities used for: (1) “Transiting traffic” that originated from carrier other than interconnecting LEC but still was carried over LEC network to paging carrier’s network. (2) Connection of parts of paging carrier’s own network. (3) Delivery of traffic that originated or terminated outside of local calling area. Demanding unnecessary facilities would run up paging providers’ own costs, court ruled. “In the absence of gold-plating, the Commission’s order simply requires the LECs to look to their own customers to recoup the needed costs of their facilities.” Court also upheld FCC’s use of its complaint procedure. LECs had argued that such disputes could be resolved only through state-managed arbitration and negotiation provisions under Telecom Act.
In 2nd case, NECA had proposed alternative formula for USF payments to be made to average schedule companies in 1999, but Common Carrier Bureau ultimately rejected proposal, in part due to concerns it didn’t fully approximate per-loop costs of those companies. At time, bureau said proposed formula would raise number of companies receiving payments and increase total amount paid to covered companies by 33%. “Most likely there is more to NECA’s claim or it would not have litigated it to this point, but we are unable to tell what that more might be,” court said. Chief Judge Harry Edwards and Judges Ginsburg and David Tatel heard case. FCC didn’t provide “greater grasp” for court of what was at issue, although ruling said burden was on NECA to make its arguments clear.
“The NECA has failed to make intelligible to the court any coherent argument in support of its substantive claim,” per curiam opinion said. “For the court’s part, we take some comfort in thinking we have previously understood cases a great deal more complicated than this one.”