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Tribal Carriers Reply Brief - In Re: FCC 11-161 (10th Cir.)

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Released: October 28, 2013
Appellate Case: 11-9900 Document: 01019100716 Date Filed: 07/30/2013 Page: 1

No. 11-9900


IN THE

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

_____________________
IN RE: FCC 11-161
_____________________

On Petition for Review of

an Order of the Federal Communications Commission

TRIBAL CARRIERS’ REPLY BRIEF


AKIN GUMP STRAUSS HAUER &

AKIN GUMP STRAUSS HAUER &

FELD LLP

FELD LLP

MICHAEL C. SMALL
JAMES E. TYSSE
2029 CENTURY PARK E. SUITE 2400
SEAN T. CONWAY
LOS ANGELES, CA 90067
JOHN B. CAPEHART
TELEPHONE: 310-229-1000
1333 NEW HAMPSHIRE AVENUE, N.W.
FACSIMILE: 310-229-1002
WASHINGTON, DC 20036
MSMALL@AKINGUMP.COM
TELEPHONE: 202-887-4000

FACSIMILE: 202-887-4288
JTYSSE@AKINGUMP.COM
SCONWAY@AKINGUMP.COM
JCAPEHART@AKINGUMP.COM


Counsel for Petitioners Gila River Indian Community and
Gila River Telecommunications, Inc.
July 30, 2013


Appellate Case: 11-9900 Document: 01019100716 Date Filed: 07/30/2013 Page: 2

TABLE OF CONTENTS


Page(s)



INTRODUCTION ....................................................................................... 1


I.


THE ORDER’S SIGNIFICANT REDUCTION IN HIGH-
COST SUPPORT FOR RATE-OF-RETURN CARRIERS
IS ARBITRARY AND CAPRICIOUS WITH RESPECT
TO THOSE RATE-OF-RETURN CARRIERS SERVING
TRIBAL LANDS. .............................................................................. 2


A.
The Order Essentially Treats All Rate-of Return Carriers
In The Same Manner. ................................................................ 3
B.
The Order’s Significant Cuts In USF Support Undermine
The Goal Of Universal Service On Tribal Lands. .................... 5
C.
The Order’s Preference For Price-Cap Carriers Serving
Tribal Lands Over Rate-of-Return Carries Serving Tribal
Lands Is Unfounded. ................................................................. 8

II.


THE TRIBAL MOBILITY FUND PROVIDES
INSUFFICIENT SUPPORT TO MEET THE GOAL OF
UNIVERSAL SERVICE ON TRIBAL LANDS. ......................... 11


III.


THE EXEMPTION FOR STANDING ROCK IS
ARBITRARY AND CAPRICIOUS AND CANNOT BE
CURED THROUGH AD HOC WAIVERS FOR OTHER
CARRIERS. ..................................................................................... 15


CONCLUSION .......................................................................................... 17






i

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TABLE OF AUTHORITIES


Page(s)

CASES

ALLTEL Corp. v. FCC,
838 F.2d 551 (D.C. Cir. 1988) ...................................................................... 16, 17
Qwest Commc’ns Int’l Inc. v. FCC,
398 F.3d 1222 (10th Cir. 2005) ........................................................................ 2, 7
Qwest Corp. v. FCC,
258 F.3d 1191 (10th Cir. 2001) ............................................................................ 2
United States Telecom Ass’n v. FCC,
359 F.3d 554 (D.C. Cir. 2004) .........................................................................................16

STATUTES

47 U.S.C. § 254 .................................................................................................passim

REGULATIONS

47 C.F.R. § 20.18(h) ................................................................................................ 11

FCC DECISIONS AND PUBLICATIONS

Connect America Fund: High-Cost Universal Service Support, Order,
27 FCC Rcd. 4235 (WCB 2012) .......................................................................... 4
Implementation of Section 309(j) – Competitive Bidding,
Report and Order, 9 FCC Rcd. 5532 (1994) ......................................................... 9
In the Matter of Telecommunications Carrier Eligible for Universal Service
Support, Order,
26 FCC Rcd. 3472 (WCB 2011) ......................................................................... 10
Connecting America: The Nat’l Broadband Plan,
2010 WL 972375 (FCC Mar. 16, 2010) ......................................................... 7, 14

