United States Court of Appeals, District of Columbia Circuit
September 8, 2016
Petition for Review of an Order of the Federal Communications
Guerra, argued the cause for petitioner. With him on the
briefs were Peter D. Keisler, James P. Young, Kwaku A.
Akowuah, Gary L. Phillips, and David L. Lawson.
E. Citrin, Counsel, Federal Communications Commission, argued
the cause for respondents. On the brief were William J. Baer,
Assistant Attorney General, Robert B. Nicholson and Robert J.
Wiggers, Attorneys, Jonathan B. Sallett, General Counsel,
Federal Communications Commission, David M. Gossett, Deputy
General Counsel, Jacob M. Lewis, Associate General Counsel,
Richard K. Welch, Deputy Associate General Counsel, and Lisa
S. Gelb, Counsel. James M. Carr, Counsel, entered an
Christopher J. Wright, argued the cause for intervenors. With
him on the brief were John T. Nakahata, Timothy J. Simeone,
Stephen W. Miller, Joshua M. Bobeck, Charles A. Zdebski, and
Jeffrey P. Brundage. John R. Grimm entered an appearance.
Before: Rogers, Circuit Judge, and Williams and Randolph,
Senior Circuit Judges.
Williams, Senior Circuit Judge
case arises from the ongoing transition of American telephony
to the Internet. The process creates challenges to a
regulatory system designed for the pre-Internet world, the
familiar "public switched telephone network" or
"PSTN." We deal here with the fees that local
exchange carriers ("LECs") can charge
inter-exchange carriers ("IXCs") for certain
services they provide, in coordination with providers of
Voice over Internet Protocol ("VoIP"), for the
completion of "inter-exchange" calls. Resolution of
the dispute turns on how the disputed services are to be
classified. The Federal Communications Commission says that
they are end-office switching services. Petitioner AT&T
says that they are tandem switching services. The prescribed
rates for the latter have generally been lower; AT&T has
no objection to paying them.
decisions of the Commission are critical. First, in 2011 the
Commission made a broad effort to update its system for
regulating intercarrier compensation. In re Connect
America Fund, 26 FCC Rcd. 17663 (2011) (the
"Transformation Order"). That order
produced definitions of "End Office Access Service"
and "Tandem-Switched Transport Access Service, "
stated in subsections (d) and (i), respectively, of 47 C.F.R.
§ 51.903. The parties focus on subsection (d),
End Office Access Service means:
(1) The switching of access traffic at the carrier's end
office switch and the delivery to or from of such traffic to
the called party's premises;
(2) The routing of interexchange telecommunications traffic
to or from the called party's premises, either directly
or via contractual or other arrangements with an affiliated
or unaffiliated entity, regardless of the specific functions
provided or facilities used; or
(3) Any functional equivalent of the incumbent local exchange
carrier access service provided by a non-incumbent local
§ 51.903(d). Subsection (i), governing tandem switching
access service, employs similar "functional
Transformation Order recognized that LECs partnered
with VoIP providers to supply these services. It therefore
specified that a LEC could collect for provision of access
services "regardless of whether the [LEC] itself
delivers such traffic to the called party's premises or
delivers the call . . . via contractual or other arrangements
with an affiliated or unaffiliated provider of interconnected
VoIP service." § 51.913(b). In short, the
Transformation Order allowed a VoIP provider and its
LEC partner (collectively, "VoIP-LEC") to charge