Nuvio Corporation v. Federal Communications Commission and United States of America, Verizon Telephone Companies and at & T Corporation, Intervenors

473 F.3d 302, 374 U.S. App. D.C. 162

• Court: Court of Appeals for the D.C. Circuit
• Decided: January 4, 2007
• Docket: 05-1248, 05-1345, 05-1346, 05-1347
• Status: Published

Opinions

Opinion for the Court filed by Circuit Judge GRIFFITH in which Chief Judge GINSBURG joins and Circuit Judge KAVANAUGH joins with the exception of footnote five.

Concurring opinion filed by Circuit Judge KAVANAUGH.

GRIFFITH, Circuit Judge.

Petitioners, providers of the newly-emerging technology of Internet telephone service, challenge an order of the Federal Communications Commission (“Commission” or “FCC”) that gave them only 120 days to do what is already required of providers of traditional telephone service: transmit 911 calls to a local emergency authority. We deny their consolidated petition for review¹ because we conclude that the Commission adequately considered not only the technical and economic feasibility of the deadline, inquiries made necessary by the bar against arbitrary and capricious decision-making, but also the public safety objectives the Commission is required to achieve.

I.

One of the many dramatic changes the Internet has brought to telecommunications has been the development of interconnected Voice over Internet Protocol (“VoIP”) service, which allows a caller using a broadband Internet connection to place calls to and receive calls from other callers using either VoIP or traditional telephone service. E911 Requirements for IP-Enabled Service Providers, First Report and Order and Notice of Proposed Rulemaking, 20 F.C.C.R. 10245, 10246 n. 1, 2005 WL 1323217 (2005) (“Order”). From a caller’s perspective, interconnected VoIP service is, for the most part, similar to traditional telephone service, and its users reasonably expect it to function the same. But two additional capabilities of VoIP service undermine those expectations when callers try to use 911 emergency services. VoIP service allows callers to choose what are called “non-native” area codes. For example, a customer living in the District of Columbia can use an area code from anywhere in the country. Some interconnected VoIP providers (“IVPs”) also offer “nomadic” service, which allows a VoIP telephone call to be made and received from wherever the user can establish a broadband connection. (By contrast, “fixed” VoIP telephone service can only be used from a dedicated, fixed connection — typically in a home or office.) As attractive as these two features may be, each makes it difficult for IVPs to provide the local callers the 911 emergency service they expect and upon which they rely. Routers designed to direct 911 calls cannot recognize non-native area codes, and unlike traditional and wireless telephone service, there are no means yet available to easily determine the location of a caller using interconnected VoIP service. IVPs, which were not required to do otherwise, failed to use dedicated trunks (communications paths connecting two switching systems, used to establish an end-to-end connection) set aside for routing calls to a local emergency call center (known as a public safety answering point or “PSAP”) and instead routed 911 calls to administrative lines that had not been designed and were not staffed to handle emergency calls. Id. at 10246 ¶ 1 n. 2 (documenting various instances in which consumers were unable fi> contact emergency help after dialing 911 using an interconnected VoIP service). The resulting tragedies gave rise to the Order at issue.

The Commission, which had previously been reluctant to regulate this nascent industry for fear of hindering its development, see, e.g., IP-Enabled, Services, Notice of Proposed Rulemaking, 19 F.C.C.R. 4863, 4864 ¶ 1, 2004 WL 439260 (2004) (“Notice of Proposed Rulemaking ” or “NPRM ”) (noting that IP-enabled services had developed “in an environment that is free of many of the regulatory obligations applied to traditional telecommunication services”), decided that an immediate solution was required to “discharge[] the Commission’s statutory obligation to promote an effective nationwide 911/E911 emergency access system,” Order, 20 F.C.C.R. at 10266 ¶36.² The Commission thus ordered that

within 120 days of the effective date of this Order,³ an interconnected VoIP provider must transmit all 911 calls, as well as a call back number and the caller’s “Registered Location” for each call, to the PSAP, designated statewide default answering point, or appropriate local emergency authority that serves the caller’s Registered Location.

