IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT No. 11-9900 IN RE: FCC 11-161 On Petitions for Review of Orders of the Federal Communications Commission UNCITED BRIEF OF INTERVENORS SUPPORTING RESPONDENTS IN RESPONSE TO THE BRIEF OF THE NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES JONATHAN E. NUECHTERLEIN HEATHER M. ZACHARY KELLY P. DUNBAR WILMER CUTLER PICKERING HALE AND DORR LLP 1875 Pennsylvania Avenue, N.W. Washington, D.C. 20006 (202) 663-6000 CATHY CARPINO GARY L. PHILLIPS PEGGY GARBER AT&T SERVICES, INC. 1120 20th Street, N.W. Washington, D.C. 20036 (202) 457-3058 Counsel for AT&T Inc. SCOTT H. ANGSTREICH BRENDAN J. CRIMMINS JOSHUA D. BRANSON KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, P.L.L.C. 1615 M Street, N.W., Suite 400 Washington, D.C. 20036 (202) 326-7900 MICHAEL E. GLOVER CHRISTOPHER M. MILLER CURTIS L. GROVES VERIZON 1320 North Courthouse Road, 9th Floor Arlington, Virginia 22201 (703) 351-3071 Counsel for Verizon and Verizon Wireless April 24, 2013 Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 1 CORPORATE DISCLOSURE STATEMENTS Pursuant to Federal Rule of Appellate Procedure 26.1, intervenors AT&T Inc., Verizon, and Verizon Wireless respectfully submit the following corporate disclosure statements: AT&T Inc. AT&T Inc. is a publicly traded corporation that, through its wholly owned affiliates, is principally engaged in the business of providing communications services and products to the general public. AT&T Inc. has no parent company, and no publicly held company owns 10 percent or more of its stock. Verizon and Verizon Wireless. The Verizon companies participating in this filing are Cellco Partnership, d/b/a Verizon Wireless, and the regulated, wholly owned subsidiaries of Verizon Communications Inc. Cellco Partnership, a general partnership formed under the laws of the State of Delaware, is a joint venture of Verizon Communications Inc. and Vodafone Group Plc. Verizon Communications Inc. and Vodafone Group Plc indirectly hold 55 percent and 45 percent partnership interests, respectively, in Cellco Partnership. Both Verizon Communications Inc. and Vodafone Group Plc are publicly traded companies. Verizon Communications Inc. has no parent company. No publicly held company owns 10 percent or more of Verizon Communications Inc.’s stock. Insofar as relevant to this litigation, Verizon’s general nature and purpose is to provide communications services, Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 2 ii including broadband Internet access services provided by its wholly owned telephone-company and Verizon Online LLC subsidiaries and by Verizon Wireless. Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 3 iii TABLE OF CONTENTS Page CORPORATE DISCLOSURE STATEMENTS ....................................................... i  TABLE OF AUTHORITIES ................................................................................... iv  STATEMENT OF RELATED CASES ................................................................... vi  GLOSSARY ............................................................................................................ vii  INTRODUCTION AND SUMMARY OF ARGUMENT ........................................ 1  ARGUMENT ............................................................................................................. 2  I.  THE ORDER EXPLAINS THE FCC’S AUTHORITY TO ADOPT THE ARC ........................................................................................................ 2  II.  ALLOCATING THE ARC AT THE HOLDING-COMPANY LEVEL DOES NOT VIOLATE 47 U.S.C. § 202 ........................................................ 4  CONCLUSION .......................................................................................................... 5  Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 4 iv TABLE OF AUTHORITIES Page CASES Allnet Communications Servs., Inc. v. National Exch. Carrier Ass’n, Inc., 741 F. Supp. 983 (D.D.C. 1990) ............................................................. 