United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 20, 2009 Decided July 17, 2009
No. 07-1426
AD HOC TELECOMMUNICATIONS USERS COMMITTEE, ET AL.,
PETITIONERS
v.
FEDERAL COMMUNICATIONS COMMISSION AND UNITED
STATES OF AMERICA,
RESPONDENTS
AT&T INC., ET AL.,
INTERVENORS
Consolidated with 07-1427, 07-1429, 07-1430, 07-1431,
07-1452, 07-1484, 07-1503
On Petitions for Review of Orders
of the Federal Communications Commission
Colleen L. Boothby and Christopher J. Wright argued the
cause for private petitioners. With them on the briefs were
David P. Murray, Thomas Jones, Randy Branitsky, Russell M.
Blau, Joshua M. Bobeck, Brad E. Mutschelknaus, Genevieve
Morelli, John J. Heitmann, Timothy J. Simeone, and Joseph
C. Cavender.
2
Stefanie A. Brand was on the brief for petitioner the New
Jersey Division of Rate Counsel. With her on the briefs was
Ronald K. Chen and Christopher J. White.
Richard K. Welch, Acting Deputy Associate General
Counsel, Federal Communications Commission, argued the
cause for respondent. With him on the brief were Matthew B.
Berry, General Counsel, Jacob M. Lewis, Associate General
Counsel, and Laurel R. Bergold, Counsel. Robert B.
Nicholson and Robert J. Wiggers, Attorneys, U.S. Department
of Justice, and James M. Carr, Counsel, Federal
Communications Commission, entered appearances.
Jonathan E. Nuechterlein argued the cause for
intervenors AT&T Inc., et al. in support of the respondent.
With him on the brief were Lynn R. Charytan, Heather M.
Zachary, Jack S. Zinman, Gary L. Phillips, Paul K. Mancini,
Michael E. Glover, Edward Shakin, William H. Johnson,
Craig J. Brown, Robert B. McKenna, David W. Zesiger, Scott
H. Angstreich, Gregory G. Rapawy, and Gregg Sayre.
Before: SENTELLE, Chief Judge, and KAVANAUGH,
Circuit Judge, and EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge
KAVANAUGH.
KAVANAUGH, Circuit Judge: This case involves the
FCC’s regulation of “special access” broadband lines that
connect individual businesses to their incumbent local
exchange carriers. Businesses need dedicated special access
lines to utilize essential broadband applications. In many
areas, however, only one incumbent local exchange carrier
(usually AT&T, Verizon, or Qwest) maintains the special
3
access lines that connect to individual businesses in that
locale. The “last mile” for broadband business customers thus
differs from the analogous last mile for residential customers,
who typically have at least two wires into their homes over
which they can obtain Internet service (namely, their
traditional telephone and cable lines). The ILECs’ current
control of most special access lines into businesses forms the
backdrop for the FCC’s action in this case.
Applying its statutory forbearance authority, the FCC
largely eliminated what the Commission refers to as
dominant-carrier pricing regulation with respect to AT&T’s
special access lines – as well as those of two smaller ILECs,
Embarq and Frontier. But at the same time, the FCC
maintained basic Title II common-carrier regulation on those
ILECs’ special access lines, including requirements for
interconnection and that ILECs’ prices be just, reasonable,
and not unreasonably discriminatory.
A coalition of businesses, as well as competitive
broadband providers that lease special access lines from the
ILECs, argue that the FCC’s decision was arbitrary and
capricious under the Administrative Procedure Act. They
contend that the FCC must continue to impose not just
common-carrier regulation but also dominant-carrier pricing
regulation on ILECs with respect to their special access lines.
We disagree. Applying the deferential arbitrary and
capricious standard, we find the FCC’s decision to recalibrate
the degree of regulation imposed on the ILECs’ special access
lines to be reasonable and reasonably explained. We
therefore deny the petitions for review.
4
I
The background leading to this case is familiar to many,
but we recount it briefly. In so doing, we will simplify the
story a bit and strive to keep the jargon to a minimum.
