AT&T Corp. v. Iowa Utils. Bd. - 525 U.S. 366, 119 S. Ct. 721 (1999)

Rule:

47 U.S.C.S. § 251(e) provides that the Federal Communications Commission (FCC) shall create or designate one or more impartial entities to administer telecommunications numbering, requires the FCC to exercise its rulemaking authority, as opposed to 47 U.S.C.S. § 201(b), which merely authorizes the FCC to promulgate rules if it so chooses. 47 U.S.C.S. § 251(h)(2) says that the FCC may, by rule, provide for the treatment of a local exchange carrier as an incumbent local exchange carrier for purposes of § 251 if the carrier satisfies certain requirements.

Facts:

 The Telecommunications Act of 1996 (1996 Act) fundamentally restructures local telephone markets, ending the monopolies that States historically granted to local exchange carriers (LECs) and subjecting incumbent LECs to a host of duties intended to facilitate market entry, including the obligation under 47 U.S.C. § 251(c) to share their networks with competitors. A requesting carrier can obtain such shared access by purchasing local telephone services at wholesale rates for resale to end-users, by leasing elements of the incumbent's network "on an unbundled basis," and by interconnecting its own facilities with the incumbent's network. After the Federal Communications Commission (FCC) issued regulations implementing the 1996 Act's local-competition provisions, incumbent LECs and state commissions filed numerous challenges, which were consolidated in the Eighth Circuit. Among other things, that court held that the FCC lacked jurisdiction to promulgate its rules regarding pricing, dialing parity, exemptions for rural LECs, the proper procedure for resolving local-competition disputes, and state review of pre-1996 interconnection agreements; that, in specifying the network elements available to requesting carriers under Rule 319, the FCC reasonably implemented the 1996 Act's requirement that it consider whether access to proprietary elements was "necessary" and whether lack of access to nonproprietary elements would "impair" an entrant's ability to provide local service, that, in Rule 319, the FCC reasonably interpreted the statutory definition of "network element," that the "all elements" rule, which effectively allows competitors to provide local phone service relying solely on the elements in an incumbent's network, is consistent with the 1996 Act; that Rule 315(b), which forbids incumbents to separate already-combined network elements before leasing them to competitors, must be vacated because it requires access to those elements on a bundled rather than an unbundled, i.e., physically separated, basis; and that the FCC's "pick and choose" rule, which enables a carrier to demand access to any individual interconnection, service, or network element arrangement on the same terms and conditions the LEC has given anyone else in an approved § 252 agreement without having to accept the agreement's other provisions, must be vacated because it would deter the "voluntarily negotiated agreements" that the 1996 Act favors.

Issue:

Was the FCC authorized to implement local-competition provisions of Telecommunications Act of 1996 (47 USCS 251 et seq.)?

Answer:

Yes

Conclusion:

The court held that the FCC had rule-making authority under a provision of the Communications Act of 1934 (1934 Act) (47 USCS 201(b)) to carry out the 1996 Act's local-competition provisions. The FCC had jurisdiction to promulgate the rules regarding pricing, state review of pre-existing interconnection agreements, rural exemptions, and dialing parity. The court found that the rule forbidding incumbents to separate already-combined network elements before leasing them to competitors was a reasonable interpretation of 47 USCS 251(c)(3). The "pick and choose" rule was a reasonable interpretation of 47 USCS 252(i). Finally, the court held that the primary unbundling rule was invalid, since the FCC, in giving requesting LECs blanket access to network elements, had not adequately considered the "necessary" and "impair" standards set by 251(d)(2).