Id. ¶ 37 (citations omitted).

In effect, the Order requires that all IVPs, including those that offer nomadic service using non-native area codes, ensure that their users are able to reach local emergency services when making 911 calls. To do so, IVPs must route all 911 calls using the technology known as Automatic Number Identification (“ANI”) or pseudo-ANI, if necessary. ANI “identifies the calling party and may be used as a call back number.” 47 C.F.R. § 20.3. A pseudo-ANI is “[a] number, consisting of the same number of digits as ANI, that is not a North American Numbering Plan telephone directory number and may be used in place of an ANI to convey special meaning.” Id. Because local selective routers are not capable of delivering non-native numbers to a local PSAP, pseudo-ANIs are used to temporarily mask the true number with a local number to facilitate processing by the local selective router for delivery to the PSAP. See id. The Commission was less stringent in requiring the use of Automatic Location Information (ALI), which provides an emergency dispatcher with the geographic location of the caller, because it is not yet technologically feasible to detect automatically the location of nomadic VoIP callers. The Order only requires, therefore, that IVPs ensure that 911 calls are routed to the registered and not the actual location of each 911 caller. See Order, 20 F.C.C.R. at 10271 ¶46. IVPs, however, must provide a way for consumers to update their registered locations in a timely fashion. See id. These interconnected IVP 911 calls must also be routed through the Wireline E911 network.⁴ See id. at 10269 ¶ 40.

The Commission did not dictate a specific manner for IVPs to provide E911 access. Instead, the Commission noted that IVPs could satisfy these requirements by interconnecting directly with the E911 network through incumbent local exchange carriers (“ILECs”), see id. at 10268 ¶ 39, by interconnecting indirectly through a third party, see id. at 10267 ¶ 38, or by any other solution that results in E911 access, see id. Finally, the Order requires that interconnected VoIP providers notify every customer, new and existing, about “the circumstances under which E911 service may not be available through the interconnected VoIP service or may be in some way limited by comparison to traditional E911 service.” Id. at 10272 ¶ 48.

II.

Under the Administrative Procedure Act, which governs our review of this challenge, petitioners’ burden is to show that the Order is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” see 5 U.S.C. § 706(2)(A). They rely upon three arguments to meet that burden. First, petitioners assert that the Order’s 120-day deadline for IVPs to provide E911 service to their users of nomadic, non-native VoIP service is an unexplained departure from the Commission’s precedent made without adequate regard to economic and technological obstacles. Petitioners also fault the Order for requiring that IVPs connect to the Wireline E911 network but failing to impose a corresponding duty on ILECs to permit this connection. Finally, petitioners contend that the Commission did not give adequate notice of the substance of the Order. We consider these arguments in turn and find each wanting.

A. The FCC decision to require all IVPs — including providers of nomadic, non-native VoIP service — to provide E911 access within 120 days.

Petitioners assert that the Commission disregarded record evidence that the 120-day deadline was not feasible because there was no demonstrated way to overcome the technical and practical obstacles to implement E911 for providers of nomadic, non-native VoIP service. But this argument fails in the face of substantial contrary record evidence that the nation’s largest interconnected VoIP provider had already procured a technical solution to meet the deadline.⁵ The Commission noted that Intrado, a third-party competitive local exchange carrier, was already prepared to offer a technological solution that met the Order’s requirements, even for providers of nomadic, non-native service. Order, 20 F.C.C.R. at 10267 ¶ 38. At the time the Order was promulgated and in advance of the 120-day deadline, Intrado was already offering a service that “enables the delivery of a VoIP subscribers [sic] address and call back number to the most geographically relevant [PSAP] ..., thereby accommodating the nomadic capability inherent in their VoIP service.” Ex Parte Letter from M. Boyd, Intrado, to M.H. Dortch, FCC, WC Docket No. 04-36 (Apr. 25, 2005); see also Ex Parte Letter from M. Boyd, Intrado, to M.H. Dortch, FCC, WC Docket No. 04-36 (Apr. 19, 2005). Vonage, the nation’s largest VoIP provider, agreed with Verizon, the ILEC controlling the Wireline E911 network in its territory, that it would use Intrado’s service “to deliver both caller’s location and call back number to emergency services personnel for 911 calls placed throughout Verizon’s [28-state] territory,” and would do so by November 4, before the November 28, 2005 deadline. Ex Parte Letter from W.B. Wilhelm, Vonage, to K.J. Martin, FCC, WC Docket No. 04-36 (May 9, 2005).