Federal communications law historically distinguished
telephone systems and cable systems. On the one hand,
wireline telecommunications services have been governed by
Title II of the Communications Act of 1934, which imposes
various common-carrier requirements on telecommunications
carriers.
By contrast, cable services have been governed by a
separate set of obligations set forth in Title VI of the Act.
Cable services have generally been exempt from mandatory
common-carrier regulation.
Broadband services do not correspond to the old
telephone-cable regulatory divide: A residential customer can
obtain high-speed or broadband Internet access over the
telephone line through Digital Subscriber Line (DSL) service
offered by local “telephone companies,” or through cable
modem service offered by “cable companies,” among other
newer alternatives provided by satellite companies and
electric companies. See Nat’l Cable & Telecomm. Ass’n v.
Brand X Internet Servs., 545 U.S. 967, 975 (2005).
The FCC ultimately decided that services offering the
same essential functions to residential customers should not
be regulated under different statutory frameworks simply
because of the wire used. To harmonize its regulatory
approach, the FCC ruled that many common-carrier
obligations would not apply to residential broadband lines,
whether DSL or cable modem. See Internet Over Cable
5
Declaratory Ruling, 17 F.C.C.R. 4,798 (2002); see also
Wireline Broadband Order, 20 F.C.C.R. 14,853 (2005); see
generally Brand X, 545 U.S. at 973-74; Daniel F. Spulber &
Christopher S. Yoo, Rethinking Broadband Internet Access,
22 HARV. J.L. & TECH. 1, 16-18 (2008).
Unlike residential customers who typically rely on their
telephone or cable wires to obtain broadband Internet service,
business customers ordinarily can obtain essential broadband
services1 only through a dedicated high-capacity special
access line owned by an ILEC such as AT&T, Verizon, or
Qwest. See WorldCom, Inc. v. FCC, 238 F.3d 449, 453 (D.C.
Cir. 2001); Lawrence A. Sullivan, Is Competition Policy
Possible in High Tech Markets?: An Inquiry Into Antitrust,
Intellectual Property, and Broadband Regulation as Applied
to “The New Economy,” 52 CASE W. RES. L. REV. 41, 76
(2001). Because one ILEC usually controls the only special
access line to an individual business, there is of course
concern that the ILEC might charge unduly excessive rates or
improperly discriminate against unaffiliated broadband
service providers seeking to lease its lines.
As a starting point, the FCC has determined that Title II
pricing and common-carrier regulations largely still apply to
the ILECs’ special access lines, absent forbearance. See
Wireline Broadband Order, 20 F.C.C.R. at 14,861, ¶ 9. The
issue for the FCC, therefore, has been when and how much to
forbear from applying the Title II obligations using its
statutory forbearance authority. See 47 U.S.C. §§ 160, 1302.
To put that choice into context, some overview of Title II and
the FCC’s regulations is necessary.
1
Those services include Ethernet, Frame Relay, ATM, LAN,
Video Transmission, Optical Network, and Wave-Based services.
6
Title II imposes certain mandatory common-carrier
requirements on interstate telecommunications carriers. For
example, telecommunications carriers must charge just and
reasonable rates. Id. § 201(b). Telecommunications carriers
must not engage in unreasonable discrimination. Id. § 202(a).
And telecommunications carriers must allow other carriers to
interconnect with their networks. Id. § 251(a)(1).
Additional statutory pricing regulation also applies to
what the FCC refers to as dominant carriers. As relevant
here, dominant carriers are typically subject to rate-of-return
regulation or price caps accompanied by stringent tariff
advance filing rules, whereas non-dominant common carriers
are not. See id. §§ 203(b), 204(a)(3); compare 47 C.F.R. §§
61.38, 61.41, 61.58 with id. §§ 1.773(a)(ii), 61.23(c).2
Title II was enacted in 1934 in part to regulate
monopolistic telephone service, at a time when broadband
service obviously was not offered. As Congress and the FCC
have recognized, regulation of broadband can pose different
issues and challenges than regulation of local telephony.
