United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 3, 1999 Decided June 8, 1999
No. 98-1468
U S WEST Communications, Inc., et al.,
Petitioners
v.
Federal Communications Commission and
United States of America,
Respondents
AT&T Corporation, et al.,
Intervenors
Consolidated with
Nos. 98-1469, 98-1471
On Petitions for Review of an Order of the
Federal Communications Commission
William T. Lake argued the cause for petitioners U S
WEST Communications, Inc., and Ameritech Corporation.
With him on the briefs were William R. Richardson, Jr.,
Lynn R. Charytan, Theodore A. Livingston, John E. Muench
and Kaspar J. Stoffelmayr.
Drew S. Days, III, argued the cause for petitioner Qwest
Communications Corporation. With him on the briefs was
Robert H. Loeffler. Kenneth W. Irvin entered an appear-
ance.
Richard K. Welch, Counsel, Federal Communications Com-
mission, argued the cause for respondents. With him on the
brief were Joel I. Klein, Assistant Attorney General, U.S.
Department of Justice, Catherine G. O'Sullivan and Adam D.
Hirsh, Attorneys, Christopher J. Wright, General Counsel,
Federal Communications Commission, Daniel M. Armstrong,
Associate General Counsel, and John E. Ingle, Deputy Asso-
ciate General Counsel.
David W. Carpenter argued the cause for intervenors
AT&T Corporation, et al. With him on the brief were Peter
D. Keisler, Mark C. Rosenblum, Roy E. Hoffinger, William
Single, IV, Jerome L. Epstein, Donald B. Verrilli, Jr., How-
ard J. Symons, Sara F. Seidman, Albert H. Kramer, Andrew
D. Lipman, Richard M. Rindler, W. Anthony Fitch, Brian
Conboy, Thomas Jones and Robert M. McDowell. Genevieve
Morelli and Michael J. Shortley, III, entered appearances.
John Thorne, Michael E. Glover, Mark L. Evans and M.
Robert Sutherland were on the brief for amici curiae Bell
Atlantic Telephone Companies.
Before: Silberman, Williams and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Williams.
Williams, Circuit Judge: Until various conditions relating
to competition in local ("intraLATA") telephone service are
satisfied, the Telecommunications Act of 1996 generally bars
each Bell operating company ("BOC") from providing long
distance ("interLATA") service originating in the region
where it provides local service:
Neither a Bell operating company, nor any affiliate of a
Bell operating company, may provide interLATA ser-
vices except as provided in this section.
s 271(a) of the Communications Act, 47 U.S.C. s 271(a).
In May 1998 two of the BOCs, U S WEST and Ameritech,
announced deals with Qwest Communications Corporation
under which each BOC would market Qwest's long distance
service to its customers. Each BOC employed a special label
for the resulting package ("Buyer's Advantage" for U S
WEST, "CompleteAccess" for Ameritech); each offered the
customer "one-stop shopping" for both local and long dis-
tance, with all customer support (sign-up and servicing)
through the BOC's own toll-free number. Qwest was to
compensate each BOC with a fixed fee for every customer
obtained.
Competitors of Qwest in the long distance market filed
complaints in two federal district courts, which referred them
to the FCC. The Commission invited the filing of administra-
tive complaints, which duly followed. The Commission held
adjudicative proceedings and ultimately issued the order un-
der review here, finding the agreements in violation of s 271.
AT&T Corp. v. Ameritech Corp., 13 FCC Rcd 21,438 (1998).
U S WEST, Ameritech, and Qwest petitioned for review.
The statutory term "provide" appears to us somewhat
ambiguous in the present context. The Commission believes
that the disputed arrangements would give the two BOCs
positions in the market for local and long distance service that
would greatly advantage them once they become explicitly
entitled to provide long distance service. Given the reason-
ableness of that belief, and its relation to the overall purposes
of the Act, we find the Commission's interpretation here
permissible.
* * *
As we said, s 271 says that a BOC may not "provide
interLATA services except as provided in this section." Ex-
ceptions in the Act allow several forms of interLATA service
immediately; the rest--including the sort of service at issue
here--is permitted, on a state-by-state basis, only upon appli-
cation and FCC approval pursuant to s 271(d). See general-
ly SBC Communications Inc. v. FCC, 138 F.3d 410, 412-14
(D.C. Cir. 1998) (explaining history and structure of s 271(c)-
(d)). Neither U S WEST nor Ameritech has received
s 271(d) approval for any state: each is therefore subject to
the general s 271(a) prohibition.
Under Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984),
we of course honor Congress's clearly expressed answer to
the "question" confronted by the agency. See id. at 842-43.
Petitioners claim that s 271(a)'s ban clearly cannot apply to
any marketing arrangements; as the two Qwest arrange-
ments are a form of marketing, they reason that the Commis-
sion necessarily erred in its expansive view of "provide."
