MCI Telecomms. Corp. v. AT&T Co.

MCI Telecomms. Corp. v. AT&T Co.

Opinion

 [*220]  [***186]  [**2226]    JUSTICE SCALIA delivered the opinion of the Court.

 Section 203(a) of Title 47 of the United States Code requires communications common carriers to file tariffs with the Federal Communications Commission, and § 203(b) authorizes the Commission to "modify" any requirement of § 203. These cases present the question whether the Commission's decision to make tariff filing optional for all nondominant long distance carriers is a valid exercise of its modification authority.

Like most cases involving the role of the American Telephone and Telegraph Company (AT&T) in our national telecommunication system, these have a long history. An understanding of the cases requires a brief review of the Commission's efforts to regulate and then deregulate the telecommunications industry. When Congress created the Commission in 1934, AT&T, through its vertically integrated Bell system, held a virtual monopoly over the Nation's telephone service. The Communications Act of 1934, 48 Stat. 1064, as amended, authorized the Commission to regulate the rates charged [****5]  for communication services to ensure that they were reasonable and non-discriminatory. The requirements of § 203 that common carriers file their rates with the Commission and  [***187]  charge only the filed rate were the centerpiece of the Act's regulatory scheme.

In the 1970's, technological advances reduced the entry costs for competitors of AT&T in the market for long distance telephone service. The Commission, recognizing the feasibility of greater competition, passed regulations to facilitate competitive entry. By 1979, competition in the provision of long distance service was well established, and some urged that the continuation of extensive tariff filing requirements served only to impose unnecessary costs on new entrants and to facilitate collusive pricing. The Commission held hearings on the matter, see Competitive Carrier Notice of Inquiry and Proposed Rulemaking, 77 F.C.C.2d 308  [*221]  (1979), following which it issued a series of rules that have produced this litigation.

The First Report and Order, 85 F.C.C.2d 1, 20-24 (1980), distinguished between dominant  [**2227]  carriers (those with market power) and nondominant carriers [****6]  -- in the long distance market, this amounted to a distinction between AT&T and everyone else -- and relaxed some of the filing procedures for nondominant carriers, id., at 30-49. In the Second Report and Order, 91 F.C.C.2d 59 (1982), the Commission entirely eliminated the filing requirement for resellers of terrestrial common carrier services. This policy of optional filing, or permissive detariffing, was extended to all other resellers, and to specialized common carriers, including petitioner MCI Telecommunications Corp., by the Fourth Report and Order, 95 F.C.C.2d 554 (1983), ² and to virtually all remaining categories of nondominant carriers by the Fifth Report and Order, 98 F.C.C.2d 1191 (1984). Then, in 1985, the Commission shifted to a mandatory detariffing policy, which prohibited nondominant carriers from filing tariffs. See Sixth Report and Order, 99 F.C.C.2d 1020 (1985). The United States Court of Appeals for the District of Columbia Circuit, however, struck down the Sixth Report's mandatory detariffing policy in a challenge brought -- somewhat ironically as it now appears -- by [****7]  MCI. See MCI Telecommunications Corp. v. FCC, 247 U.S. App. D.C. 32, 765 F.2d 1186 (1985) (Ginsburg, J.). The Court of Appeals reasoned that § 203(a)'s command that "every common carrier . . . shall . . . file" tariffs was mandatory. And although § 203(b) authorizes the Commission to "modify any requirement" in the section, the Court of Appeals concluded that that phrase "suggested circumscribed alterations -- not, as the FCC now would have it, wholesale abandonment or elimination of a requirement." Id., at 1192.

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