2
The FCC’s so-called Computer Inquiry rules impose
nondiscriminatory access and tariffing requirements on
telecommunications carriers providing “enhanced” services –
namely those that bundle computer-processing applications with
“basic” telephone services. See Brand X, 545 U.S. at 976; Scott
Blake Harris et al., Regulating Broadband, 23 COMM. LAW. 1, 34-
35 (Summer 2005). As applied by the FCC, those rules subject
telecommunications carriers with greater market power to more
stringent obligations. For purposes of this case, we need not
discuss the overlapping obligations imposed by the Computer
Inquiry pricing rules separately from those imposed by the FCC’s
dominant-carrier pricing regulation: The FCC’s decisions to
forbear from applying certain dominant-carrier regulations and
Computer Inquiry requirements rise or fall together.
7
In 1996, to guide the FCC’s regulation of broadband in
the residential and business markets, Congress enacted § 706
of the Telecommunications Act, 47 U.S.C. § 1302.
Section 706 directs the Commission to “encourage the
deployment” of broadband “on a reasonable and timely
basis.” Naturally, there are different ideas about the best
means to achieve that statutory objective – for example, some
advocate a more market-based approach (which would spur
more facilities-based competition) and others favor a more
common-carrier, equal-access-based approach.
Interestingly, and perhaps not surprisingly given the
compromises necessary to reach agreement on such a massive
piece of legislation, Congress did not choose between those
competing philosophies for broadband regulation. To be sure,
the preamble to the Act does say that it is to “promote
competition and reduce regulation.” Pub. L. No. 104-104,
110 Stat. 56, 56 (1996) (emphasis added). But § 706 speaks
in very broad terms and instructs the FCC to facilitate
broadband deployment “by utilizing, in a manner consistent
with the public interest, convenience, and necessity, price cap
regulation, regulatory forbearance, measures that promote
competition in the local telecommunications market, or other
regulating methods that remove barriers to infrastructure
investment.” And § 706 mandates that, if broadband
capability is not being sufficiently deployed, the Commission
“shall take immediate action to accelerate deployment of such
capability by removing barriers to infrastructure investment
and by promoting competition in the telecommunications
market.”
The general and generous phrasing of § 706 means that
the FCC possesses significant, albeit not unfettered, authority
8
and discretion to settle on the best regulatory or deregulatory
approach to broadband – a statutory reality that assumes great
importance when parties implore courts to overrule FCC
decisions on this topic.
As contemplated by § 706, the FCC has utilized
forbearance from certain Title II regulations as one tool in its
broadband strategy. Forbearance decisions are governed by
the Communications Act’s § 10, codified as amended at 47
U.S.C. § 160, which provides that any telecommunications
carrier may file a petition with the FCC requesting that the
Commission forbear from applying any Communications Act
provisions or FCC rules to specific services. Under § 10, the
FCC must grant forbearance if enforcement is unnecessary to
ensure that rates and practices are just, reasonable, and not
unreasonably discriminatory; enforcement is unnecessary to
protect consumers; and forbearance is consistent with the
public interest, in that it “will promote competitive market
conditions” and “enhance competition among providers of
telecommunications services.”
Until recently, ILECs such as AT&T, Verizon, and
Qwest had been subject to both basic common-carrier and
dominant-carrier pricing regulation with respect to their
special access lines. In 2004, Verizon filed a petition with the
FCC seeking forbearance from regulations regarding its
provision of certain special access services to business
customers.
The Commissioners deadlocked 2-2 on Verizon’s
petition. The forbearance statute provides that a forbearance
petition “shall be deemed granted if the Commission does not
deny the petition for failure to meet the requirements for
forbearance under [§ 10] within one year” of filing. Cf. Sprint
Nextel Corp. v. FCC, 508 F.3d 1129, 1133 (D.C. Cir. 2007)
9
(“deemed granted” disposition of Verizon’s forbearance
petition unreviewable).
