United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 5, 2008 Decided February 10, 2009
No. 08-1234
VERIZON CALIFORNIA, INC., ET AL.,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION AND UNITED
STATES OF AMERICA,
RESPONDENTS
QWEST COMMUNICATIONS INTERNATIONAL INC., ET AL.,
INTERVENORS
On Petition for Review of an Order
of the Federal Communications Commission
Michael K. Kellogg argued the cause for petitioners. On
the briefs were Aaron M. Panner, Andrew G. McBride,
William P. Barr, Michael E. Glover, and Karen Zacharia.
Bennett L. Ross, Joshua S. Turner, Thomas R. McCarthy,
Joshua H. Seidermann, and Robert B. McKenna Jr. were on
the briefs for intervenors United States Telecom Association
and Independent Telephone & Telecommunications Alliance.
Craig E. Gilmore, Lawrence C. Keller, and Lewis A. Tollin
entered appearances.
2
James M. Carr, Counsel, Federal Communications
Commission, argued the cause for respondents. With him on
the brief were Thomas O. Barnett, Assistant Attorney General,
U.S. Department of Justice, Catherine G. O’Sullivan and
Nancy C. Garrison, Attorneys, Matthew B. Berry, General
Counsel, Federal Communications Commission, Joseph R.
Palmore, Deputy General Counsel, and Richard K. Welch,
Acting Deputy Associate General Counsel. Joel Marcus,
Counsel, Federal Communications Commission, entered an
appearance.
Donald B. Verrilli Jr. argued the cause for intervenors
Comcast Corporation, et al. With him on the brief were Mark
D. Schneider, Christopher W. Savage, Matthew A. Brill, J.
Scott Ballenger, Brian W. Murray, and Lori Alvino McGill.
Daniel L. Brenner, Neal M. Goldberg, and Michael S.
Schooler were on the brief for amicus curiae National Cable
& Telecommunications Association in support of respondents.
Gene Kimmelman and Chris Murray were on the brief for
amicus curiae Consumers Union in support of respondents.
Before: SENTELLE, Chief Judge, and TATEL, Circuit
Judge, and WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: When a telephone
service provider loses a phone customer, the customer is
entitled to “port” the existing phone number to the new
service provider. The latter initiates a Local Service Request
(“LSR”), which spurs the original provider into the necessary
technical action. The LSR also, of course, alerts the outgoing
provider to its imminent loss of a customer, and providers
3
may naturally be tempted to seize the chance to make a last
plea to the customer to remain loyal.
Verizon California, Inc., an incumbent local exchange
carrier, faces competition from cable companies that provide
voice services over Internet Protocol. It has in fact used
information provided by the LSR process to contact defecting
customers and offer them various incentives to stay with
Verizon, all before the number port is completed. (Verizon’s
efforts to win back customers after the completion of LSRs
are not at issue.)
Three cable companies—Bright House Networks, LLC,
Comcast Corporation, and Time Warner Cable Inc.—filed a
complaint about Verizon’s practice with the Federal
Communications Commission. They argued that Verizon’s
retention efforts violated the Telecommunications Act’s
restrictions on carriers’ use of other carriers’ proprietary
information for marketing purposes. 47 U.S.C. § 222(b). The
FCC agreed and ordered Verizon to cease and desist from
these efforts. Bright House Networks, LLC v. Verizon Cal.,
Inc., 23 FCC Rcd 10704, 10723 ¶ 48 (2008) (“Order”).
Verizon petitioned for review of the Order, mainly
arguing that the FCC had misinterpreted § 222(b) by applying
it where a telecommunications service is provided only by a
carrier submitting an LSR (here, the cable companies), not the
one receiving it (Verizon). Finding the FCC’s interpretation
of § 222(b) reasonable, and rejecting Verizon’s other
contentions, we deny the petition.
* * *
Section 222(b) (“Confidentiality of carrier information”)
reads,
4
A telecommunications carrier that receives or obtains
proprietary information from another carrier for purposes
of providing any telecommunications service shall use
such information only for such purpose, and shall not use
such information for its own marketing efforts.