Petitioners base this claim on s 272 of the Act. It requires
that each BOC, even after receiving s 271(d) approval, pro-
vide most interLATA services only through a separate affili-
ate. See 47 U.S.C. s 272(a). Further, s 272(g)(2) places the
following restriction on the BOC and its affiliate:
A Bell operating company may not market or sell inter-
LATA service provided by an affiliate required by this
section within any of its in-region States until such
company is authorized to provide interLATA services in
such State under section 271(d) of this title.
Id. s 272(g)(2). The BOCs argue that since this section
prevents them from marketing the interLATA service of an
affiliate until they receive the go-ahead under s 271(d), it
carries a clear implication that they may, before that date,
market the interLATA services of a non-affiliate such as
Qwest. The Commission agreed--to the extent of reading
s 272(g)(2) as showing that the forbidden "provi[sion]" of
s 271(a) cannot cover all marketing relationships. See 13
FCC Rcd at 21,463, p 32. But some arrangements that are
marketing in the conventional sense of the word, it thought,
could also qualify as provision of service forbidden under
s 271(a). See id. at 21,463-64, p 33.
Addressing this precise question first, we think it plain that
the Commission's reading of the two sections has not led it
into any logical contradiction. So long as there remains some
non-trivial range of marketing of non-affiliate services that
does not fall under the s 271(a) ban, the Commission pre-
serves some scope for s 272(g)(2)'s implicit authorization.
The BOCs argue that the Commission in fact leaves no such
room, pointing to language in the Order saying that although
a BOC could offer its marketing services to a long distance
supplier, it could not "represent[ ] that [the marketed] prod-
uct or service is associated with its name or services." Id. at
21,474, p 50. Thus the Commission's view would, they say,
allow a marketing arrangement only if it "has no conceivable
business purpose." The exact meaning of "associated with its
name or services" is not before us, but we read the phrase
together with the Commission's expression of concern about
the BOCs' developing a "first mover's advantage" over long
distance carriers in the as yet undeveloped full-service mar-
ket. Id. at 21,467-68, 21,473, pp 40-41, 49. Thus, although
the Commission's view bars the BOCs from taking advantage
of some of the synergies that their marketing of interLATA
service might exploit, it cannot be said to cut the implicitly
permissible marketing down to zero or its functional equiva-
lent. For example, the Commission's decision explicitly al-
lows a BOC to offer the services of its marketing department
for sale of interLATA services, subject to the proviso noted
above. The Commission cannot be said to have squeezed the
life out of s 272(g)(2)'s implied permission. Thus, the BOCs'
argument from s 272(g)(2) doesn't compel the narrow reading
they claim for s 271(d).
Nor are there other reasons to suppose Congress clearly
intended such a narrow interpretation. Unlike numerous
other terms in the Telecommunications Act of 1996, neither
the word "provide" nor the phrase "provide interLATA ser-
vices" is anywhere defined in the Act. Cf. 47 U.S.C. s 153
(definitions). "InterLATA service" is defined--as "telecom-
munications between a point located in a local access and
transport area and a point located outside such area," id.
s 153(21)--but that doesn't help: the definition does not
specify some necessary relation of an actor to such telecom-
munications. Nor do any of the various ordinary meanings of
"provide" appear necessarily superior in this context. See 13
FCC Rcd at 21,460, p 27 (comparing dictionary definitions).
Petitioners also point to numerous other places where the
Act uses the term "provide" or its cognates, see 47 U.S.C.
s 153(44) ("provider of telecommunications services"); id.
s 153(45) ("provide telecommunications services"); id.
s 271(c) ("providing access and interconnection"); id.
s 272(a) ("provide" various services, including interLATA
services); id. s 275 ("provision of alarm monitoring ser-
vices"), arguing that the Commission's assignment of narrow
meanings to "provide" in those instances compels equal nar-
rowness here. But although we normally attribute consistent
meanings to statutory terms, "[i]dentical words may have
different meanings where the subject-matter to which the
words refer is not the same in the several places where they
are used, or the conditions are different." Weaver v. USIA,
87 F.3d 1429, 1437 (D.C. Cir. 1996) (internal quotation omit-
ted). As the Commission noted, no other section besides
s 271(a)-(b) uses "provide" to describe a restriction on BOCs'
entry into a market where the lifting of the restriction
depends on the BOCs themselves. 13 FCC Rcd at 21,462,
p 30. A narrow reading would thus tempt the BOCs to defer
conduct that Congress hoped to accelerate--acts facilitating
the development of competition in the intraLATA market.
FCC's reading of "provide" to include the BOCs' actions
here, moreover, appears clearly reasonable in the specific
context of s 271. See Chevron, 467 U.S. at 845. As the
Commission noted, s 271 both gives the BOCs an opportunity
to enter the long-distance market and conditions that oppor-
tunity on the BOCs' own actions in opening up their local
markets. See 13 FCC Rcd at 21,645, p 36. The Commission
viewed the powerful incentive set up by this scheme as
shedding light on the market entry prohibition:
[I]n order to determine whether a BOC is providing
interLATA service within the meaning of section 271, we
must assess whether a BOC's involvement in the long
distance market enables it to obtain competitive advan-
tages, thereby reducing its incentive to cooperate in
opening its local market to competition.