4 Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993) .......................................................... 2 Diamond Int’l Corp. v. FCC, 627 F.2d 489 (D.C. Cir. 1980) ................................... 5 MCI Telecomms. Corp. v. FCC, 750 F.2d 135 (D.C. Cir. 1984) ............................... 3 National Ass’n of Regulatory Util. Comm’rs v. FCC, 737 F.2d 1095 (D.C. Cir. 1984) ............................................................................................... 3 Rural Cellular Ass’n v. FCC, 588 F.3d 1095 (D.C. Cir. 2009) ................................. 3 Sorenson Communications, Inc. v. FCC, 659 F.3d 1035 (10th Cir. 2011) ............................................................................................... 3 Union Tel. Co. v. Qwest Corp., 495 F.3d 1187 (10th Cir. 2007) .............................. 5 US West, Inc. v. FCC, 778 F.2d 23 (D.C. Cir. 1985) ................................................ 4 STATUTES Communications Act of 1934, 47 U.S.C. § 151 et seq. ............................................. 4 47 U.S.C. § 153(11) ......................................................................................... 4 47 U.S.C. § 201 ................................................................................................ 2 47 U.S.C. § 202 ................................................................................................ 5 47 U.S.C. § 202(a) ................................................................................... 1, 4, 5 Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 5 v 47 U.S.C. § 251(b)(5) ...................................................................................... 2 47 U.S.C. § 332 ................................................................................................ 2 Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 6 vi STATEMENT OF RELATED CASES Intervenors adopt the Statement of Related Cases set forth in the Federal Respondents’ Uncited Response to the Joint Preliminary Brief of the Petitioners. Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 7 vii GLOSSARY ARC Access Recovery Charge Communications Act or Act Communications Act of 1934, as amended (47 U.S.C. § 151 et seq.) FCC Federal Communications Commission FCC Br. Federal Respondents’ Response to the Brief of the National Association of State Utility Consumer Advocates (filed Mar. 18, 2013) ICC LEC Intercarrier Compensation Local Exchange Carrier NASUCA National Association of State Utility Consumer Advocates Order Report and Order and Further Notice of Proposed Rulemaking, Connect America Fund, 26 FCC Rcd 17663 (2011) Pet. Br. Brief of the National Association of State Utility Consumer Advocates (filed Oct. 23, 2012) Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 8 INTRODUCTION AND SUMMARY OF ARGUMENT The FCC shows in its brief that NASUCA’s challenges to the Order’s adoption of the ARC were not preserved for judicial review and lack merit. Intervenors write separately to emphasize two points. I. Contrary to NASUCA’s claim, the Order clearly identifies the FCC’s legal authority to adopt the ARC. The Order explains that the ARC is an interim measure that is part of the agency’s efforts to facilitate the transition to bill-and- keep, see, e.g., Order ¶ 847 (JA___), and the Order contains a subsection that sets forth the FCC’s authority to adopt such transition mechanisms, see id. ¶¶ 809-810 (JA___). Nothing more was required. II. NASUCA’s argument that permitting carriers to allocate the ARC at a holding-company level violates the prohibition of unreasonable discrimination in 47 U.S.C. § 202(a) is equally without merit. As the FCC explains (at 10-11), holding-company flexibility serves neutral purposes that are consistent with § 202(a). But NASUCA’s argument also fails for a more basic reason. Section 202(a) applies only to “common carriers,” and holding companies are not common carriers. Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 9 2 ARGUMENT I. THE ORDER EXPLAINS THE FCC’S AUTHORITY TO ADOPT THE ARC As the FCC demonstrates, the ARC forms an important component of the Order’s comprehensive ICC reforms. See FCC Br. 5-6. The Order fully explains the FCC’s legal authority to adopt those broader ICC reforms under 47 U.S.C. §§ 201, 251(b)(5), and 332. See Order ¶¶ 760-781 (JA___-__). Nonetheless, NASUCA argues (at 5) that the FCC’s explanation of the ARC is deficient because the FCC supposedly failed to “mention” its “legal authority” in the specific subsection of the Order “devoted to the Recovery Mechanism.” But, in the very first paragraph NASUCA cites as lacking sufficient explanation, see Pet. Br. 5 & n.2 (citing Order ¶¶ 847-932 (JA___-__)), the FCC made clear that the ARC is a “transitional recovery mechanism” intended to facilitate a “gradual transition” to bill-and-keep, Order ¶ 847 (JA___); see also, e.g., id. ¶¶ 36-38, 849, 910 n.1791 (JA___-__, ___, ___). The Order contains a separate subsection in which the FCC expressly identified its legal authority to “[s]pecify the [t]ransition” to bill-and-keep. Id. ¶¶ 809-810 (JA___). The FCC had no obligation to repeat that analysis every time it adopted a specific transition measure. See Bechtel v. FCC, 10 F.3d 875, 878 (D.C. Cir. 1993) (noting that the FCC “need not repeat itself incessantly”). Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 10 3 As the Order explains, transitional measures have long been a “‘standard tool of the [FCC]’” that permit it to “‘avoid excessively burdening carriers’” as they “‘adjust to [a] new pricing system.’” Id. ¶ 809 (quoting National Ass’n of Regulatory Util. Comm’rs v. FCC, 737 F.2d 1095, 1135-36 (D.C. Cir. 1984)) (JA___). Courts afford the FCC “‘substantial deference’” when it adopts such interim measures. Id. (quoting Rural Cellular Ass’n v. FCC, 588 F.3d 1095, 1106 (D.C. Cir. 2009)); see Sorenson Communications, Inc. v. FCC, 659 F.3d 1035, 1046 (10th Cir. 2011) (“Because the provisions under review are merely transitional, our review is especially deferential.”) (internal quotation marks omitted); MCI Telecomms. Corp. v. FCC, 750 F.2d 135, 141 (D.C. Cir. 1984) (FCC has authority to adopt “[i]nterim solutions” to ameliorate “unfairness of abruptly shifting policies”). Although NASUCA intimates (at 6) that the ARC is a “novel charge,” it does not dispute that the ARC is an interim measure that falls well within the FCC’s authority to specify the transition to bill-and-keep.* Nor could it, for the ARC is an integral component of the uniform ICC regime adopted in the Order. See FCC Br. 5-6. The ARC facilitates the gradual implementation of bill-and-keep * The FCC ably refutes NASUCA’s claim (at 8-11) that the ARC, unlike past transition measures such as the subscriber line charge (which NASUCA concedes (at 3) “was within [the FCC’s] established authority”), improperly offsets reductions in past intrastate access charge revenues. See FCC Br. 6-8. Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 11 4 by providing carriers a cushion against the revenue losses associated with declining ICC payments. See Order ¶¶ 847-849, 905-907 (JA___-__, ___-__). Moreover, consistent with the FCC’s broader ICC reforms, the ARC provides carriers with recovery from customers rather than other carriers. See id. ¶¶ 906-907 (JA___-__). II. ALLOCATING THE ARC AT THE HOLDING-COMPANY LEVEL DOES NOT VIOLATE 47 U.S.C. § 202 The FCC reasonably provided the parent companies of incumbent LECs the flexibility to allocate ARCs at the holding-company level. See Order ¶ 910 (JA___); FCC Br. 8-13. NASUCA maintains (at 13) that such flexibility constitutes “‘unjust or unreasonable discrimination’” in violation of 47 U.S.C. § 202(a), because it allows different incumbent LEC subsidiaries of a single holding company to charge different ARCs in different states. NASUCA’s discrimination argument fails at the threshold because § 202(a) applies only to common carriers, and holding companies are not “engaged as a common carrier for hire, in interstate or foreign communication by wire.” 47 U.S.C. § 153(11) (defining common carrier); see US West, Inc. v. FCC, 778 F.2d 23, 26 (D.C. Cir. 1985) (explaining that “holding companies” are not “common carriers” and that the FCC’s