47 U.S.C. § 222(b).
Before proceeding to the main issue, we note our
agreement with the Commission “that advance notice of a
carrier change that one carrier is required to submit to another
is carrier ‘proprietary information’ under section 222(b).”
Order, 23 FCC Rcd at 10709 ¶ 13 & n.42. Of course the
receiving carrier already knows its own customer’s name and
phone number, but the information that a competitor has just
won the customer over, which is vital to the timing of
Verizon’s retention marketing, is proprietary information that
the competitor discloses only because it must do so in order to
effect the number port, id. ¶ 12.
The main disagreement between the parties revolves
around the phrase “for purposes of providing any
telecommunications service.” 47 U.S.C. § 222(b). Does it
refer only to information received for purposes of the
receiving carrier’s provision of a telecommunications service
(Verizon’s position) or does it also cover situations where
information is received for purposes of the submitting
carrier’s provision of such service (the FCC’s position)? At
least without classifying the receiving carrier’s role in the
porting process as provision of a telecommunications service
(a view that presents some difficulties), the distinction is
critical, as the information provided to Verizon via an LSR is
to enable the submitting carrier, and not Verizon, to provide a
telecommunications service.
5
Under the familiar Chevron framework, we defer to the
FCC’s reasonable interpretation so long as it doesn’t
contradict the Act’s unambiguous text. Chevron U.S.A. Inc. v.
NRDC, 467 U.S. 837, 842–44 (1984). Of course, as with all
agency actions subject to the Administrative Procedure Act,
the interpretation also must not be arbitrary and capricious. 5
U.S.C. § 706(2)(A).
We do not believe that the statutory language is
unambiguously contrary to the FCC’s interpretation. Section
222(b) does not explicitly state which carrier is to provide the
telecommunications service. Granted, the first reading that
comes to mind is that the statute covers only situations where
the receiving carrier is the one providing such a service. To
use an example offered by Verizon, in the sentence “Joe
received information from Mary for purposes of drafting a
brief,” it is overwhelmingly likely that the speaker expects Joe
to do the drafting. But one can imagine contexts where Mary
would be understood as the prospective drafter—where, for
example, Joe was to use the information to develop a legal
argument or to organize factual material and provide the
results to Mary for her brief-writing. The context is key.
Understandably, therefore, the FCC looked to the context
of § 222(b), including its own precedent. The FCC had
earlier tackled the problem of so-called “slamming”—the
practice of submitting or executing an unauthorized change in
a subscriber’s telephone service provider. There, similarly, a
new provider submits information to its predecessor to enable
the submitting carrier to provide service. The Commission
held that information so received “may only be used by the
executing carrier [the losing competitor] to effectuate the
provision of service by the submitting carrier to its
customers.” In re Implementation of the Subscriber Carrier
Selection Changes Provisions of the Telecommunications Act
of 1996: Policies and Rules Concerning Unauthorized
6
Changes of Consumers’ Long Distance Carriers, 18 FCC Rcd
5099, 5109 ¶ 25 (2003) (emphasis added), quoted in Order,
23 FCC Rcd at 10712 ¶ 21. To be sure, the ruling did not
offer a linguistic exegesis of § 222(b), but in treating § 222(b)
as binding the executing carrier even though it is not to be
providing the service at issue, the ruling at the very least
constitutes a precedent. Verizon seems not to dispute the
existence of the precedent, nor its soundness as a matter of
statutory interpretation. Rather it asserts the anti-slamming
ruling “cannot be read this way because it addressed local
carriers’ provision of exchange access service—a wholesale
telecommunications service that is provided to the carrier
submitting the information.” Verizon Reply Br. 13 n.8. But
the point of the ruling, for our purposes, is simply the
application of § 222(b) where the service in question was only
the service to be provided by the submitting carrier.