Later in 2006, AT&T and two smaller ILECs, Embarq
and Frontier, sought to follow Verizon’s lead and filed
petitions with the FCC seeking comparable forbearance.3 As
ILECs, they claimed that both dominant-carrier regulation and
basic common-carrier requirements were unnecessary and
unduly hindered their ability to compete in providing certain
specified services over their special access lines.
In 2007, the FCC (now back at full strength with five
Commissioners) granted AT&T, Embarq, and Frontier only
partial forbearance. See AT&T Title II and Computer Inquiry
Forbearance, 22 F.C.C.R. 18,705 (2007) (AT&T Order);
Embarq and Frontier Title II and Computer Inquiry
Forbearance, 22 F.C.C.R. 19,478 (2007) (Embarq/Frontier
Order). The FCC’s decision granted forbearance from
dominant-carrier regulation but not from basic common-
carrier regulation. See AT&T Order, 22 F.C.C.R. at 18,707, ¶
2; Embarq/Frontier Order, 22 F.C.C.R. at 19,480, ¶ 2. The
FCC emphasized that the ILECs, in operating their special
access lines, must continue to comply with Title II common-
carrier regulation generally applicable to all
telecommunications carriers – most importantly, the
requirements to allow interconnection and to charge prices
that are just, reasonable, and not unreasonably
discriminatory.4
3
AT&T and BellSouth filed separate forbearance petitions but
later merged.
4
The FCC later similarly resolved a forbearance petition by
Qwest, another significant ILEC provider of special access lines.
10
Several competitor carriers that lease special access lines
and a trade association representing broadband business
customers challenge the FCC’s action. They argue that the
FCC should have denied forbearance and maintained
dominant-carrier regulation on these three ILECs.
II
Congress has directed the FCC to make the major policy
decisions and to select the mix of regulatory and deregulatory
tools the Commission deems most appropriate in the public
interest to facilitate broadband deployment and competition.
Telecommunications Act of 1996, § 706, 47 U.S.C. § 1302.
Our task on review is therefore limited. We review the
FCC’s action in this case only to ensure that it is not
“arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” 5 U.S.C. § 706(2)(A). That
standard is particularly deferential in matters such as this,
which implicate competing policy choices, technical
expertise, and predictive market judgments. See EarthLink,
Inc. v. FCC, 462 F.3d 1, 12 (D.C. Cir. 2006); see also Time
Warner Telecomm., Inc. v. FCC, 507 F.3d 205, 221 (3d Cir.
2007).
The FCC’s forbearance decision in this case readily
satisfies the applicable arbitrary and capricious standard of
review. The FCC reached a hotly debated and eminently
debatable, but ultimately reasonable, conclusion that
eliminating the extra layer of dominant-carrier pricing
regulation on the ILECs’ special access lines – while leaving
in place basic Title II common-carrier regulation – will better
promote competition and the public interest. We find no legal
basis to upset the FCC’s policy judgment.
11
In this Court, petitioners primarily argue that the FCC
examined the wrong product market and wrong geographic
market when it analyzed competition in broadband services
nationwide, rather than focusing more precisely on special
access lines in identified local markets. According to
petitioners, the fact that there is competition among
broadband business service providers – who generally lease
special access lines from ILECs – does not change the fact
that the ILECs control most connections to businesses. They
suggest, therefore, that the FCC’s analysis is equivalent to
arguing that there is competition in bus service to a local
airport because of competition among the airlines providing
air service at the airport.
To begin with, in our recent decision in EarthLink, Inc. v.
FCC, we rejected a similar argument challenging the FCC’s
decision to forbear from imposing unbundling obligations on
the Bell Operating Companies’ broadband services. 462 F.3d
at 8. Given the rapidly changing state of the overall
broadband market and § 706’s direction that the FCC may
look to and attempt to shape possible future developments in
regulating broadband, we stated that the law does not compel
a “particular mode of market analysis or level of geographic
rigor” when the agency forbears from imposing certain
requirements on broadband providers. Id.; see also Time
Warner Telecomm., 507 F.3d at 221 (examining FCC’s
Wireline Broadband Order and permitting FCC to “refrain
from a traditional market analysis and to rely instead on larger
trends and predictions concerning the future of the broadband
services market”).
