Reply Brief — United States Independent Telephone Ass'n v. MCI Telecommunications Corp.

\7 Suprema Cqurt, U, $5

FIL Ep’

No. 78-270 ) NOV 2 4978

7 | ] 16} DDAK. JR.

Gu the Supreme Court of the Wuiters JR., CLERK

OCTOBER TERM, 1978

FEDERAL COMMUNICATIONS COMMISSION, PETITIONER

Uv.

MCI TELECOMMUNICATIONS CORPORATION, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

PETITIONER’S REPLY TO

“BRIEF FOR THE UNITED STATES IN OPPOSITION”

ROBERT R. BRUCE

General Counsel

DAVID J. SAYLOR

Deputy General Counsel

DANIEL M. ARMSTRONG

Associate General Counsel

JOHN E. INGLE

Counsel

Federal Communications

Commission

Washington, D.C. 20554

(202) 632-7112

Iu the Supreme Court of the United States

OCTOBER TERM, 1978

No. 78-270

FEDERAL COMMUNICATIONS COMMISSION, PETITIONER

Vv.

MCI TELECOMMUNICATIONS CORPORATION, ET AL,

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

PETITIONER’S REPLY TO

“BRIEF FOR THE UNITED STATES IN OPPOSITION”

The United States, through the Solicitor General,"

has opposed the petition of the Federal Communica-

* Because the Solicitor General obviously does not represent

the Commission here and because the Department of Justice

did not participate in the D.C. Circuit proceedings which led

to the E'xecunet II decision, we question exactly what interests

of the United States the Solicitor legitimately represents in

this case. This situation is especially troubling because on

(1)

2

tions Commission and the companion petitions of the

United States Independent Telephone Association

(No. 78-216) and the American Telephone and Tele-

graph Co. (No. 78-217).

1. The United States makes no attempt to recon-

cile its position now with the brief it filed on behalf of

the FCC successfully opposing the petition of AT&T

for certiorari to the Third Circuit in Bell Telephone

Co. of Penn. v. FCC, the decision which conflicts with

the D.C. Circuit decision here under review.’ In that

brief,’ which explicitly distinguished “private line”

service from MTS/WATS-type services,‘ the United

States assured this Court that AT&T was afforded

adequate notice in the FCC’s interconnection proceed-

ings and that the interconnection orders were not

overbroad, because the orders were limited to inter-

connection for private line services.

another occasion before this Court, the Solicitor did represent

the Commission with respect to the same Commission orders

that are now under review, and, at that time, pressed on our

behalf an interpretation of those orders that is consistent

with our present petition and inconsistent with the Solicitor

General’s present opposition. See Brief for the Respondents

in Opposition, AT&T v. FCC, No. 74-1229, cert. denied, 422

U.S. 1026, reh. denied, 423 U.S. 886 (1975). Even now, in its

brief on behalf of some unspecified government interest, the

Solicitor concedes that the petition is “not without some

force.” U.S. Opposition 11.

* 503 F.2d 1250 (3d Cir. 1974), cert. denied, 422 U.S. 1026,

reh. denied, 423 U.S. 886 (1975).

* Brief for the Respondents in Opposition, swpra n.1, No. 74-

1229.

‘Td. at 8.

3

Tracking the Third Circuit’s opinion, the brief ex-

plained that AT&T had notice “that the inquiry en-

compassed all private line service offerings * * *.”

Brief in No. 74-1229, p. 16 (emphasis added). The

brief relied upon the fact that the Third Circuit’s

(and the FCC’s) “computations of possible revenue

diversions from AT&T were based upon AT&T’s total

revenues from all private line services * * *.” Jd. at

17 n. 9 (emphasis added).° The brief also described

the FCC’s Specialized Common Carrier Services pro-

ceeding,’ which was the source of the interconnection

obligation as well as the policy of competition, as a

rulemaking to determine “whether to open AT&T’s

near monopoly in private line service to competition

and [to select] the means of insuring that new com-

petitors would obtain local distribution.” Jd. at 12

(emphasis added). It concluded, quoting the Third

Circuit, that AT&T had a fair opportunity to “pre-

sent its arguments against the proposed intercon-

nection.” Jd. (emphasis added).

* Compare that analysis with the FCC’s analysis of the scope

of interconnection at Pet. 23-24 in this case.

°29 FCC 2d 870, 31 FCC 2d 1106 (1971), aff’d sub nom.

Washington Util. & Transp. Comm’n v. FCC, 513 F.2d 1142

(9th Cir.), cert. denied, 423 U.S. 836 (1975). See also Brief

for the Federal Respondents in Opposition to certiorari in

that case, National Ass’n of Regulatory Utility Commissioners

v. FCC, No. 74-1550, where the FCC and the United States,

through the Solicitor General, characterized the case as involv-

ing only “private line service” or “specialized communications

services,” as contrasted with public telephone service. Brief,

pp. 2, 3, 5, 6.

4

In response to AT&T’s argument that the inter-

connection order was “impermissibly overbroad,” the

brief relied once again on the Third Circuit’s analysis.

It argued that the interconnection obligation “must

be read in context as requiring AT&T to furnish those

interconnection ‘elements of private line services

which AT&T supplies to its affiliates and furnishes

to customers through its Long Lines Depart-

ment’ * * *.” Jd. 20 n. 10 (emphasis added). Such a

requirement, the brief concluded, “is not overbroad.” *

Id.

We submit that the brief in No. 74-1229 is irre-

concilable with points 1 and 2 of the brief for the

United States in this case. The brief in No. 74-1229

was intended to assure this Court that certiorari was

unwarranted, in large part because the “notice” and

“overbreadth” arguments of AT&T presupposed

broader orders than the Commission had issued. The

‘In addition to the quoted portions, the general tenor of the

brief in No. 74-1229 presupposes a limited interconnection

obligation. The brief plainly intended to persuade this Court

that AT&T’s complaints of an unbounded obligation were

unfounded.