primary jurisdiction extends only to “holding companies’ subsidiaries”); Allnet Communications Servs., Inc. v. National Exch. Carrier Ass’n, Inc., 741 F. Supp. 983, 984 (D.D.C. 1990) (rejecting tariff challenge against association because “title II” of the Communications Act, which includes Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 12 5 § 202, “proscribe[s] the activities of common carriers” and “NECA is not a common carrier”); cf. Union Tel. Co. v. Qwest Corp., 495 F.3d 1187, 1195 (10th Cir. 2007) (§ 202(a) provides that “telecommunications carriers may not unreasonably discriminate”). Thus, any variation among the ARCs that a holding company’s different subsidiary LECs in different states charge their customers does not implicate § 202(a). Indeed, that has been settled law for more than 30 years: § 202(a) has never “require[d] that [tariff] charges be identical in each state. Rather, it is to be expected under the statutory scheme that there will be variations from state to state.” Diamond Int’l Corp. v. FCC, 627 F.2d 489, 493 n.7 (D.C. Cir. 1980) (per curiam). CONCLUSION For the foregoing reasons, and those set forth in the FCC’s brief, the Court should deny NASUCA’s petition for review. Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 13 6 /s/ Jonathan E. Nuechterlein JONATHAN E. NUECHTERLEIN HEATHER M. ZACHARY KELLY P. DUNBAR WILMER CUTLER PICKERING HALE AND DORR LLP 1875 Pennsylvania Avenue, N.W. Washington, D.C. 20006 (202) 663-6000 Jon.Nuechterlein@wilmerhale.com CATHY CARPINO GARY L. PHILLIPS PEGGY GARBER AT&T SERVICES, INC. 1120 20th Street, N.W. Washington, D.C. 20036 (202) 457-3058 Counsel for AT&T Inc. Respectfully submitted, /s/ Scott H. Angstreich SCOTT H. ANGSTREICH BRENDAN J. CRIMMINS JOSHUA D. BRANSON KELLOGG, HUBER, HANSEN, TODD, EVANS & FIGEL, P.L.L.C. 1615 M Street, N.W., Suite 400 Washington, D.C. 20036 (202) 326-7900 sangstreich@khhte.com MICHAEL E. GLOVER CHRISTOPHER M. MILLER CURTIS L. GROVES VERIZON 1320 North Courthouse Road, 9th Floor Arlington, Virginia 22201 (703) 351-3071 Counsel for Verizon and Verizon Wireless April 24, 2013 Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 14 CERTIFICATE OF COMPLIANCE Certificate of Compliance With Type-Volume Limitations, Typeface Requirements, Type Style Requirements, Privacy Redaction Requirements, and Virus Scan 1. This brief contains 991 words of the 21,400 words the Court allocated for the briefs of intervenors in support of the FCC in its October 1, 2012 Order Consolidating Case No. 12-9575 with Other FCC 11-161 Cases, Establishing Windstream Briefing Schedule, and Modifying Intervenor Participation. The intervenors in support of the FCC have complied with the type-volume limitation of that order because their briefs, combined, contain a total of fewer than 21,400 words, excluding the parts of those briefs exempted by Fed. R. App. P. 32(a)(7)(B)(iii). 2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and 10th Cir. R. 32(a) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word 2007 in 14-point Times New Roman font. 3. All required privacy redactions have been made. 4. This brief was scanned for viruses with Symantec Endpoint Protection (version 12.1.671.4971, updated on April 24, 2013) and, according to the program, is free of viruses. /s/ Scott H. Angstreich Scott H. Angstreich April 24, 2013 Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 15 CERTIFICATE OF SERVICE I hereby certify that, on April 24, 2013, I caused the foregoing Uncited Brief of Intervenors Supporting Respondents in Response to the Brief of the National Association of State Utility Consumer Advocates to be filed by delivering a copy to the Court via e-mail at FCC_briefs_only@ca10.uscourts.gov. I further certify that the foregoing document will be furnished by the Court through (ECF) electronic service to all parties in this case through a registered CM/ECF user. This document will be available for viewing and downloading on the CM/ECF system. /s/ Scott H. Angstreich Scott H. Angstreich April 24, 2013 Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 16