Policy and Rules Concerning Rates for Dominant Carriers,
Report and Order, CC Docket No. 87-313, 5 FCC Rcd. 23 (1990) ..................... 9
http://www.fcc.gov/guides/emergency-communications ........................................ 11
ii

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OTHER AUTHORITIES

Universal Service Fund Reform: Hearing Before the United States Senate
Committee on Indian Affairs (June 7, 2012) (Statement of Shirley Bloomfield,
CEO, National Telecommunications Cooperative Association) ............................ 10

iii

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GLOSSARY OF TERMS

“APA”
Administrative Procedure Act

Benchmark Order” Order,
Connect America Fund: High-Cost
Universal Service Support 27 FCC Rcd 4235
(WCB 2012)

“Broadband Plan”
Connecting America: The Nat’l Broadband
Plan
, 2010 WL 972375 (FCC Mar. 16, 2010)

“COLR”
Carrier of last resort

“Eligible carrier” or “ETC”
Eligible telecommunications carrier


“FCC”
Federal Communications Commission

“Fund” or “USF”
Universal Service Fund
Order
In re Connect America Fund, 26
FCC Rcd. 17663 (2011)

Qwest II
Qwest Commc’ns Int’l Inc. v. FCC, 398 F.3d
1222 (10th Cir. 2005)

Telecommunications Act
Telecommunications Act of 1996
iv

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INTRODUCTION
Time and again, the FCC has found that to achieve the universal service
goals of Section 254(b) of the Telecommunications Act, additional financial
support was necessary to help redress the dire state of telecommunications service
on Tribal lands. The FCC reiterated that finding in the Order at issue here. The
actions instituted by the Order, however, are at cross-purposes with those findings.
The Order subjects rate-of-return carriers serving Tribal lands to the same rules
that make significant reductions in USF high-cost support to the majority of rate-
of-return carriers. The Order fails to explain how the FCC could find one thing
over and over again and then implement exactly the opposite. And no adequate
explanation for this about-face appears in the FCC’s response to Gila River’s brief.
Indeed, if anything, the FCC’s response serves only to underscore the lack of
rational connection between the Order’s recognition of the dismal condition of
telecommunications service on Tribal lands, on the one hand, and the Order’s
adoption of rules that significantly decrease USF support for the majority of rate-of
return carriers, including carriers like Gila River that serve Tribal lands, on the
other hand.
Twice before, this Court has vacated USF orders issued by the FCC on the
ground that the FCC failed “to provide sufficient reasoning or record evidence” to
demonstrate that the orders were consistent with the universal service principles of
1

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Section 254(b). Qwest Corp. v. FCC, 258 F.3d 1191, 1195 (10th Cir. 2001); see
also Qwest Commc’ns Int’l Inc. v. FCC, 398 F.3d 1222, 1234 (10th Cir. 2005). As
it relates to USF support for service on Tribal lands, the reasoning and evidence
underlying the Order at issue here are similarly deficient. Thus, under the Qwest
decisions, this Court should set aside the Order and remand to the FCC.1

I.

THE ORDER’S SIGNIFICANT REDUCTION IN HIGH-COST
SUPPORT FOR RATE-OF-RETURN CARRIERS IS ARBITRARY
AND CAPRICIOUS WITH RESPECT TO THOSE RATE-OF-
RETURN CARRIERS SERVING TRIBAL LANDS.

As Gila River demonstrated in its opening brief, the Order subjects rate-of-
return carriers serving tribal lands to the same rules that the Order imposes on rate-
of-return carriers generally – rules that mandate a significant reduction of funding
to most rate-of-return carriers. This one-size-fits-all solution flies in the face of the
FCC’s consistent recognition in the Order and elsewhere that the deplorable state
of telecommunications service on Tribal lands necessitates substantially more,
rather than substantially less, financial support to carriers serving those lands. The
FCC’s wooden, undifferentiated approach to the problems facing Tribal lands thus
also defies the statutory requirement that universal service principles be employed

