Competitive Telecommunications Ass'n v. Federal Communications Commission

998 F.2d 1058, 302 U.S. App. D.C. 423, 73 Rad. Reg. 2d (P & F) 845, 1993 U.S. App. LEXIS 20125
CourtCourt of Appeals for the D.C. Circuit
DecidedAugust 6, 1993
DocketNo. 92-1013
StatusPublished
Cited by16 cases

This text of 998 F.2d 1058 (Competitive Telecommunications Ass'n v. Federal Communications Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Competitive Telecommunications Ass'n v. Federal Communications Commission, 998 F.2d 1058, 302 U.S. App. D.C. 423, 73 Rad. Reg. 2d (P & F) 845, 1993 U.S. App. LEXIS 20125 (D.C. Cir. 1993).

Opinion

Opinion for the Court filed by Circuit Judge D.H. GINSBURG.

D.H. GINSBURG, Circuit Judge:

The Competitive Telecommunications Association, MCI Telecommunications Corporation, Sprint Communications Company, and Williams Telecommunications Company petition for review of an FCC decision, entered upon remand from this court, holding that four integrated service packages offered by AT & T under its “Tariff 12” are not unreasonably discriminatory. See AT & T Communications, Revisions to Tariff F.C.C. No. 12, 6 FCCRcd 7039 (1991); § 202(a) of the Communications Act of 1934, 47 U.S.C. § 202(a). Because there is substantial evidence in the record supporting the FCC’s decision, we deny the petitions for review.

I. Background

At issue is the lawfulness of four of AT & T’s Tariff 12 offerings. Under Tariff 12 AT & T provides each commercial customer with a customized package of integrated telecommunication services at a negotiated price. The package price is less than the sum of the rates that the customer would pay if it purchased each service individually from AT & T, but the customer forfeits the flexibility of determining the precise way in which AT & T will provide the services.

AT & T filed a tariff for each of the four Tariff 12 options, as required by § 203 of the Communications Act. The FCC reviewed the tariffs and the petitioners’ objection that they are unlawfully discriminatory within the meaning of § 202(a), which provides that “[i]t shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges ... for ... like communication service.” 47 U.S.C. § 202(a). The FCC then held that the Tariff 12 offerings are not unlawfully discriminatory because a package of services is not “like” the individually-tariffed services of which it is composed; wherefore AT & T did not have to show that the difference between the package price and the sum of the piece-part prices is reasonable. The FCC based that decision primarily upon the fact that a Tariff 12 offering results in cost savings both to the customer and to AT & T. On the other hand, the FCC found that one Tariff 12 package is “like” another and that AT & T therefore has the burden of showing that the price differences among the different packages are reasonable.

On review this court reversed and remanded the matter for the FCC’s reconsideration. See MCI Telecommunications Corp. v. FCC, 917 F.2d 30 (D.C.Cir.1990). While a negotiated integrated service package is not prohibited by the Communications Act, see id. at 38, we held that the FCC erred in basing its § 202 discrimination analysis upon the cost and price characteristics of the integrated service package.

The court determined that “likeness” within the meaning of § 202(a) turns upon “functional equivalence”; “pricing differences a fortiori cannot be a basis for finding the services unlike — otherwise, the very discrimination Section 202 attempts to prevent would be the grounds for finding that section inapplicable.” Id. at 39. Because “[m]uch of the FCC’s explanation for its conclusion that integrated services packages are not like the sum of their parts appear[ed] to rest securely upon these forbidden considerations,” the court remanded the matter for the FCC to reconsider the likeness issue “without regard for differentials in cost to the carrier and price to the customer.” Id. at 40.

On remand the Commission invited and received comments from interested parties and again found that a Tariff 12 filing is not “like” its disaggregated service elements. The FCC gave three independent bases for that conclusion. First, the Commission stated that a Tariff 12 offering gives AT & T a degree of provisioning flexibility not available when a customer procures the same services pursuant to their several tariffs. Second, the FCC found that AT & T provides network monitoring functions for its Tariff 12 customers that it does not furnish to customers under individual tariff offerings. Third, the Commission found that the “turnkey” nature of the Tariff 12 offering better enables AT & T to respond to the particular service requirements of the user.

[426]*426The FCC also reversed its earlier finding that one Tariff 12 offering is “like” another for the purpose of § 202, noting that each offering involves diverse features specially negotiated with the user: “Given the nature of the process and the varying needs and perspectives of each customer, it is inevitable that the negotiations involve numerous variables, the number and combination of which will differ from customer to customer.” 6 FCCRcd at 7049. Thus did the Commission conclude that the four Tariff 12 packages comply fully with the Communications Act.

II. Analysis

An inquiry into whether a carrier is discriminating in violation of § 202(a) involves a three-step inquiry: (1) whether the services are “like”; (2) if they are, whether there is a price difference between them; and (3) if there is, whether that difference is reasonable. See MCI, 917 F.2d at 39. Because the FCC held that an integrated service package is not “like” its component services purchased individually, it did not reach the next two questions.

Likeness, as we said, depends upon “functional equivalence.” See Ad Hoc Telecommunications Users Comm. v. FCC, 680 F.2d 790, 795 (D.C.Cir.1982) (likeness inquiry “focuses on whether the services in question are different in any material functional aspect”). In applying this test, the FCC must “look to the nature of the services offered” and ascertain whether customers view them as performing the same functions. MCI, 917 F.2d at 39. If a user perceives the service “as the same with cost considerations being the sole determining criterion,” then the services are “like.” Id.

In Ad Hoc the court reversed the FCC’s holding that AT & T’s Message Telephone Service was “like” a combination of the carrier’s INWATS (800) and OUTWATS services. The court clearly instructed “the Commission [that it] should not blend discrete services in its application of the [functional equivalence] test.” 680 F.2d at 796. The petitioners argue at great length that our decision in Ad Hoc requires the FCC to break each Tariff 12 package into its component services and, they emphasize, “to ask whether the communications services which AT & T provides to its Tariff 12 customers are ‘like’ the communications services which are available from AT & T’s separate tariffs.”

In relying upon Ad Hoc the petitioners assume that a Tariff 12 offering is just a collection of discrete services. AT & T claims, however, and the FCC held, that a Tariff 12 offering is actually a single integrated service that is not “like” a simple amalgam of discrete services. If they are correct, then by virtue of the Ad Hoc decision, which bars the FCC from lumping distinct services together, the Commission may not compare the distinct service offered in a Tariff 12 option to some potpourri of AT & T’s individually-tariffed services. Thus, the correct application of the Ad Hoc decision depends upon how one decides the very issue here under review, viz.

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Bluebook (online)
998 F.2d 1058, 302 U.S. App. D.C. 423, 73 Rad. Reg. 2d (P & F) 845, 1993 U.S. App. LEXIS 20125, Counsel Stack Legal Research, https://law.counselstack.com/opinion/competitive-telecommunications-assn-v-federal-communications-commission-cadc-1993.