The Commission also relied on IVP trials that demonstrated E911 access was possible for providers of nomadic, nonnative VoIP service. For example, Qwest and Vonage conducted a test of VoIP E911 access in King County, Washington. This test included both an experimental means of PSTN access and a messaging component used to deliver the calling party’s location automatically. Petitioners’ focus on the failed experimental access component ignores the successful messaging component of the trial that demonstrated VoIP E911 access was in fact possible. In recounting the results of this trial, Qwest noted that, rather than using this failed experimental access, an IVP could provide E911 service using a combination of Qwest’s tarriffed access to the Wireline E911 network and third party support services.⁶ Ex Parte Letter from C. O’Con-nell, Qwest, to M.H. Dortch, FCC, WC Docket No. 04-36 (Apr. 12, 2005). Vonage had also successfully tested E911 access for nomadic VoIP in Newport, Rhode Island. See Ex Parte Letter from W.B. Wilhelm, Vonage, to M.H. Dortch, FCC, WC Docket No. 04-36 (May 9, 2005). Petitioners seize upon two elements of this Newport test to argue that it is an unreliable basis for the Order. First, there is only one PSAP in small Rhode Island and so this test could not address the critical issue of routing calls to the wrong PSAP. Second, the state and not an ILEC owns the selective router and so there is no issue of providing access to the E911 Wire-line network. Petitioners have no doubt identified elements in this test that provide some grounds to distinguish them from what the Order demands, but the general success of the Rhode Island test, combined with the substantial deference we owe the FCC’s predictive judgments, overcomes the petitioners’ objections. See, e.g., Int’l Ladies’ Garment Workers’ Union v. Donovan, 722 F.2d 795, 821 (D.C.Cir.l983)(“Predictive judgments about areas that are within the agency’s field of discretion and expertise” are entitled to “particularly deferential” treatment.); see also Charter Commc’ns, Inc. v. FCC, 460 F.3d 31, 44 (D.C.Cir.2006) (“That is a predictive judgment that the FCC is entitled to make and to which we defer.”).

Petitioners’ argument that the submission of the National Emergency Number Association (“NENA”) undermines the Commission’s conclusion that the 120-day deadline was reasonable also fails to account for the deference we give to an agency’s predictive judgments. NENA opined that “the bulk of national access to [E911]” could be reached within 120 days, but noted that “[f]ull national access” could take “another 4-6 months.” Ex Parte Letter from J.R. Hobson, NENA, to M. Dortch, FCC, WC Docket No. 04-36 (May 11, 2005) (emphasis added). The Commission was acting well within its authority to use its expertise to make predictive judgments when it concluded that if the “bulk of national access” could be achieved within 120 days, it was reasonable' to use that time period.

We must also address the petitioners’ claim that the Commission erred by failing to distinguish between the technological obstacles faced by nomadic or non-native VoIP providers and those faced by fixed, native providers. They allege the Commission based the Order on the technological capabilities associated with fixed VoIP service and overlooked the unique challenges posed by nomadic, non-native VoIP service. But the Commission in fact considered the unique technological challenges of nomadic VoIP, see Order, 20 F.C.C.R. at 10259 ¶ 25 (noting that “certain [nomadic or portable] VoIP services pose significant E911 implementation challenges”), and taking stock of those challenges, did not require that IVPs determine the actual location of nomadic VoIP users because it “is not always technologically feasible for providers of interconnected VoIP service to automatically determine the location of their end users without end users’ active cooperation,” id. at 10271 ¶46. Instead, the Commission determined that IVPs must provide only the registered location of the nomadic VoIP user making a 911 call, see id., and called for comment on the feasibility of automatically determining the geographic location of nomadic VoIP users, see id. at 10276-77 ¶¶ 56-57.