1 Although Gila River is “the only Tribal carrier to challenge the Order,”
Federal Respondents’ Response to Tribal Carriers’ Principal Brief (“FCC Br.”) 14,
many rate-of-return carriers that serve Tribal lands are challenging the Order as
well. E.g., Comments of the RLEC ETCs, WC Docket 10-90 et al. at 1 (filed
Sept. 26, 2012) (JA at 4430) (identifying co-Petitioners Chippewa County
Telephone Company, Hiawatha Communications, and Ontonagon County
Telephone Company as rate-of-return carriers that serve Tribal lands).
2

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so as to bridge disparities in service between regions of the country. Gila River
Opening Br. 25-28. The FCC’s contention that the Order’s funding formula rests
on individual characteristics of rate-of-return carries and thus factors in the nature
of the communities they serve is highly misleading. And the justifications the FCC
advances for its severe treatment of rate-of-return carriers are hollow.

A.

The Order Essentially Treats All Rate-of Return Carriers In The
Same Manner.

The FCC contends that the support provided to rate-of-return carriers under
the Order is “based on each carrier’s individual costs[.]” FCC Br. 22. This
argument blinks reality. When push comes to shove, the Order applies new and
nearly identical limits and funding limitation formulas to every rate-of-return
carrier.
This uniformity is reflected throughout the Order. All rate-of-return carriers
are subjected to an across-the-board $250 per month per line limit on high-cost
support. Order ¶ 273 (JA at 492). Local Switching Support, which allowed the
smallest rate-of-return carriers to receive increased high-cost support, and Safety
Net Additive support, which was support for rate-of-return carriers that made
significant network investments, are eliminated for all carriers. Id. ¶¶ 250, 257 (JA
at 484, 487). And all rate-of-return carriers are subjected to the same new limits
and modified limitations formula applied to corporate operations expenses. Id. ¶¶
229-231 (JA at 474-475). Even the benchmark rule, which uses a regression
3

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methodology to compare costs of rate-of-return carriers, Petitioners’ Preliminary
Br. 27-28, applies the same percentile limit on recovery of costs for all rate-of-
return carriers. See Order, Connect America Fund: High-Cost Universal Service
Support 27 FCC Rcd 4235, ¶ 10 (WCB 2012), application for rev. granted in part,
Connect America Fund, 28 FCC Rcd 2572 (2013); petitions for review pending
sub nom. Nat’l Telecomm. Coop. Ass’n v. FCC, No. 13-1661 (4th Cir. filed May
21, 2013) (“The regression-derived limits are set at the 90th percentile of costs for
[capital expenses] and [operating expenses] compared to similarly situated
companies.”); see generally Petitioners’ Preliminary Br. 27-29 (summarizing
changes to high-cost support for rate-of-return carriers).
The FCC does not dispute that the new rules apply to rate-of-return carriers
serving Tribal lands, despite their acknowledged greater needs, just as the rules
apply to all other rate-of-return carriers. The FCC claims, however, that the
Benchmark Order’s inclusion of a “tribal variable” in its regression methodology
demonstrates that the FCC has taken those needs into account. FCC Br. 20-21 &
n.7. The FCC’s reliance on the tribal variable is misplaced. As set forth in the
Petitioners’ Joint USF briefs, the Order delegates unbounded authority to an FCC
bureau to concoct regression variables without adhering to APA notice and
comment requirements. As a result, the tribal variable can be modified or
eliminated at any time without advance notice or other rulemaking protections,
4

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thus violating the USF statute’s “predictability” mandate. 47 U.S.C. § 254(b)(5).
See Joint USF Brief 36-39; Joint USF Reply Brief 17-20.

B.

The Order

’s Significant Cuts In USF Support Undermine The
Goal Of Universal Service On Tribal Lands.

The Order makes significant reductions in USF support for the majority of
rate-of-return carriers.2 And Gila River is among those carriers that will suffer
from the diminished support, thus compromising telecommunications service on
the Tribal land that it serves and undermining the goal of universal service. The
FCC’s attempts to minimize those cuts are unavailing.
First, the FCC belittles the impact of the Order on Gila River. It claims that
Gila River’s contention that it will receive between $300,000 and $1.6 million less
in high cost support annually as a result of the Order is based on outdated pre-
Order estimates, and that, by virtue of the subsequently enacted Benchmark Order,
Gila River “has so far seen no reduction of its High Cost Loop Support.” FCC Br.