* This is not merely a debating point, of course, intended to

show that the United States has not been consistent. Our

argument is that the Third Circuit decision was correct and

controls the interconnection question, and that the United

States was correct in its brief in No. 74-1229 but wrong in its

contradictory brief in this case. As we pointed out in our

petition, the Third Circuit explicitly decided that the Commis-

sion had excluded MTS and WATS from consideration in its

interconnection inquiry. Pet. 24. See AT&T Pet. App. 34g.

See also Pet. 17 n. 20.

5

United States’ brief in this case is intended to assure

the Court that there was no error below in construing

the same interconnection orders so broadly as to have

no bounds. The United States may not have it both

ways.

2. The United States apparently regards as sig-

nificant the FCC’s statement in the declaratory ruling

(Pet. App. 39C-40C) that its specialized carrier

policy embraced some specialized services the estab-

lished carriers had not theretofore regarded as “pri-

vate line.” U.S. Opposition 13. But the Commission

there was merely recognizing that one of the special-

ized carrier applicants, the Data Transmission Corp.,

had proposed an end-to-end all digital data network

that included switching. Concededly, this was not a

traditional private line service; but it surely was a

far cry from ordinary long distance telephone service

(MTS). See Specialized Common Carrier Services,

29 FCC 2d 870, 874-76 (1971).

The crucial fact, however, is that none of the ap-

plicants in the Specialized Common Carrier proceed-

ing proposed anything resembling MTS or WATS or

Execunet service. Those classes of service therefore

were excluded from the Commission’s consideration

—both for purposes of Section 214 certificates and

for purposes of interconnection pursuant to Section

201(a). Pet. App. 39C-41C. Our argument is that

the exclusion of such services as MTS, WATS and

equivalent services from consideration meant that the

Commission could not have ordered interconnection

for the purpose of providing those services. Jd. This

6

Was so because, as the Commission reasoned in its

declaratory ruling, a contrary decision would mean

that “all the telephone companies were deprived of a

meaningful opportunity for a hearing with respect to

the public interest consequences * * * of such inter-

connection.” Pet. App. 41C. Thus, the Commission’s

candid explanation of its reading of Specialized Com-

mon Carrier Services does not undercut in any way

its conclusion that AT&T had no obligation, under

outstanding FCC orders pursuant to Section 201(a),

to provide interconnection facilities that would enable

MCI and others to offer MTS, WATS and equivalent

services such as Execunet.

It is one thing to concede, as the Commission did

in its declaratory ruling, that the bounds of the inter-

connection obligation were a little bit fuzzier and less

precise than the Third Circuit had articulated them.

It is quite another thing to assert, as the Solicitor

General’s brief and the D.C. Circuit’s opinion would

do, that the interconnection limitations imposed by

the Commission and affirmed by the Third Circuit

have no substance, so that the orders in fact were

“unbounded.” The Solicitor and the D.C. Circuit per-

ceive universal interconnection obligations that reach

MTS, WATS, and equivalent services such as Execu-

net. It requires no “literal reading” of the Third

Circuit’s opinion to find a direct conflict with that

perception. U.S. Opposition 13.

3. The United States cannot “see how the decisions

below can significantly impair the Commission’s per-

formance of its statutory responsibility.” U.S. Op-

T

position 14. Nor does it see any “important or re-

curring issue of administrative or communications

law” that would warrant this Court’s attention. Jd.

It is true that the Commission has commenced a

broad inquiry (the MTS/WATS inquiry) into long

distance telephone service competition, which will

consider interconnection issues as well as certification

issues.’ But that inquiry likely will take years to

complete, because the issues are complex and the

policy ramifications are far reaching. In the mean-

time, judge-made policy will govern this important

segment of public utility service. The Commission

must make day-to-day regulatory decisions on new

tariff filings by MCI and other specialized carriers

for MTS/WATS-equivalent services, as well as any

tariffs AT&T or another telephone company files to

provide interconnection. The D.C. Circuit’s command

that the FCC do nothing to impede “MCI’s right to

enter the market now”, Pet. App. 10E, will substan-

tially influence the FCC’s decisions on those matters.

Whether the FCC theoretically will be able to re-

claim its proper policy-making role after completion

of the MTS/WATS inquiry, we submit, is beside the

point. The D.C. Circuit’s decisions, in effect, have

turned Congress’ scheme for the regulation of com-

*In the Matter of MTS and WATS Market Structure, FCC

78-144, released February 28, 1978 (“MTS/WATS Inquiry’’).

We pointed out this proceeding to the Court at Petition, p. 13

and n. 15, and Petitioner’s Reply, n. 26 at p. 14.

8

munications on its head.” They have established

judge-made policy which will prevail unless and until

the FCC, after affording due administrative process,

can make a decision that will pass muster with the

same judges who established the prevailing policy.

This raises issues that are both important and, in

this very case, recurring. The Court should grant the

petition for certiorari.

Respectfully submitted,

ROBERT R. BRUCE

General Counsel

DAvip J. SAYLOR

Deputy General Counsel

DANIEL M. ARMSTRONG

Associate General Counsel

JOHN E. INGLE

Counsel

Federal Communications

Commission

Washington, D.C. 20554

(202) 632-7112

November 2, 1978

‘© The United States apparently finds it unimportant to have

the anomalous situation of a regulatory agency setting out to

make public interest findings that will either affirm or reverse

the policy decisions of the court of appeals.

wv us. GOVERNMENT PRINTING OFFICE; 1978 277120 188