Id. at 21,465, p 37.
This seems reasonable as a general approach. Of course
too-broad a notion of "competitive advantage" or "incentive"
could make it nonsensical, turning it into an excuse to stifle
the BOCs at every opportunity. But the FCC found that the
arrangements here would have afforded the BOCs in question
a serious advantage, namely a "first mover's advantage" over
any non-BOC firms hoping to secure a position in the antici-
pated full-service market. See id. at 21,467-68, 21,473, pp 40-
41, 49. By offering one-stop shopping for local and long
distance under their own brand name and with their own
customer care, see id. at 21,466, p 38, U S WEST and
Ameritech could build up goodwill as full-service providers,
positioning themselves in these markets before s 271 allows
them actually to enter. There appears to have been specific
congressional concern over the impact of jointly marketed
local and long distance service; this is manifested in the
s 271(e) rule barring the major interLATA carriers from
jointly marketing their interLATA service with local service
obtained from a BOC, for three years or until the BOC in
question gains access to the long distance market under
s 271, whichever is first. See id. at 21,473-74, p 49; 47
U.S.C. s 271(e)(1). If the BOCs could secure this advantage
without opening their local service markets, the blunting of
the intended incentive would be considerable--or so the
Commission could reasonably find.
Petitioners seek to press the s 271(e) likeness further.
They note that the Commission, despite what they claim is an
incentive structure similar to s 271(a)'s, relied on the First
Amendment in allowing long distance carriers covered by
s 271(e) to engage in certain advertising activities paralleling
what is forbidden here. See In the Matter of Implementa-
tion of the Non-Accounting Safeguards of Sections 271 and
272 of the Communications Act of 1934, as amended, 11 FCC
Rcd 21905, 22,040-41, pp 279-80. But s 271(e) allows the
long distance carriers to (1) offer and market separately their
long distance service plus resold BOC services, and (2) offer
and market jointly their long distance service and local
service not based on resold BOC services. In that context,
the Commission allowed a covered carrier to proclaim its
offers both of long distance and of resold BOC local service in
a single ad, so long as it did not offer such service as a
"bundle" or otherwise with "one-stop" shopping. Id. In
short, it let them truthfully advertise the services they could
lawfully provide, but no more. As the BOCs are barred from
providing interLATA service until they have surmounted the
s 271(d) hurdles, the present case presents no real analogy.
Context also explains the Commission's application of the
"engage in the provision of alarm monitoring" language of
s 275. The Commission and the petitioners spar over wheth-
er the Commission's approach here is genuinely different, but
we need not resolve the clash, as the differences in the
statutory contexts justify different outcomes. See 13 FCC
Rcd at 21,462-63, p 31. Incentives are not as crucial in a
situation where the business prohibition will be lifted in a
fixed time, as they will for alarm monitoring, see 47 U.S.C.
s 275(a)(1), as where its duration depends on the BOC's own
actions.
The Commission's action here of course does not represent
a complete demarcation of the border between permitted
marketing and forbidden provision. That is entirely reason-
able. Apart from the Commission's general authority to
choose between adjudication and rulemaking, see NLRB v.
Bell Aerospace Co., 416 U.S. 267, 294 (1974), it makes sense
for it to proceed through case-by-case judgments of a ques-
tioned action's likely effect--whether, for example, the mar-
keting materials will cause consumers to identify the services
with the BOC. While--as we've noted--some of the Commis-
sion's language on incentives is rather broad, it is not incon-
sistent with future judgments balancing the interests that are
relevant under s 271(a). We are also puzzled by the Com-
mission's concern that the two BOCs in each instance laid
down the terms for the transaction, which Qwest humbly
accepted. 13 FCC Rcd at 21,449-50, 21,452, pp 10, 14. As
the BOCs had unique advantages to offer Qwest, this course
of events was hardly surprising; we cannot see that the issue
of who first proposed what to whom has much bearing on the
policy values at stake. But the Commission's detours on the
subject do not appear to have played a decisive role in its
decision.
Petitioners also assert a want of substantial evidence.
They regard the Commission's ultimate finding as belied by
Qwest's repeated identification in the BOCs' marketing mate-
rials as the long distance provider. But that identification is
still consistent with the view that the materials as a whole
would lead consumers to link long-distance service to the
BOCs, particularly as long distance was offered only as part
of a full-service package with a BOC brand name. Nor does
it appear that the FCC, by pointing to various activities
characterized as "typically performed by those who resell
interLATA services," 13 FCC Rcd at 21,471-73, pp 46, 48, was
somehow suggesting that the ultimate finding of "provider"
status depended on an intermediate finding of "reseller"
status; petitioners' arguments that they are not actually
resellers are thus misguided.
The petitions are
Denied.