2 The FCC asserts that, under the Order, 46% of rate-of-return carriers will
“see either no reduction or an increase” in support. FCC Br. 5 n.2. The Order
does not plainly say that, however. Rather, it states that “almost 34 percent of rate-
of-return carriers will see no reductions whatsoever, and more than 12 percent of
providers will an increase in high-cost universal service receipts.” Order ¶ 290 (JA
at 496). Gila River read this sentence to mean that the 12% of providers that will
see an increase in support under the Order are a subset of the 34% that will see no
reductions. Based on that reading, Gila River stated in its opening brief that 66%
of rate-of-rate of return carriers will see a reduction in support under the Order. In
any event, even if the number of rate-of-return carriers seeing no reductions under
the Order is 46% (as the FCC says it is), it remains the fact that a majority of rate-
of-return carriers will experience a reduction in support as a result of the Order.
5

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29-30. The FCC ignores, however, that High Cost Loop Support is only one of
four forms of high cost support. Joint USF Br. 30 (identifying High Cost Loop
Support, Local Switching Support, Interstate Common Line Support, and Safety
Net Additive as the four forms of high cost support under the pre-Order rules).
After the Order was issued, Gila River submitted to the FCC two comprehensive
financial forecasts, one prepared by a private cost consultant and the other prepared
by the National Exchange Carrier Association, predicting a substantial diminution
of its overall high cost support under the Order. See Letter from Tom W.
Davidson, WC Docket 10-90 et al. (filed Mar. 1, 2012) (JA at 4498-4508). As
demonstrated in these forecasts, more than $300,000 of Gila River’s projected loss
stems from the Order’s reduction of funding that simply is not addressed by the
Benchmark Order – specifically, losses stemming from the Order’s extension of
the modified corporate operations expense limit to Interstate Common Line
Support and its elimination of the Safety Net Additive and Local Switching
Support. Id.
The FCC fares no better in its effort to downplay the impact of the Order on
rate-of-return carriers serving Tribal lands in general. It declares that the support
provided to them will be “sufficient,” thus satisfying Section 254(b)(5) of the
Communications Act. FCC Br. 23-25. But the basis for the FCC’s confidence is
paper thin. The FCC cites only to broad statements in the Order. Id. 24-25
6

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(citing Order ¶¶ 289-291(JA at 496)). But neither in its brief nor in the Order does
the FCC provide detailed factual analysis to back up its bold assertions about the
sufficiency of support to rate-of-return carriers serving Tribal lands. Agency say-
so that universal service will be attained does not cut it. See Qwest II, 398 F.3d at
1234.
The FCC argues that the reductions in high-cost support to rate-of-return
carriers were designed to eliminate “excess subsidization to high-cost areas.” FCC
Br. 16. This does not establish, however, that the remaining support will be
sufficient for rate-of-return carriers serving Tribal lands.
The FCC also argues that “[r]eductions in intercarrier compensation will be
offset by a new . . . subsidy” and that “rate-of-return carriers . . . will continue to
receive, as a group, roughly the same amount of high-cost support.” FCC Br. 15.
This ignores, however, that the new subsidy offsetting reductions in intercarrier
compensation comes out of the $2 billion annual high-cost budget for rate-of-return
carriers. Order ¶ 126 (JA at 438). The upshot is that rate-of-return carriers, as a
group, will realize a significant decline in total combined USF and intercarrier
compensation revenues.3

3 In rural regions where rate-of-return carriers typically operate (Gila River
Br. 6), USF support and intercarrier compensation constitute “60% or more of their
regulated revenues.” Broadband Plan at *123.
7

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C.

The Order’s Preference For Price-Cap Carriers Serving Tribal
Lands Over Rate-of-Return Carries Serving Tribal Lands Is
Unfounded.

