Supreme Court Urged to Reject Telecom Act Cases
The U.S. solicitor general supported a strict standard for deciding whether a telecom company’s entry into a market has been blocked by local or state laws. Filing an amicus brief Thursday at the Supreme Court, the solicitor general’s office asked the high court not to review two appeals court decisions that rejected a vaguer standard, under which telecom companies could get relief from local laws by showing they “may” prevent a company from providing service.
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The brief is a blow to petitioners Level 3 and Sprint Nextel because the court had taken the initiative to ask the solicitor general whether the cases should be reviewed. The court usually follows the official’s recommendations.
The case revolves around section 253(a) of the 1996 Telecom Act. It says, “No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.” After the law took effect, many companies sued municipalities, saying local laws violated the section. Level 3 and Sprint won cases in district courts that read the provision to call for the preemption of any law that “may” have the effect of prohibiting market entry. But the decisions were reversed by appeals courts. They said that companies must show actual or effective prohibition, not just the threat.
The word “may” in section 253(a) shouldn’t be read as referring to “possible or conceivable effects of a regulation, but rather to deny permission to States and localities to enforce the types of legal requirements that Section 253(a) forbids,” the solicitor general said. “A plaintiff seeking preemption under Section 253 cannot meet its burden simply by alleging that, under circumstances that might exist at some indeterminate future time, a legal requirement ‘may’ affect its ability to provide a telecommunications service. Instead, a plaintiff must present evidence of the practical effects of the requirement at issue.”
There’s no conflict among appeals courts, so the Supreme Court doesn’t have to step in, the solicitor general added. Views among courts of the preemption standard “differ in some respects,” but courts agree that the FCC’s 1997 California Payphone Order should be the “starting point for analysis.” The FCC said there that a law prohibits providing telecom service if it imposes “an express legal prohibition of service covering all of the relevant geographic market,” and it has the effect of prohibiting if it “materially inhibits or limits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment.”
Level 3 has no plans to back down from its effort to overturn what it sees as an “overly narrow application of Section 253,” said John Ryan, the company’s assistant chief legal officer. “At a time when the federal government is encouraging and even funding the construction of broadband networks, state and local governments should not be permitted to charge unfair, unreasonable and discriminatory franchise fees,” he said. Sprint didn’t get back us to right away.