Even putting the EarthLink precedent aside, petitioners’
focus on the narrowest possible market is unavailing in this
case. To be sure, petitioners’ submission might pack more
force had the FCC lifted all common-carrier regulation on the
12
ILECs’ special access lines, thereby potentially allowing
ILECs to leverage their control over special access lines into
undue control of the broadband business services market (and
to presumably squeeze out competitive broadband business
service providers). But the FCC did no such thing. Rather,
the Commission expressly recognized that ILECs’ control of
bottleneck special access lines in certain local areas creates
the potential for improper exercise of market power. The
FCC therefore refused the ILECs’ forbearance petitions in
part and retained basic Title II common-carrier regulation on
the ILECs’ special access lines. As the Commission
explained, AT&T, Embarq, and Frontier “continue to be
subject to sections 201 and 202 of the Act . . . which, among
other things, mandate that [the ILECs] provide interstate
telecommunications services upon reasonable request and
prohibit [the ILECs] from acting in an unjust or unreasonable
manner or otherwise favoring particular entities in the
provision of ‘like’ services provided to other entities.” AT&T
Order, 22 F.C.C.R. 18,705, 18,726, ¶ 35 (2007);
Embarq/Frontier Order, 22 F.C.C.R. 19,478, 19,498, ¶ 34
(2007).
Therefore, the precise issue here is whether the FCC was
arbitrary and capricious in concluding that the ILECs, while
subject to basic Title II common-carrier regulation, need not
also be subjected to dominant-carrier regulation.
For present purposes, the most relevant impact of
dominant-carrier regulation is to subject ILECs to price caps,
rate-of-return regulation, or FCC approval of its prices and
rates – as opposed to a more generic Title II mandate to
charge prices and rates that are just, reasonable, and not
unreasonably discriminatory. The FCC determined that such
additional dominant-carrier obligations on ILECs were “not
necessary to ensure” that ILECs’ special access charges were
13
“just, reasonable, and not unjustly or unreasonably
discriminatory.” AT&T Order, 22 F.C.C.R. at 18,723-24,
¶ 30; Embarq/Frontier Order, 22 F.C.C.R. at 19,496, ¶ 29.
The Commission explained at some length that dominant-
carrier regulation – with its requirement that the FCC approve
the ILECs’ prices and charges – “may create market
inefficiencies, inhibit carriers from responding quickly to
rivals’ new offerings, and impose other unnecessary costs.”
AT&T Order, 22 F.C.C.R. at 18,725, ¶ 33; Embarq/Frontier
Order, 22 F.C.C.R. at 19,497, ¶ 32. The Commission
predicted that eliminating dominant-carrier regulation will
increase competition by freeing the ILECs from unnecessary
regulation. The “better policy,” the FCC said, was to allow
the ILECs to “respond to technological and market
developments without the Commission reviewing in advance
the rates, and terms, and conditions under which [the ILECs
offer] these services.” AT&T Order, 22 F.C.C.R. at 18,725,
¶ 33; Embarq/Frontier Order, 22 F.C.C.R. at 19,497, ¶ 32.
To respond to the concern that ILECs might be able to
skirt their basic Title II common-carrier obligations to allow
interconnection and charge just, reasonable, and not
unreasonably discriminatory prices, the FCC pointed out that
business end-users and competitive broadband service
providers who lease or use the ILECs’ special access lines
may bring complaints under 47 U.S.C. § 208. Section 208
establishes a formal fast-track process for business end-users
and competitive broadband providers to challenge the
reasonableness of rates charged by ILECs, among other
things. Under § 208, all complaints as to “the lawfulness of a
charge, classification, regulation, or practice” will be
investigated and resolved within five months. Id. § 208(b)(1).
