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NASUCA Brief of Intervenors Supp. Respondents, In Re: FCC 11-161

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Released: April 25, 2013
Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 1

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
SCOTT H. ANGSTREICH
HEATHER M. ZACHARY
BRENDAN J. CRIMMINS
KELLY P. DUNBAR
JOSHUA D. BRANSON
WILMER CUTLER PICKERING
KELLOGG, HUBER, HANSEN, TODD,
HALE AND DORR LLP
EVANS & FIGEL, P.L.L.C.
1875 Pennsylvania Avenue, N.W.
1615 M Street, N.W., Suite 400
Washington, D.C. 20006
Washington, D.C. 20036
(202) 663-6000
(202) 326-7900


CATHY CARPINO
MICHAEL E. GLOVER
GARY L. PHILLIPS
CHRISTOPHER M. MILLER
PEGGY GARBER
CURTIS L. GROVES
AT&T SERVICES, INC.
VERIZON
1120 20th Street, N.W.
1320 North Courthouse Road, 9th Floor
Washington, D.C. 20036
Arlington, Virginia 22201
(202) 457-3058
(703) 351-3071


Counsel for AT&T Inc.
Counsel for Verizon and Verizon

Wireless
April 24, 2013


Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 2

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: 3
including broadband Internet access services provided by its wholly owned
telephone-company and Verizon Online LLC subsidiaries and by Verizon
Wireless.
ii

Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 4

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 
iii

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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

iv

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47 U.S.C. § 251(b)(5) ...................................................................................... 2
47 U.S.C. § 332 ................................................................................................ 2
v

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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.
vi

Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 8

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
Intercarrier Compensation
LEC
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)
vii

Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 9

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: 10

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”).
2

Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 11

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.
3

Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 12

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
4

Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 13

§ 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.
5

Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 14


Respectfully submitted,


/s/ Jonathan E. Nuechterlein
/s/ Scott H. Angstreich

JONATHAN E. NUECHTERLEIN
SCOTT H. ANGSTREICH
HEATHER M. ZACHARY
BRENDAN J. CRIMMINS
KELLY P. DUNBAR
JOSHUA D. BRANSON
WILMER CUTLER PICKERING
KELLOGG, HUBER, HANSEN, TODD,
HALE AND DORR LLP
EVANS & FIGEL, P.L.L.C.
1875 Pennsylvania Avenue, N.W.
1615 M Street, N.W., Suite 400
Washington, D.C. 20006
Washington, D.C. 20036
(202) 663-6000
(202) 326-7900
Jon.Nuechterlein@wilmerhale.com
sangstreich@khhte.com


CATHY CARPINO
MICHAEL E. GLOVER
GARY L. PHILLIPS
CHRISTOPHER M. MILLER
PEGGY GARBER
CURTIS L. GROVES
AT&T SERVICES, INC.
VERIZON
1120 20th Street, N.W.
1320 North Courthouse Road, 9th Floor
Washington, D.C. 20036
Arlington, Virginia 22201
(202) 457-3058
(703) 351-3071


Counsel for AT&T Inc.
Counsel for Verizon and Verizon Wireless

April
24,
2013

6

Appellate Case: 11-9900 Document: 01019041726 Date Filed: 04/24/2013 Page: 15

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: 16

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



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