The FCC played favorites in the Order: it froze high-cost support for price-
cap carriers while cutting such support for rate-of-return carriers. Gila River Br.
16-17. With respect to price-cap carriers serving Tribal lands, however, the Order
offered no basis (and there is none) for such preferential treatment.
The FCC brands all rate-of-return carriers – and, by implication, those
serving Tribal lands too – as inefficient; from there, the FCC argues that
maintenance of the same high cost support levels for these carriers is unwarranted.
FCC Br. 4, 28-29. The FCC’s blanket characterization of rate-of-return carriers
serving Tribal lands as inefficient is incorrect. Moreover, the FCC cited no
evidence that price-cap carriers serving Tribal lands are more efficient and thus
more worthy of support.
The fact that rate-of-return carriers received almost $2 billion of the $4.5
billion high-cost support awarded in 2011 despite serving only five percent of
access lines in the nation (FCC Br. 4) is the product of the FCC’s regulatory
scheme, which divides areas of the country into either price cap or rate-of-return
territories. In short, as the historical record shows, it is this system that preordains
that the vast majority of high-cost support necessarily would go to support service
in areas served by rate-of-return carriers, including areas that contain Tribal lands.
8

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Until 1990, all incumbent local exchange carriers were subject to rate-of-
return regulation. Policy and Rules Concerning Rates for Dominant Carriers,
Report and Order, CC Docket No. 87-313, 5 FCC Rcd. 23, ¶ 1 (1990). In that
year, however, the FCC determined that “enormous differences” existed among
local exchange carriers “in the number and concentration of their access lines, the
geographic location and dispersion of the affiliates, and the number of states they
serve.” Id. ¶ 257. The FCC further determined that these local exchange carriers
experienced “significant financial and operation differences in their assets,
revenues, and earnings.” Id. In light of these differences, the FCC determined that
a unitary regulatory scheme was no longer warranted, id., so it adopted a price cap
regulatory scheme for the “largest local exchange carriers,” id. ¶¶ 1, 258. The FCC
noted that these carriers “provide[d] 88 percent of all local telephone lines in the
U.S.,” and that they “provide[d] virtually all local exchange and access service in
virtually all major metropolitan areas,” id., which are the most profitable areas of
the country for carriers to service, see Implementation of Section 309(j) –
Competitive Bidding, Report and Order, 9 FCC Rcd. 5532, ¶109 (1994) (“Rural
areas, because of their more dispersed populations, tend to be less profitable to
serve than more densely populated urban areas.”).
In contrast, and as the Order expressly acknowledges, rate-of-return carriers
operate in “many of the country’s most difficult and expensive areas to serve.”
9

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Order ¶ 26 (JA at 401). And many of the carriers serving Tribal lands (which are
especially difficult and expensive to serve, see Order ¶ 479 (JA at 545-546)), are
rate-of-return carriers. See Universal Service Fund Reform: Hearing Before the
United States Senate Committee on Indian Affairs (June 7, 2012) (Statement of
Shirley Bloomfield, CEO, National Telecommunications Cooperative Association)
(at least 36 members of NTCA, a trade association representing rate-of-return
carriers, serve Tribal lands).
Furthermore, even though rate-of-return carriers serve only five percent of
the country’s access lines, they serve approximately forty percent of the nation’s
landmass. See Statement of Shirley Bloomfield, supra. This is significant because
the FCC has recognized that areas with small population densities cost more to
serve. In the Matter of Telecommunications Carriers Eligible for Universal
Service Support, Order, 26 FCC Rcd. 3472, ¶ 5 (WCB 2011).
In sum, it is not surprising that a large proportion of high-cost support
historically has gone to rate-of-return carriers. The reason is not that rate-of-return
carriers by their nature are inefficient. Rather, it is because of the high costs of
serving the communities in which they operate, including Tribal lands. Those
costs are high for price-cap carriers serving Tribal lands as well. There is,
however, no evidentiary basis for the Order’s maintenance of the prior levels of
10

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support for price-cap carriers serving Tribal lands while exposing rate-of-return
carriers serving Tribal lands to reductions in funding.

II.

THE TRIBAL MOBILITY FUND PROVIDES INSUFFICIENT
SUPPORT TO MEET THE GOAL OF UNIVERSAL SERVICE ON
TRIBAL LANDS.