In its decision here, moreover, the FCC reiterated its
commitment to the five-month mandate for resolution of
§ 208 complaints. See AT&T Order, 22 F.C.C.R. at 18,726,
14
¶ 36; Embarq/Frontier Order, 22 F.C.C.R. at 19,498, ¶ 35. In
that regard, it bears mention that competitive broadband
business service providers and business customers are
sophisticated entities that presumably would not be shy about
invoking available remedies if faced with ILECs gouging
them.
The FCC’s decision also was limited in another important
way: The FCC declined to grant forbearance with respect to
the ILECs’ “TDM-based” DS1 and DS3 special access
services – namely, those that use traditional Time Division
Multiplexing technology. The FCC granted forbearance from
dominant-carrier regulation only with respect to the ILECs’
“non-TDM-based” special access services: packet-switched
broadband and optical transmission services.5 This means the
following: To the extent ILECs try to abuse their control over
special access lines, competitive carriers not only can file
§ 208 complaints with the FCC but also can obtain access to
the ILECs’ price-regulated TDM-based services to provide
and compete with the ILECs in providing non-TDM-based
special access services. All parties concede that it is
technically feasible to use TDM-based services in this way,
but petitioners argue that it is not economically feasible to do
so. In advancing this argument, they particularly focus on
Ethernet service. As the FCC noted, however, that protest lies
in some tension with the evident success of big-time
competitive broadband business service providers that use
ILECs’ TDM-based inputs, as reflected in the record
evidence. See AT&T Order, 22 F.C.C.R. at 18,721, ¶ 26 &
n.109; Embarq/Frontier Order, 22 F.C.C.R. at 19,494, ¶ 25 &
5
The specified services include Ethernet, Frame Relay, ATM,
LAN, Video Transmission, Optical Network, and Wave-Based
services. See AT&T Order, 22 F.C.C.R. at 18,713, ¶ 12;
Embarq/Frontier Order, 22 F.C.C.R. at 19,485-86, ¶ 12.
15
n. 102. For example, Time Warner Telecom has proclaimed
that, by using ILECs’ TDM-based special access inputs in
areas where it has not deployed its own facilities, it has been
able to “affordably” and “cost-effectively deliver our
industry-leading Ethernet portfolio to customers anywhere.”
Press Release, Time Warner Telecom and Overture Networks
Provide Ethernet Anywhere (June 6, 2006). Other
competitive providers similarly advertise their ability to use
DS1 and DS3 circuits to provide broadband services to
businesses. See Press Release, Deltacom Launches New
Ethernet Services Using Overture Networks Technology
(June 14, 2007); Press Release, XO Communications Signs
Multi-Million Dollar Deal with Hatteras Networks for
Nationwide Mid-Band Ethernet Services Rollout (April 19,
2007); see also Letter from William H. Johnson, Verizon
Assistant General Counsel to Marlene H. Dortch, FCC
Secretary, at 3 (Oct. 9, 2007).
In refusing to continue saddling the ILECs with
dominant-carrier regulation in addition to common-carrier
regulation, the FCC also noted competitive carriers’ growing
ability to deploy their own facilities and thereby reduce their
reliance on ILECs altogether. See AT&T Order, 22 F.C.C.R.
at 18,724, ¶ 32; Embarq/Frontier Order, 22 F.C.C.R. at
19,496-97, ¶ 31. The FCC recognized the significant
construction costs of replicating the ILECs’ last-mile
connections to individual businesses. But those costs, the
FCC explained, nonetheless could be justified – and perhaps
more importantly, were already being justified by several
competitive providers – by the sizable revenues that could be
obtained. See AT&T Order, 22 F.C.C.R. at 18,724, ¶ 32
(citing FCC findings, studies, and various competitive
carriers’ public statements regarding their self-deployments);
Embarq/Frontier Order, 22 F.C.C.R. at 19,496-97, ¶ 31
(same). As intervenors noted, self-deployment is not simply a
16
theoretical possibility; it is occurring. Perhaps an obvious
point, but a decision that gives owners of telecommunications
lines more control over access to those lines tends to increase
the incentive for competitors to build competing lines. The
FCC is permitted under § 706 to take that action-forcing
consideration into account when calibrating the appropriate
degree of regulation on ILECs’ special access lines. The FCC
thus reasonably considered both the existence and the
desirability of self-deployment as factors that further
supported eliminating dominant-carrier regulation on the
ILECs.
