Appeals Court Lukewarm on Challenges to FCC Omaha Decision
A 3-judge federal panel indicated Tues. it probably will uphold an FCC decision to lessen Qwest’s unbundling requirements in select Omaha wire centers, despite challenges from competitors and Qwest itself. The U.S. Appeals Court, D.C., panel asked plenty of questions during an oral argument, but appeared skeptical about the answers from attorneys challenging the FCC order. “I think they are going to affirm” the FCC’s order, said an attorney who sat in the audience, as another shook his head in assent.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The FCC’s decision in late 2005 responded to a forbearance petition from Qwest that argued there was so much competition in Omaha from Cox’s telecom services that Qwest no longer needed to meet unbundling and other regulatory requirements. Although the FCC granted part of Qwest’s petition, the company appealed, complaining the FCC didn’t go far enough to ease its regulatory requirements while competitors said the agency shouldn’t have given Qwest any leeway at all.
Attorneys attacked the FCC order Tues. on at least 3 grounds: (1) Qwest said the FCC didn’t meet the Telecom Act’s Sec. 10 deadline for approving forbearance petitions. The agency voted on time but didn’t issue an order explaining the vote until weeks later, said Qwest attorney Lewis Tollin. As a result, Qwest’s entire petition should be considered approved by default, Qwest said. (2) Time Warner Telecom said the FCC didn’t properly measure the amount of competition in Omaha before deciding to ease Qwest’s requirement to unbundle high capacity loops and transport facilities for use by competitors. (3) McLeodUSA questioned a legal point underlying the FCC’s decision -- that the agency was allowed to ease the Telecom Act’s Sec. 251 unbundling requirements because the Act’s requirements had been “fully implemented.”
Judge Thomas Griffith said Qwest’s challenge “sounds like a case this court just decided” in July involving Core Communications. The Core case also raised questions about the FCC’s practice of issuing forbearance orders long after the vote is taken. The court had upheld the FCC in the Core case. “In that case, Core argued the text had to be issued by the deadline,” similar to Qwest’s argument, Griffin said. Qwest’s Tollin said the new case was different because it centered more on definitions.
Griffin then asked why Qwest didn’t seek reconsideration of the forbearance decision. Tollin said forbearance decisions were different from other FCC orders. “They could have filed for reconsideration,” said FCC attorney Joseph Palmore. The FCC might have granted it, he said: “Sometimes that happens.” Palmore also defended the FCC’s practice of issuing orders weeks after votes are taken. It’s “not unreasonable” for the FCC to handle forbearance decisions the same way it handles other orders, he said.
Tollin said the FCC’s delay in issuing an order meant Qwest didn’t even know which 9 wire centers gained forbearance. Palmore told the judges Qwest should have known because the 9 wire centers were cited in an ex parte filing by Cox. Tollin said the ex parte was filed late the night before the vote was taken, giving little time for response. “Didn’t the news release [issued by the FCC after the vote] give you notice of what was done?” asked Judge Brett Kavanaugh. No, said Tollin. “Did you ask?” Kavanaugh inquired. Yes, said Tollin, but FCC officials “said wait until the official release of an order.” Judge Stephen Williams asked if Tollin was saying “much of the data relied on by the FCC came in on the night of the vote.” Yes, said Tollin.
The FCC put too much importance on Cox’s network coverage of residential areas in determining the amount of enterprise competition, which was the focus of the Qwest petition, said Time Warner Telecom attorney David Murray. Cable companies by nature offer “ubiquitous” residential coverage, he said. Griffith and Williams noted, however, that the FCC said it used other factors as well to measure competition. Murray said if the FCC had to “look at actual coverage” from Cox it probably would find there was much less competition in the 9 wire centers than originally thought.
“A remarkable degree of facilities competition” was seen in the 9 Omaha wire centers, said the FCC’s Palmore. “The Commission relied on [many] factors,” he said. In response to McLeodUSA’s challenge to the FCC’s decision that the Telecom Act’s unbundling rules had been “fully implemented,” Palmore said Sec. 10 of the Act doesn’t have a definition of “fully implemented” but other language in the Act indicated Congress expected the rules to be implemented “by promulgating regulations,” which the FCC did.
Stifel Nicolaus analysts said “the most likely scenario” is the court will deny the challenges. But the court “could be convinced by CLEC arguments that the FCC’s business/enterprise UNE relief in nine wire centers should be remanded for further justification,” they said. The case’s resolution “will have an impact on other Bell/ILEC forbearance petitions seeking similar targeted UNE deregulation,” the analysts said.