Petitioners’ argument that the Commission overlooked the economic cost of implementing the Order’s 120-day deadline highlights that our task under the arbitrary or capricious standard is to determine only whether an agency’s decision “ ‘was based on a consideration of the relevant factors and whether there has been a clear error of judgment,’ ” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983) (quoting Bowman Transp., Inc. v. Ark-Best Freight System, Inc., 419 U.S. 281, 285, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974)). Petitioners overlook a countervailing interest that the Commission must consider and we must respect — the threat to public safety. When, as is the case with the FCC, Congress has given an agency the responsibility to regulate a market such as the telecommunications industry that it has repeatedly deemed important to protecting public safety, the agency’s judgments about the economic cost of its regulations must take into account its duty to protect the public. The Commission is required to consider public safety by both its enabling act, see Communications Act of 1934 § 1, 47 U.S.C. § 151 (“so as to make available, so far as possible ... [a] world-wide wire and radio communication service with adequate facilities at reasonable charges ... for the purpose of promoting safety of life and property through the use of tvire and radio commionica-tions”) (emphasis added), and the Wireless Communication and Public Safety Act of 1999 § 3, 47 U.S.C. § 615 (“shall encourage and support efforts by States to deploy comprehensive end-to-end emergency communications infrastructure and programs, based on coordinated statewide plans, including seamless, ubiquitous, reliable wireless telecommunications networks and enhanced wireless 9-1-1 service”). The Commission here weighed public safety against the economic cost of compliance with the Order and found that, “[w]hile 120 days is an aggressively short amount of time in which to comply with these requirements, the threat to public safety if we delay further is too great and demands near immediate action.” Order, 20 F.C.C.R. at 10266-67 ¶ 37 (emphasis added).

Because the Commission has reasonably determined that nomadic, non-native VoIP E911 access is technologically feasible, any argument about the time period required for implementation is nothing more than a quarrel over relative costs and benefits. In this case, the Commission has weighed the cost of an “aggressive” implementation scheme — a 120-day deadline— against the cost in human lives, and found in favor of public safety. See id. at 10266 ¶ 36 (“We find that this requirement most appropriately discharges the Commission’s statutory obligation to promote an effective nationwide 911/E911 emergency access system by recognizing the needs of the public safety community to get call back and location information and balancing those needs against existing technological limitations of interconnected VoIP providers.”); cf. Public Citizen v. Au-chter, 702 F.2d 1150, 1157 (D.C.Cir.1983) (“Delays that might be altogether reasonable in the sphere of economic regulations are less tolerable when human lives are at stake.”). We may not disturb its determination where, as here, the Commission has considered relevant factors and has articulated a reasoned basis for its conclusion. See State Farm, 463 U.S. at 42-43, 103 S.Ct. 2856. When viewed in this light, we cannot agree that the 120-day deadline is arbitrary or capricious.

Petitioners’ final challenge to the 120-day deadline is that it represents an unexplained departure from long-standing precedent. The precedent, so the argument goes, was established when the FCC gave more time for wireless and satellite phones and other new technologies to implement 911 capabilities than the aggressive deadline it has imposed on the new VoIP telephone service market. Petitioners are right that an agency departing from precedent “must provide a principled explanation for its change of direction.” Nat’l Black Media Coalition v. FCC, 775 F.2d 342, 355 (D.C.Cir.1985); see also Air-mark Coip. v. FAA, 758 F.2d 685, 692 (D.C.Cir.1985). But surely different technologies may reasonably bear different regulatory burdens. It is not apparent to us that the regulation of satellite or wireless phones is clear precedent for the regulation of information technology service providers. No doubt each involves telephone communications, but the differences between satellite and wireless phone service on the one hand and VoIP service on the other are such that the Commission has previously refused to classify IP-enabled services as telecommunications carriers. We give deference to agency expertise used to distinguish its prior cases from present controversies. See PPL Montana, LLC v. Surface Transp. Bd., 437 F.3d 1240, 1247 (D.C.Cir.2006) (“[T]he [agency’s] attempt to distinguish its prior cases, while terse, is entitled to deference.” (quoting Inland Lakes Mgmt., Inc. v. NLRB, 987 F.2d 799, 805 (D.C.Cir.1993))). Even if the Commission’s regulatory approach to these other telecommunications services provided a precedent for VoIP service, the Commission provided a reasoned explanation for adopting a different approach by expressly noting that “the record indicates that the network components that have been developed to make wireless E911 possible can also be used for VoIP E911, which should make the implementation process simpler and far less expensive than the initial upgrades necessary for wireless E911.” Order, 20 F.C.C.R. at 10274 ¶ 53; see also Ex Parte Letter from W.B. Wilhelm, Vonage, to K.J. Martin, FCC, WC Docket No. 04-36 (May 9, 2005) (stating that Vonage “does not anticipate that it will face the same issues that have made [wireless] E-9-1-1 such a daunting challenge”).

