SBC Communications, Inc. v. Federal Communications Commission

981 F. Supp. 996, 10 Communications Reg. (P&F) 571, 1997 U.S. Dist. LEXIS 20725
CourtDistrict Court, N.D. Texas
DecidedDecember 31, 1997
Docket7:97-cv-00163
StatusPublished
Cited by6 cases

This text of 981 F. Supp. 996 (SBC Communications, Inc. v. Federal Communications Commission) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
SBC Communications, Inc. v. Federal Communications Commission, 981 F. Supp. 996, 10 Communications Reg. (P&F) 571, 1997 U.S. Dist. LEXIS 20725 (N.D. Tex. 1997).

Opinion

MEMORANDUM OPINION AND ORDER

KENDALL, District Judge.

• This Court has been asked to decide the constitutionality of certain provisions of the Telecommunications Act of 1996 (the “Act”). Before the Court is plaintiffs’ Motion for Summary Judgment and defendants’ Cross Motion for Summary Judgment. Plaintiffs 1 attack the constitutionality of Subtitle B of Title I of the Telecommunications Act of *1000 1996, codified at 47 U.S.C. §§ 271, 272, 273, 274, and 275 and entitled “Part III — Special Provisions Concerning Bell Operating Companies,” on the grounds that it is (a) a violation of principles of separation of powers, (b) a bill of attainder and (c) a violation of the equal protection clause. SBC also bases its constitutional challenge of § 274 on the First Amendment to the United States Constitution.

BACKGROUND

This case was initiated by eight Bell operating companies (“BOCs”) so named and categorized because of their previous affiliation with American Telephone & Telegraph Company (“AT & T”) prior to the court ordered break up of AT & T. The challenged statutes and this case have their genesis in the antitrust lawsuit brought by the United States against AT & T in 1974. This antitrust lawsuit was settled in 1982 when AT & T, an intervening defendant in this case, entered into a consent decree with the United States, the defendant here. A review of the history of that court action is appropriate.

In 1974, the Justice Department brought an antitrust lawsuit against AT & T alleging that AT & T had violated the Sherman Act by using its market power to bar entry into markets by other corporations. The lawsuit was settled through what became known as the Modified Final Judgment (the “MFJ”), which also became known as the AT & T Consent Decree. The AT & T Consent Decree required AT & T to divest itself of 24 BOCs by 1984.

The AT & T Consent Decree imposed certain restrictions on the BOCs. For decades the BOCs were under the control of AT & T until the breakup wrought by the consent decree. In their territory what are now the BOCs often had state granted franchises to provide local exchange service. The consent decree maintained the monopoly status as to local exchange service, but barred certain activities that now make their way into the “Special Provisions” found in §§ 271-275. The 1996 Act, however, took away the state sanctioned monopoly protection for local exchange service, opened all local exchange carriers to competition, but by name singled out-the BOCs so as to prevent them from engaging in long distance service, electronic publishing, and providing alarm services. In the consent decree, the BOCs were prohibited from providing telephone service between a point located inside a certain exchange area and any point outside that exchange area, which is referred to as inter local access and transport area or interLATA. The BOCs also were prohibited from providing information services, any non-telecommunications services, and from manufacturing telecommunications equipment. The prohibited information services included electronic publishing and alarm monitoring services. In 1991, the restrictions on information services were overturned and the BOCs were allowed to provide such services as electronic publishing and alarm monitoring. 2 The consent decree and its accompanying restrictions play a very important role in this case because they provide the foundation for the FCC’s argument that the restrictions challenged by the plaintiffs do no more than replace the restrictions imposed by the AT & T Consent Decree. The relevancy, and imperfection, of the FCC’s argument is revealed through further analysis of the parties’ arguments and the challenged statutes.

CHALLENGED PROVISIONS

On February 8,1996, the President signed the Telecommunications Act of 1996 into law. Section 601(a)(1) of the Act expressly provided that the restrictions imposed by the AT & T Consent Decree would be replaced by the restrictions and obligations of the Act. The Act serves to open local exchanges to competition by imposing various obligations on local exchange carriers including the requirement that incumbent local exchange carriers assist competitors desiring to use their networks, and allow them to do so. Section 251(b) of the Act places numerous and onerous duties on all local exchange carriers designed to stimulate competition in and simplify entry into the local markets by the competitors of all local exchange carriers. Section 252 provides the guidelines for achieving certain of *1001 the duties imposed on the local exchange carriers by § 251.

Local telephone companies such as the plaintiffs are commonly referred to as local exchange carriers. Local exchange carriers provide various services including local telephone calls, short-haul calls, operator services, and advanced features such as call waiting, call forwarding and voice mail. Additionally, they provide exchange access services, which enable long distance carriers to use the local exchange carriers’ facilities to originate and terminate long distance calls to end users.

Plaintiffs are not the only local exchange carriers. Hundreds of other local exchange carriers operate in the United States. GTE Corporation, Sprint Corporation, Frontier Corporation, Cincinnati Bell Telephone Company, and Southern New England Telephone Company are a few examples of significant sized local exchange carriers completely unaffiliated with the Bell operating companies.

The effect of the Telecommunications Act of 1996 is to expose incumbent local exchange carriers to competition through the elimination of any previous barriers to competition created by local laws or naturally arising from the local exchange carrier’s exclusive control over their property. These restrictions are not the subject of the constitutional challenge brought by the plaintiffs in this Court. Instead, the plaintiffs are challenging the restrictions found in §§ 271-275 of the Act entitled “Special Provisions Concerning Bell Operating Companies.” Plaintiffs argue it is not lawful or fair to take away the state sanctioned franchised protected status for local service while at the same time continuing to not allow only them to compete in other telephone business, particularly long distance. They contend that the proverbial carrot has been removed but they are still receiving the stick.

The Special Provisions found in §§ 271-275 apply solely to a BOC or any affiliate of a BOC. That term is defined in § 153(4) as twenty specific corporate entities 3 and their successors or assigns that provide wireline telephone exchange service. 47 U.S.C. § 153(4).

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Bluebook (online)
981 F. Supp. 996, 10 Communications Reg. (P&F) 571, 1997 U.S. Dist. LEXIS 20725, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sbc-communications-inc-v-federal-communications-commission-txnd-1997.