The FCC argues that the Order’s Tribal Mobility Fund demonstrates that the
FCC adopted a “tailored” approach to promoting universal service on Tribal lands.
FCC Br. 19. As the record shows, however, the Tribal Mobility Fund does not
make up for the cuts in high-cost support to carriers serving Tribal lands.
For one, the Tribal Mobility Fund is limited to wireless carriers serving
Tribal lands. It provides no support at all to wireline carriers serving Tribal lands.
Promoting the development of wireless service on Tribal lands is laudable. But the
Order pays short shrift to the continued important role that wireline carriers play
on Tribal lands. That importance is readily apparent with respect to 911 calls.
While 911 calls placed on wireline networks typically automatically report location
of calls to the 911 dispatcher, see http://www.fcc.gov/guides/emergency-
communications, 911 calls placed on wireless devices provide dispatchers with
only the general vicinity in which the caller may be located. See 47 C.F.R. §
20.18(h) (rules addressing location accuracy standards for wireless carriers). Many
Tribal lands lack traditional U.S. Postal Services address. See Comments of Gila
River, WC Docket 10-90 et al. at 3 (filed Apr. 18, 2011) (JA at 2504) (“public
11

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addresses on the approximately 8,000 structures in the community are almost
nonexistent, posing significant challenges to emergency and public safety
personnel attempting to respond in times of crisis.”). Thus, the ability of 911
dispatchers to automatically obtain accurate location information is critical in
emergency situations on Tribal lands.
The FCC also ignores that many rate-of-return carriers serving Tribal lands
are subject to state or Tribal COLR requirements, which obligate an incumbent
carrier to provide service when no other carrier will do so and subject these
incumbent carriers to more statutory and regulatory constraints. Order ¶ 862 (JA
at 692) (“[I]ncumbent [carriers] have limited control over the area or customers
that they serve, having been required to deploy their network in areas where there
was no business case to do absent subsidies[.]”). Wireless carriers receiving
General and Tribal Phase Mobility Fund support, however, need only meet
minimum coverage requirements, not COLR obligations. Id. ¶¶ 365, 488 (JA at
519, 549) (discussing coverage requirements for General Mobility Fund Phase I
and Tribal Mobility Fund Phase I, respectively). Therefore, those carries likely
will construct facilities to serve the largest population centers within Tribal lands.
Because of their COLR obligations, rate-of-return carriers will thus be required to
serve the very highest cost regions of Tribal lands – and with reduced funding
under the new rules, to boot. This whipsaw effect of COLR demands and the
12

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cutback in USF support impairs the ability of rate-of-return carriers to carry out
their obligations. Far from promoting efficient use of USF support, this puts
universal service at risk.
Even as to wireless carriers, the support provided by the Tribal Mobility
Fund is inadequate. Yes, the Order reserves $50 million in one-time support to
wireless carriers serving Tribal lands in the Tribal Mobility Fund Phase I auction.
Order ¶ 481 (JA at 546). Moreover, in the general Mobility Fund Phase I auction,
which was held in late 2012, carriers serving Tribal lands won bids making them
eligible to receive approximately $25 million. FCC Br. 20 n.6. Therefore, the
general and Tribal Phase I Mobility Funds combined make approximately $75
million available in one-time support to wireless carriers serving Tribal lands for
2012 and 2013. In addition, beginning in 2014, the Mobility Fund Phase II
authorizes “up to $100 million” annually for ongoing support to wireless carriers
serving Tribal lands. Order ¶ 494 (JA at 551).
The FCC pats itself on the back for offering this support for carriers serving
Tribal lands. It ignores, however, that the support – $75 million combined
between 2012 and 2013, and “up to $100 million” annually starting next year –
represents a significant reduction in present support for wireless carriers serving
Tribal lands. This is because the Order gives with one hand what it takes away
with the other. In particular, it abolished the identical support rule, under which
13