Because petitioners acknowledge that some type of E911 regulation is necessary, see Petitioners’ Br. at 19, this petition for review is, in essence, a challenge only to where the FCC has drawn the regulatory “line,” and we have previously and repeatedly given the Commission “wide discretion to determine where to draw administrative lines.” AT & T Corp. v. FCC, 220 F.3d 607, 627 (D.C.Cir.2000). Based on the record evidence, the demonstrated safety concerns, and our deference to the Commission’s predictive judgments, we conclude that the Order’s 120-day deadline was neither arbitrary nor capricious.

B. The FCC requirement for TVP connectivity to the Wireline E911 network without a corresponding obligation on ILECs.

The Order requires IVPs to utilize the Wireline E911 network generally owned by the ILECs, but it failed to impose a duty on ILECs to provide that access. Petitioners argue that this different treatment of the ILECS was error. We find no error for the simple reason that the record contained evidence that major ILECs were cooperating with nomadic IVPs and “increasingly offering E911 solutions that allow VoIP providers to interconnect directly to the Wireline E911 network through tariff, contract, or a combination thereof.” Order, 20 F.C.C.R. at 10268 ¶ 39. There is record evidence, for example, that Qwest, BellSouth, and Verizon were cooperating with IVPs to provide access to the Wireline E911 network. See, e.g., Ex Parte Letter from C. O’Connell, Qwest, to M.H. Dortch, FCC, WC Docket No. 04-36 (Apr. 12, 2005); Ex Parte Letter from B.L. Ross, BellSouth, to M.H. Dortch, FCC, WC Docket No. 04-36 (May 12, 2005); Ex Parte Letter from K. Grillo, Verizon, to M.H. Dortch, FCC, WC Docket No. 04-36 (May 11, 2005). Although there is some evidence to suggest that a few ILECs were not always cooperative, see Petitioners’ Reply Br. at 10 n. 15, there was ample evidence of significant and increasing ILEC cooperation with IVPs and, in the Commission’s view, that cooperation removed any need to impose a duty upon ILECs to permit connectivity. That is a judgment we wisely leave alone as “predictions regarding the actions of regulated entities are precisely the type of policy judgments that courts routinely and quite correctly leave to administrative agencies,” Public Util. Comm’n of State of Cal. v. FERC, 24 F.3d 275, 281 (D.C.Cir. 1994).