Finally, in reaching its decision, the FCC emphasized that
its ongoing Special Access Rulemaking proceeding will
address, on an industry-wide basis, general concerns about
discriminatory practices by ILECs with respect to their special
access lines. In that docket, the Commission is looking
broadly and deeply at the market to make sure ILECs are not
engaging in unjust and unreasonable practices. It is true that
the proceeding seems to be moving at a slow pace. But even
as we write, numerous interested parties are making their
voices heard both to the FCC and in the broader public debate
over this issue. That is as it should be. For present purposes,
the relevant point is that the FCC’s forbearance decision in
this particular matter (or in the related Verizon and Qwest
special access matters) is not chiseled in marble. So Congress
and the FCC will be able to reassess as they reasonably see fit
based on changes in market conditions, technical capabilities,
or policy approaches to regulation in this area.
Putting all of the pieces together, we find the FCC’s
approach in this case to be reasonable and reasonably
explained. In seeking to promote broadband competition and
deployment, the Commission maintained common-carrier
regulation on the ILECs’ special access lines, including the
17
interconnection mandate and the requirement that prices be
just, reasonable, and not unreasonably discriminatory. It
made clear that the § 208 fast-track complaint process is open
and available for prompt refereeing of disputes. It determined
that competitive broadband service providers could use
heavily regulated TDM-based services to compete. It
recognized the fact and feasibility of competitive self-
deployment of special access lines – a development that both
helps justify and will be furthered by the FCC’s decision.
And finally, the FCC is continuing to study the overall market
developments in special access on an industry-wide basis.
Given all of that, we must defer to the Commission’s
judgment that dominant-carrier pricing regulation is
unnecessary to ensure just, reasonable, and non-
discriminatory rates and the protection of consumers, and that
partial forbearance is consistent with the public interest.
III
We need only briefly address the separate arguments put
forth by the New Jersey Division of Rate Counsel, or NJRC.
We agree with the FCC that the NJRC has not
demonstrated its Article III standing to challenge the AT&T
Order. The NJRC alleges injury to New Jersey customers,
but AT&T and its affiliates do not provide service in New
Jersey. For New Jersey ratepayers, there is no “injury in fact”
to speak of, no “causal relationship between the injury and the
[AT&T Order],” and no “likelihood that the injury will be
redressed by a favorable decision.” United Food &
Commercial Workers Union Local 751 v. Brown Group, Inc.,
517 U.S. 544, 551 (1996).
That said, the NJRC does have standing to challenge the
Embarq/Frontier Order. But the NJRC’s federalism and
18
separation of powers objections to the FCC’s forbearance
authority are not before the Court because they were not
properly raised before the FCC. See Comments of the New
Jersey Division of the Rate Counsel, No. 06-125 (Aug. 17,
2006) at 5-6. Under 47 U.S.C. § 405(a), the FCC’s
“opportunity to pass” on an issue is a “condition precedent to
judicial review.” Accordingly, § 405(a) bars the NJRC’s
constitutional claims against the Embarq/Frontier Order.
The NJRC’s only properly raised claim against the
Embarq/Frontier Order, therefore, is that the FCC failed to
provide adequate notice-and-comment procedures under the
Administrative Procedure Act. But the FCC did provide an
opportunity for notice and comment. See Public Notice, 21
F.C.C.R. 8,022 (2006). We therefore reject the NJRC’s
argument.
***
We deny the petitions for review.
So ordered.