Verizon’s interpretation, moreover, would lead to an
anomalous result. Its argument against the cable company
complainants turns entirely on the point that they will provide
the new telecommunications service exclusively with their
own facilities. As Verizon reads it, the statute would protect
carriers that purchased telecommunications service from
Verizon on a wholesale basis and then resold it to their own
customers, and carriers that leased unbundled network
elements from Verizon for the provision of
telecommunications service, but not carriers like the
complainants that simply submitted LSRs to Verizon so that
they could provide telephone service with their own facilities.
Yet, the Commission noted, it has read the basic statute, the
Telecommunications Act of 1996, as having the promotion of
facilities-based local competition as its fundamental policy,
Order, 23 FCC Rcd at 10714 ¶ 27, a reading which we have
readily accepted, U.S. Telecom Ass’n v. FCC, 359 F.3d 554,
577 (D.C. Cir. 2004).
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Verizon argues that the FCC’s interpretation raises
serious First Amendment difficulties and accordingly should
enjoy less than full Chevron deference. It is true that there are
certain oddities in the Commission’s justification of the rule.
It confined itself to cross-referencing In re Implementation of
the Subscriber Carrier Selection Changes Provisions of the
Telecommunications Act of 1996: Policies and Rules
Concerning Unauthorized Changes of Consumer Long
Distance Carriers, 14 FCC Rcd 1508, 1573–75 ¶¶ 107–11
(1998) (the “1998 Anti-Slamming Decision”), where it had
justified a similar application of § 222(b) largely in terms of
“eliminating restraints on competition,” id. at ¶ 108. But of
course the Order itself imposes a restraint on competition;
and Verizon submitted a study, undiscussed by the
Commission, setting forth claims that continuation of its
marketing program would generate $75–79 million in benefits
for telephone customers over a five-year period, Joint
Appendix (“J.A.”) 259 ¶ 28.
But a study of the Order and the 1998 Anti-Slamming
Decision makes clear that the Commission’s concern is really
to assure the losing carrier’s neutral role in the execution
process (here, execution of porting). Order, 23 FCC Rcd at
10713 ¶ 22. Neutrality, as the FCC explained at oral
argument, helps avoid the “two-masters problem,” to make
sure that Verizon’s incentive on receiving an LSR is
unambiguously to complete it promptly and effectively. Oral
Arg. Tr. 28–30. For example, despite the parties’ stipulation
that “Verizon does not have a practice of delaying the porting
of numbers in order to engage” in retention marketing, J.A.
272, there is evidence in the record that the combination of
Verizon’s retention marketing with its LSR process has
introduced unnecessary errors into its number porting,
Supplemental Appendix 60–62. Thus the FCC’s basic
determination was to eliminate the apparent conflict of
interest, compelling Verizon to focus first on completing the
8
result of another carrier’s successful marketing before
engaging in its own.
This analysis compels our rejection of Verizon’s First
Amendment argument. The Order limits commercial speech,
and thus need satisfy only intermediate scrutiny. See Central
Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447
U.S. 557, 564 (1980). We agree with the FCC that curing the
two-masters problem is a substantial interest and that the
prohibition against retention marketing during the short time
period while an LSR is pending advances that interest directly
and is “designed carefully” to achieve the stated goal. Order,
23 FCC Rcd at 10721 ¶ 44 n.109 (citing the 1998 Anti-
Slamming Decision, 14 FCC Rcd 1508, 1573–75 ¶¶ 107–11
(1998)). As the Commission noted in the 1998 Anti-
Slamming Decision, the executing carrier is disabled only
from using an opportunity fortuitously placed in its hands by a
technological necessity—the fact that its technical cooperation
is essential to implementation of the submitting carrier’s
competitive victory. See 14 FCC Rcd at 1574–75 ¶¶ 109–10.
We thus do not find a First Amendment violation, nor even
the sort of serious constitutional difficulty that would counsel
against extending Chevron deference to the FCC’s
interpretation of § 222(b). Cf. AFL-CIO v. FEC, 333 F.3d
168, 175 (D.C. Cir. 2003) (“[W]e do not accord [an agency]
deference when its regulations create serious constitutional
difficulties.” (quotation omitted)).