C. The FCC’s notice and comment procedures.

Petitioners’ final argument faults the Commission because the Notice of Proposed Rulemaking that led to the Order lacked proposed rules or even tentative conclusions. The APA requires notice of “either the terms or substance of the proposed rale or a description of the subjects and issues involved.” 5 U.S.C. § 553(b)(3). “Since the public is generally entitled to submit their views and relevant data on any proposals, the notice must be sufficient to fairly apprise interested parties of the issues involved, but it need not specify every precise proposal which [the agency] may ultimately adopt as a rule.” Action for Children’s Television v. FCC, 564 F.2d 458, 470 (D.C.Cir.1977) (internal quotation marks and citations omitted). The Commission fairly apprised the parties and the public of the issues covered by the Order. In our view, the Commission notified the parties of the purpose, see NPRM, 19 F.C.C.R. at 4900 ¶ 56 (“how best to achieve our policy objectives for ensuring the availability of 911 and E911 capability”), the extent, see id. (“the effectiveness of alternatives to direct regulation”), the form, see id. at 4901 ¶ 56 (“technological flexibility so that our rules allow for the development of new and innovative technologies”), and the time frame, see id. ¶ 57 (“time frame in which we should consider 911 and E911 regulatory issues in the IP context”) of any potential regulation. The NPRM gave “interested parties a reasonable opportunity ... to present relevant information” on the central issues. WJG Tel. Co. v. FCC, 675 F.2d 386, 389 (D.C.Cir.1982) (internal quotation marks and citations omitted). Indeed, many of the parties submitted comments on all aspects of VoIP access.

III.

For the foregoing reasons, the petition for review is denied.

So ordered.

1 . Nuvio Corporation; Lightyear Network Solutions, LLC; Primus Telecommunications, Inc.; Lingo, Inc.; and i2 Telecom International, Inc. (collectively "petitioners”) have all petitioned for review.

2 .E911 is a more advanced version of the traditional 911 system, which merely routes an emergency call to the local PSAP, because it provides additional information about the caller:

E911 systems route 911 calls through the use of a Selective Router to a geographically appropriate PSAP based on the caller’s location. E911 also provides the call taker with the caller's call back number, referred to as Automatic Numbering Information (ANI), and, in many cases, location information — a capability referred to as Automatic Location Identification (ALI). Order, 20 F.C.C.R. at 10251 ¶ 13 (citations omitted).

3 . This Order became effective on July 29, 2005, see 70 Fed.Reg. 43,323, 43,323 (July 27, 2005) (to be codified at 47 C.F.R. § 9.5), thereby requiring compliance by November 28, 2005, id.

4 . “The core of the existing wireline E911 network is a dedicated, redundant, highly reliable wireline network (Wireline E911 Network), which is interconnected with but largely separate from the PSTN [public switched telephone network].” Order, 20 F.C.C.R. at 10251 ¶ 14. This network is generally implemented and operated by incumbent local exchange carriers (''ILECs”). Id.

5 . Our concurring colleague reads the Order to suggest that "the 911 requirement would be justified even if VoIP providers could not feasibly meet the 120-day deadline.” Concurring Op. at 310-11. But he quotes no language in the Order stating that, and we find none suggesting that. The Order makes reference to the Commission's statutory duty to consider safety, a factor that is an important element in our analysis, but we do not think these references can support the suggestion that the Commission has ever justified the 120-day deadline on the basis of any authority to ban VoIP service outright. We note that if such authority exists, the Commission has not clearly relied on it in its briefs or at oral argument. In fact, when asked to clarify whether the deadline was appropriate even if it was not feasible, counsel for the Commission replied, "No. No, Your Honor. The Commission believed that the deadline was aggressive, but that it was something that could be met, and it recognized the need to try to force these parties to get going, to get moving,” Transcript of Oral Argument at 19, Nuvio Corp. v. FCC, No. 05-1248 (D.C.Cir. Sep.12, 2006). Because we "cannot sustain [the Commission's] action on some other basis the [Commission] did not mention,” Point Park Univ. v. NLRB, 457 F.3d 42, 50 (D.C.Cir. 2006) (citing SEC v. Chenery Corp., 332 U.S. 194, 196-97, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947)), we need not consider whether safety concerns alone would justify the deadline.

6 . To provide E911 connectivity for its 'nomadic'' VoIP users, the VoIP provider can purchase the dedicated access component in the form of Qwest’s tarriffed E911 service and, in addition, they can purchase the E2 interface (the messaging component) from a VoIP Positioning Center provider. This is consistent with the NENA 12 standard.

Ex Parte Letter from C. O’Connell, Qwest, to M.H. Dortch, FCC, WC Docket No. 04-36 (Apr. 12, 2005).