Appeals Court Questions Special Access Mandamus Petition
A panel of federal appeals court judges indicated Thurs. that timing concerns might prevent them from issuing a mandamus order involving the FCC’s special- access policy. During oral argument, U.S. Appeals Court, D.C., judges repeatedly noted that a petition seeking an update of the agency’s special-access pricing flexibility order was filed only 2 years ago. Not enough time may have passed to require the court to intervene and force action, the judges said. AT&T, CompTel, the eCommerce & Telecom Users Group and the Information Technology Assn. have asked the court to issue a mandamus order forcing the FCC to act on the petition.
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FCC attorney John Ingle told the judges the Commission is in the midst of acting on the petition. Ingle said an order is “circulating” among FCC commissioners and revealed the FCC had asked the court 2 weeks ago to defer action on the mandamus request because of the impending Commission decision. Ingle said the FCC promised to give the court a status report on the vote by Dec. 1 and said the agency could make a recommendation then whether the mandamus petition should go forward or be considered moot. An analyst sitting in the audience said the court didn’t need to issue an order because it already had pressured the agency into acting more quickly by calling for briefs and scheduling the oral argument.
At issue is the FCC’s 1999 decision to give pricing flexibility to Bells for special-access services in metropolitan areas where they could prove certain levels, or “thresholds,” of competition existed. The order was approved in 1999, and AT&T and the other parties filed a petition in 2002 asking the agency to change it. The petitioners said the order wasn’t working the way the FCC had expected. They said the agency had expected prices to go down and competition to rise. Instead, the Bells raised their rates substantially as soon as they got pricing flexibility, petitioners argued, and competition didn’t grow as much as expected. Audience members said one of the most compelling positions by AT&T attorney David Carpenter during the oral argument was his statement that the FCC included language in the TRO indicating competition wasn’t yet working in special access markets. That language appeared to contradict the agency’s assumption in the special-access order that competition would develop, he said.
Carpenter told the court that by failing to act more quickly to reconsider the flexibility rules, the FCC was permitting $5 billion in annual overcharges by the Bells, with “a $12 billion effect on the national economy.” He said the original order was based on the FCC’s “predictions” of competitive growth “that proved to be false.” The idea was that special-access customers would have “competitive alternatives,” and that “turned out to be wrong,” Carpenter said. In response to Judge David Sentelle’s question of whether the prediction just hasn’t come true “yet,” Carpenter said it wouldn’t happen “in my lifetime.” Carpenter said “the point is the magnitude of errors. If there is no competitive or regulatory containment, incumbents can raise rates at will.” Carpenter urged the court to issue a mandamus order “tomorrow or soon” and give the FCC 30 days to act.
Sentelle and Judges Douglas Ginsburg and Raymond Randolph frequently noted that only 2 years had passed since the petition went to the FCC, and they asked Carpenter how that compared to other mandamus orders issued by courts. Ingle told the judges that the agency has been moving at a reasonable pace on the petition. After receiving the petition in Aug. 2002, the agency called for comments by the end of 2002 and replies in early 2003, he said. The FCC gets a lot of petitions for rulemaking, he said. The staff looks at all of them and determines which ones are appropriate for consideration, he said. The agency “has an obligation to make a judgment if a rulemaking is valid” but “doesn’t have an obligation to do [a rulemaking] over in a very short time,” he said. Ginsburg told Ingle that if the court decides to defer action on the mandate request it will do so soon.
Geoffrey Klineberg, argued on behalf of the Bells that the pricing flexibility order is working and noted Verizon, for one, has seen a major decline in special access revenues. “There is no emergency here and the FCC should deny the petition,” Klineberg said: “It’s been less than 5 years since the FCC initiated the modest reforms.” Verizon told the FCC earlier this week in an ex parte filing that its special-access prices, adjusted for inflation, fell 13.8% annually 1996-2000, before pricing flexibility was granted, and by 22.2% annually in 2001- 2003, once flexibility became available. “One of the success stories for the FCC in recent years has been its pro-competitive deregulation of special access prices,” the filing said. The filing related to the FCC’s consideration of the AT&T rulemaking petition.