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competitive carriers serving Tribal lands (mostly wireless carriers) received an
estimated $150 million in high-cost support in 2011 alone. Order ¶ 525 (JA at
561). All told, the Order effectively decreases overall support for wireless carriers
serving Tribal lands by 33% annually – $50 million – once the identical support
rule is phased out.
The FCC states that its Mobility Funds were “not intended as a
‘replacement’ for the identical support rule.” FCC Br. 27 n.10. This is not so.
The identical support rule effectively provided wireless carriers an incentive to
serve Tribal lands; the Mobility Funds now provides this incentive (FCC Br. 9-10),
but does so to the tune of $50 million less annually than the identical support rule.
This is no way to obtain universal service on Tribal lands.
In addition to the Tribal Mobility Fund, the FCC lauds its low-income
support program, which provides enhanced universal service support to low-
income residents on Tribal lands. FCC Br. 8-9, 14, 22, 26. Here too the FCC’s
self-plaudits are unwarranted. In 2010, the FCC found that federal support for
telecommunications service to residents on Tribal lands was insufficient, even with
the enhanced low-income support program. Broadband Plan at *142. The FCC’s
invocation of programs that pre-date the Order, such as the creation of the Office
of Native Affairs and Policy and the bidding credits in spectrum license auctions
for wireless providers serving qualifying Tribal lands, FCC Br. 8-9, are beside the
14

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point. And the Tribal engagement and consultation requirements that the FCC also
lists as feathers in its cap, id. at 11, 14, 21-22, do nothing to address the “greater
financial support” needed “to ensure the availability of broadband in Tribal lands,”
Order ¶ 479 (JA at 545-546).

III. THE EXEMPTION FOR STANDING ROCK IS ARBITRARY AND

CAPRICIOUS AND CANNOT BE CURED THROUGH AD HOC
WAIVERS FOR OTHER CARRIERS.

As Gila River demonstrated in its opening brief, the Order’s grant of a
temporary exemption from the USF funding reductions to one – and only one –
carrier serving Tribal lands, Standing Rock Telecommunications, is arbitrary and
capricious and necessitates the invalidation of the Order because the same
considerations on which the exemption for Standing Rock rests apply in spades to
a number of other carriers serving Tribal lands. Gila River Br. 33-35. The FCC’s
defense of the Standing Rock exemption is muddled. And its offer of possible
waivers from the rules for other carriers does not cure the Order’s defects.
The FCC asserts that Standing Rock deserved an exemption because it is a
“nascent” carrier that is only a few years old. FCC Br. 31. The FCC fails to
explain, however, why the age of Standing Rock should be dispositive here,
separating it from other carriers. Support for older carriers could promote Tribal
self-sufficiency and economic development just as much as support for newer
carriers. Standing Rock itself recognized as much. It did not request that any
15

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exemption be limited to just itself in comments it submitted to the FCC; rather, it
requested an exception for all Tribal areas. Comments of Standing Rock, WC
Docket No. 10-90 at 3 (filed Aug. 23, 2011) (JA at 3247) (“Existing … levels of
support … should be preserved to the greatest extent possible.”) Furthermore,
Standing Rock did not even rely on its age, or the age of any tribal carrier. Rather,
in its comments, Standing Rock emphasized the “less than” seventy percent
telephone penetration rate on Tribal lands generally and the “high cost” of
providing service there as reasons for the FCC to ensure that support for all Tribal
carriers not be decreased. Id. at 6-7 (JA at 3250-3251).
The FCC argues that, if other carriers are unduly burdened by the Order,
they can seek a Standing Rock-type exemption by applying for temporary waivers.
FCC Br. 30-32. It is a fundamental principle of administrative law, however, that
the availability of waivers does not salvage a rule that is arbitrary and capricious to
begin with. As the D.C. Circuit has admonished, “the very essence of waiver is the
assumed validity of the general rule.” ALLTEL Corp. v. FCC, 838 F.2d 551, 561
(D.C. Cir. 1988). Under this tenet, “[w]hile a rational rule that would otherwise be
impermissibly broad can be saved by a ‘safety valve’ waiver or exception
procedures, the mere existence of a safety valve does not cure an irrational rule.”
United States Telecom Ass’n v. FCC, 359 F.3d 554, 571 (D.C. Cir. 2004). If an
agency were able to insulate its rules from invalidation by dint of a waiver
16

Appellate Case: 11-9900 Document: 01019100716 Date Filed: 07/30/2013 Page: 22
mechanism, “no rule, no matter how irrational, could be struck down[.]” ALLTEL,
838 F.2d at 561-62. In short, the fact that other carriers might be able to secure a
waiver from the Order, along the lines of the Standing Rock exemption, does not
render the Order lawful.

