TR Daily Court Upholds ETC Duty for Price Cap Carriers in Non-CAF Areas
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Friday, April 6, 2018

Court Upholds ETC Duty for Price Cap Carriers in Non-CAF Areas

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit today unanimously upheld FCC orders that left eligible telecommunications carrier (ETC) obligations in place for some areas where carriers are receiving frozen, legacy, voice-only high-cost support and where customers don’t have other options.

“The FCC is shepherding the nation’s communications infrastructure into the Twenty-First Century, even as it seeks to ensure that hard-to-serve areas and individuals retain access at least to basic landline service. The Commission is owed deference as it temporarily holds in place preexisting requirements until the new systems are up and running. And the FCC has provided for sufficient case-by-case relief if and when Petitioners establish a need for it. There is no defect in the FCC’s challenged Orders. We therefore deny the petitions,” Circuit Judge Cornelia T.L. Pillard wrote in the opinion released today in “AT&T, Inc., and CenturyLink, Inc., v. FCC” (cases 15-1038, 16-1002, and 16-1072).

Judge Pillard was joined in the opinion by Chief Judge Merrick P. Garland and Circuit Judge Robert L. Wilkins.

The 2014 and 2015 orders that were under challenge in the case related to a request from the U.S. Telecom Association for the FCC to forbear from requiring price cap carriers to provide voice service in areas in which they do not receive Connect America Fund high-cost support.

In the 2014 order, the Commission declined to reach the issue with regard to about 6% of census blocks served by price cap carriers.

In the 2015 order, the Commission reached the issue but held that USTelecom had not justified forbearance from the voice service obligations in the remaining census blocks during the transition to CAF funding. The FCC also declined to reach the result desired by USTelecom through a rulemaking proceeding. It said that without retaining those service obligations, it could not be sure customers would continue to have access to service during the transition. It said it would revisit the issue after the CAF Phase II and Remote Area Fund auctions and the transition is complete.

In today’s ruling, the court rejected the petitioners’ argument that the 2014 and 2015 orders were “contrary to the Commission’s statutory authority” and that the orders were “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

“We owe particular deference to interim regulatory programs involving some exigency, like the one at issue here. … That added deference reflects the reality that, during a transition period, an agency must make ‘predictive judgments’ and ‘certainty is impossible,’” Judge Pillard wrote.

In response to petitioners’ argument that in the 2015 order, the FCC “impermissibly supplies ex post rationales for the 2014 Order, review of which should be confined to the reasons stated therein,” the court said that the 2014 order only addressed the issues with respect to the areas where it granted forbearance, leaving consideration of issues related to other areas for further consideration in the later order.

“The FCC’s position that the 2014 Order was not its last word on the forbearance petitions is buttressed by the agency’s statutory time window to respond to USTelecom’s forbearance petition, which remained open when the Commission issued its 2014 Order. …. Under Section 10(c) of the Act, the agency has up to one year plus ninety days to respond to a petition for forbearance. … The timing of the 2014 Order, only a few months after the petition’s filing, supports the agency’s characterization of its actions: The agency dealt with part of the petition when it still had ample time — until January 4, 2016 — to deal with the rest of it, all of which it would handle before the deadline,” the court continued. —Lynn Stanton, [email protected]

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