* * *
Verizon also contends that at the very least we should
vacate the Order with respect to two carriers affiliated with
and serving Comcast and Bright House. These affiliates, the
argument goes, are not “telecommunications carriers” within
the meaning of the Act because they do not hold themselves
9
out as common carriers, “undertak[ing] to carry for all people
indifferently.” V.I. Tel. Corp. v. FCC, 198 F.3d 921, 926
(D.C. Cir. 1999) (quoting Nat’l Ass’n of Regulatory Util.
Comm’rs v. FCC, 525 F.2d 630, 641 (D.C. Cir. 1976), and
citing the Act’s definition of the term “telecommunications
service” as “offering of telecommunications for a fee directly
to the public, or to such classes of users as to be effectively
available directly to the public, regardless of the facilities
used,” 47 U.S.C. § 153(46)). (Verizon does not dispute that
Sprint Communications Company L.P., the carrier serving
Time Warner, is in fact a common carrier.) Though the issue
is closer, we do not find the Commission’s classification
unlawful.
The FCC found that three pieces of evidence, taken
together, amounted to a prima facie case that the affiliates had
held themselves out as common carriers. First, they self-
certified that they do and will continue to operate as common
carriers, serving all similarly situated customers equally.
Order, 23 FCC Rcd at 10718 ¶ 39. Second, the carriers
entered into publicly available interconnection agreements
with Verizon, something that Verizon was obligated to do
only if the other entities were in fact telecommunications
carriers. Id. at 10718–19 ¶¶ 39–40 & n.99. Verizon’s
behavior is telling. Interconnection obligations curtail
potential anticompetitive advantages that network effects
might afford a local exchange carrier, see Jonathan E.
Nuechterlein & Philip J. Weiser, Digital Crossroads 80
(2005), advantages Verizon would presumably be loath to
give up. Finally, each carrier obtained a state certificate of
public convenience and necessity, thereby giving public
notice of its intent to act as a common carrier. Order, 23 FCC
Rcd at 10718 ¶ 39. While none of the three facts by itself
seems compelling, in the aggregate they appear enough to
render the Commission’s conclusion reasonable.
10
Like the Commission, we are not troubled by the fact that
Bright House and Comcast-affiliated carriers are currently
serving only their affiliates. As the FCC explained, “[i]f a
voice services provider similarly situated to Comcast and
Bright House were looking for a provider of these services,
the Comcast and Bright House Competitive Carriers would be
obvious choices.” Id. at 10719 ¶ 40. Verizon does not
present any evidence to suggest that the disputed affiliates
would turn away such a customer.
In our court, Verizon makes much of the fact that the
Commission, having concluded that the two carriers were
telecommunications carriers for purposes of § 222(b), left
open a possibility that they might not be telecommunications
carriers for purposes of other provisions of the Act. See id.
¶ 41. That, says Verizon, is the very definition of arbitrary
and capricious decisionmaking. But the Commission simply
refrained from reaching any decision as to the classification of
the affiliates in other statutory contexts. It said, “We leave
those determinations for another day.” Id. Although a phrase
in a statute is typically assumed to have the same meaning
throughout, “it is not impermissible under Chevron for an
agency to interpret an imprecise term differently in two
separate sections of a statute which have different purposes.”
Abbott Labs. v. Young, 920 F.2d 984, 987 (D.C. Cir. 1990),
quoted in Order, 23 FCC Rcd at 10719–20 ¶ 41 n.100.
“Identical words may have different meanings where [among
other things] the conditions are different.” Weaver v. U.S.
Info. Agency, 87 F.3d 1429, 1437 (D.C. Cir. 1996) (quoting
Atlantic Cleaners & Dyers, Inc. v. United States, 286 U.S.
427, 433 (1932)). Because of that possibility—different
contexts dictating different interpretations—courts addressing
the meaning of a term in one context commonly refrain from
any declaration as to its meaning elsewhere in the same
statute. We cannot see that the Commission’s non-resolution
11
of these other issues rendered its reasoning any more
questionable than would a court’s similar exercise of caution.
* * *
Verizon’s petition for review is accordingly
Denied.