CONCLUSION

For the foregoing reasons, and for the reasons set forth in Gila River’s
Opening Brief, as well as in the Joint Universal Service Fund Opening and Reply
Briefs and the Joint Opening and Reply Intercarrier Compensation Briefs, this
Court should set aside the Order and remand to the FCC.
Respectfully submitted,
Dated: July 30, 2013

AKIN GUMP STRAUSS HAUER &

FELD LLP



By /s/ Michael C. Small

2029 Century Park East, Suite 2400
Los Angeles, CA 90067
310-229-1000
msmall@akingump.com

James E. Tysse
Sean T. Conway
John B. Capehart

Attorneys for Petitioners Gila River Indian
Community and Gila River
Telecommunications, Inc.


17

Appellate Case: 11-9900 Document: 01019100716 Date Filed: 07/30/2013 Page: 23

CERTIFICATE OF COMPLIANCE WITH FED. R. APP. P. 32(a) AND

COURT BRIEFING ORDERS


Certificate of Compliance With Type-Volume Limitation,
Typeface Requirements, and Type Style Requirements

1. This brief complies with the type-volume limitation of Fed. R. App. P.
32(a)(7)(B) and the Court’s Third Briefing Order and Summary of Deadlines for
Briefing because:

this brief contains 3,958 words, excluding the parts of the brief
exempted from the word count by Fed. R. App. P. 32(a)(7)(B)(iii),
and the Court’s Amended First and Second Briefing Orders.

2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5)
and this Court’s Amended First and Second Briefing Orders, as well as 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.



Dated: July 30, 2013

AKIN GUMP STRAUSS HAUER &

FELD LLP



By /s/ Sean Conway

Sean Conway
1333 New Hampshire Ave., N.W.
Washington, DC 20036
Telephone: 202-887-4000
sconway@akingump.com

Attorney for Petitioners Gila River Indian
Community and Gila River
Telecommunications, Inc.




Appellate Case: 11-9900 Document: 01019100716 Date Filed: 07/30/2013 Page: 24

CERTIFICATE OF DIGITAL SUBMISSION


I hereby certify that with respect to the foregoing:
(1) all required privacy redactions have been made per 10th Cir. R.
25.5;
(2) if required to file additional hard copies, that the ECF submission
is an exact copy of those documents;
(3) the digital submission has been scanned for viruses with the
most recent version of a commercial virus scanning program,
Symantec Endpoint Protection version 11.0.5002.333 last updated
July 29, 2013, and according to the program is free of viruses.


Dated: July 30, 2013

AKIN GUMP STRAUSS HAUER &

FELD LLP



By /s/ Sean Conway

Sean Conway
1333 New Hampshire Ave., N.W.
Washington, DC 20036
Telephone: 202-887-4000
sconway@akingump.com

Attorney for Petitioners Gila River Indian
Community and Gila River
Telecommunications, Inc.




Appellate Case: 11-9900 Document: 01019100716 Date Filed: 07/30/2013 Page: 25

CERTIFICATE OF SERVICE



I hereby certify that on July 30, 2013, and pursuant to the Court’s Order
Governing Procedures for the Electronic Filing of All Briefs in the Consolidated
Proceedings, I electronically filed the foregoing with the Court via e-mail to

FCC_briefs_only@ca10.uscourts.gov

, which will send notification of such filing
to all counsel who have entered appearances in the consolidated proceedings.



Dated: July 30, 2013

AKIN GUMP STRAUSS HAUER &

FELD LLP



By /s/ Sean Conway

Sean Conway
1333 New Hampshire Ave., N.W.
Washington, DC 20036
Telephone: 202-887-4000
sconway@akingump.com

Attorney for Petitioners Gila River Indian
Community and Gila River
Telecommunications, Inc.




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