Cases by Issue - Telephone Company Regulation

Verizon Communications v. FCC

Mon, 05 Jan 2009 17:45:55 +0000

Case Basics

Docket No.

00-511

Petitioner

Verizon Communications

Respondent

FCC

Consolidation

No. 00-555

No. 00-587

No. 00-590

No. 00-602

Heard By

Rehnquist Court (1994-2005)

Decided By

Rehnquist Court (1994-2005)

Opinion

535 U.S. 467 (2002)

Argued

Wednesday, October 10, 2001

Decided

Monday, May 13, 2002

Advocates

William P. Barr (Argued the cause for the petitioners in 00-511)

Donald B. Verrilli, Jr. (Argued the cause for the petitioners in 00-555, 00-587, and 00-590)

Theodore B. Olson (Department of Justice, argued the cause for the federal petitioners)

Facts of the Case

The Telecommunications Act of 1996 entitles new companies seeking to enter local telephone service markets to lease elements of the incumbent carriers' local exchange networks and directs the Federal Communications Commission (FCC) to prescribe methods for state utility commissions to use in setting rates for the sharing of those elements. The FCC provided for the rates to be set based upon the forward-looking economic cost of an element as the sum of the total element long-run incremental cost of the element (TELRIC) and a reasonable allocation of forward-looking common costs incurred in providing a group of elements that cannot be attributed directly to individual elements and specified that the TELRIC should be measured based on the use of the most efficient telecommunications technology currently available and the lowest cost network configuration. FCC regulations also contain combination rules, requiring an incumbent to perform the functions necessary to combine network elements for an entrant, unless the combination is not technically feasible. In five separate cases, a range of parties challenged the FCC regulations. Ultimately, the Court of Appeals held that the use of the TELRIC methodology was foreclosed because the Act plainly required rates based on the actual cost of providing the network element and invalidated certain combination rules.

Question

Does the Telecommunications Act of 1996 authorize the Federal Communications Commission to require state utility commissions to set the rates charged by the incumbents for leased elements on a forward-looking basis untied to the incumbents' investment? Does the Act require incumbents to combine such elements at the entrants' request when they lease them to the entrants?

Conclusion

Decision: 6 votes for FCC, 2 vote(s) against
Legal provision: 47 U.S.C. 251

Yes and yes. In an opinion delivered by Justice David H. Souter, the Court held that the FCC can require state commissions to set the rates charged by incumbents for leased elements on a forward-looking basis untied to the incumbents' investment and that the FCC can require incumbents to combine elements of their networks at the request of entrants. Because the incumbents did not meet their burden of showing unreasonableness to defeat the deference due the FCC, the Court reversed the Court of Appeals's ruling insofar as it invalidated TELRIC. "The job of judges is to ask whether the Commission made choices reasonably within the pale of statutory possibility in deciding what and how items must be leased and the way to set rates for leasing them. The FCC's pricing and additional combination rules survive that scrutiny," wrote Justice Souter, rejecting arguments that the FCC did not chose the best way to set rates. Justice Sandra Day O'Connor did not participate in this case.

AT&T v. Iowa Utilities Board

Mon, 05 Jan 2009 16:25:17 +0000

Case Basics

Docket No.

97-826

Petitioner

AT&T

Respondent

Iowa Utilities Board

Consolidation

No. 97-829

No. 97-831

No. 97-830

No. 97-1075

No. 97-1087

No. 97-1099

No. 97-1141

Heard By

Rehnquist Court (1994-2005)

Decided By

Rehnquist Court (1994-2005)

Opinion

525 U.S. 366 (1999)

Argued

Tuesday, October 13, 1998

Decided

Monday, January 25, 1999

Advocates

Bruce J. Ennis, Jr. (Argued the cause for the private petitioners)

David W. Carpenter (Argued the cause for the private cross-respondents/petitioners)

William P. Barr (Argued the cause for the cross-petitioners/respondents)

Diane Munns (Argued the cause for the State Commission respondents)

Laurence H. Tribe (Argued the cause for the private respondents)

Seth P. Waxman (Department of Justice, argued the cause for the federal cross-respondents/petitioners)

Facts of the Case

The 1996 Telecommunications Act (Act) fundamentally altered local telephone markets by ending the monopolies traditionally given to local exchange carriers (LECs) by states and subjecting LECs to a host of duties meant to facilitate market entry. Among these was the imposition of an obligation on incumbent LECs to share their networks with competitors. Following the Federal Communication Commission's (FCC) issuance of regulations implementing the Act's guidelines, AT&T; challenged their constitutionality on behalf of itself and other existing phone service providers.

Question

Does the Federal Communication Commission have authority to implement the competition-inducing guidelines set out in the 1996 Telecommunications Act?

Conclusion

Decision: 7 votes for AT&T, 1 vote(s) against
Legal provision: Communication Act of 1934

Yes. In a complicated split opinion, the Court held that the FCC has rulemaking authority to uphold those provision of the Act in question. Despite the local nature of some of the LECs involved, the Court emphasized their interconnectivity with regional and national carriers. As such, the FCC could also reach local LEC markets and regulate their competitive business practices. Such regulatory authority would include the ability to tell LECs what portions of their services they had to share with new competitors, allow new competitors to use local networks without having to own them, and forbid incumbent LECs from separating their network elements before leasing them to competitors.

MCI Telecommunications Corp. v. American Telephone & Telegraph Co.

Mon, 05 Jan 2009 16:23:55 +0000

Case Basics

Docket No.

93-356

Petitioner

MCI Telecommunications Corp.

Petitioner Type

Petitioner

Respondent

American Telephone & Telegraph Co.

Respondent Type

Respondent

Consolidation

United States v. American Telephone & Telegraph Co., No. 93-521

Heard By

Rehnquist Court (1993-1994)

Decided By

Rehnquist Court (1993-1994)

Opinion

512 U.S. 218 (1994)

Argued

Monday, March 21, 1994

Decided

Friday, June 17, 1994

Advocates

David W. Carpenter (on behalf of the Respondents)

Donald B. Verrilli, Jr. (on behalf of the private Petitioner)

Christopher J. Wright (on behalf of the Federal Petitioners)

Facts of the Case

None

Question

None

Conclusion

Decision: 5 votes for American Telephone & Telegraph Co., 3 vote(s) against
Legal provision: Communication Act of 1934

None

Norfolk Redev. & Housing Auth. v. C. & P. Tel.

Mon, 05 Jan 2009 17:29:40 +0000

Case Basics

Docket No.

81-2332

Petitioner

Norfolk Redev. & Housing Auth.

Petitioner Type

Petitioner

Respondent

C. & P. Tel.

Respondent Type

Respondent

Heard By

Burger Court (1981-1986)

Decided By

Burger Court (1981-1986)

Opinion

464 U.S. 30 (1983)

Argued

Monday, October 3, 1983

Decided

Tuesday, November 1, 1983

Advocates

Francis N. Crenshaw (on behalf of the Petitioner)

Joseph L. Kelly (on behalf of Respondent)

Joshua I. Schwartz (on behalf of federal respondent in support of petitioner)

Facts of the Case

None

Question

None

Conclusion

Decision: 8 votes for Norfolk Redev. & Housing Auth., 0 vote(s) against
Legal provision: 42 U.S.C. 4601

None