# Appendix — American Telephone & Telegraph Co. v. MCI (Nos. 78-217, 78-216, 78-270)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1978

## Text

' wine VOurt, U. '
| FILED
78-217 ! AUG 7% 1978 |

No.

IN THE

Supreme Court of the Bnited States

Octorner Term, 1978

a
a
American TELEPHONE anpd TELEGRAPH COMPANY.

Petitioner.
”,

MCT TerecomMunications Corporation, et Al...

Ry sponde nt.

APPENDIX TO PETITION
FOR A WRIT OF CERTIORARI

Of Counsel: Micuartt. Bovorn

. ' Pau. J. Berman

EF. Mark Gartinaitors: 2 a — : a
— S88 Sixteenth Street, N.W.

Arrrep C. Parrormw

5 Washington, D.C. 20006
19) Broadway Va hington i )

New York N.Y. 10007 9 Burrow K. Karxis
ALFRED WINCHELL WHITTAKER
195 Broadway
New York, New York 10007
Attorne Ys for Ame ru ay

T « le phone and
Telearaph Company

August 1978

Press of Brrow S. Adams PRINTING, INC, WASHINGTON, D.C

TABLE OF CONTENTS

Page

Appendix A

Opinion of Court of Appeals filed April 14, 1978, in
MCI Telecommunications Corp. v. FCC, D.C. Cir.,
Pe PE dite ea Ga then tek Gel eee bi vadsweukankes

Appendix B

Order of the Court of Appeals filed May 11, 1978,
granting petitioner’s request for interim stay of
the Order of April 14, 1978, MCI Telecommunica-
tions Corp. v. FCC, supra, and denying the motion
of United States Independent Telephone Associa-
tion for a stay pending certiorari; accompanying
per curiam memorandum. .............0.+0ee0es

Appendix C

Federal Communications Commission Memorandum,
Opinion and Order on AT&T petition for a declara-
— ruling, released February 28, 1978, FCC 78-

Ee Sha beekeneewsnaes Kuba shies babeetbakepeannec’

Appendix D

Order of Court of Appeals filed April 14, 1978, in MCI
Telecommunications Corp. v. FCC, supra. .......

Appendix E

Orders of Court of Appeals filed May 8, 1978, denying
petitions for rehearing and suggestions for rehear-
ing en banc of the Opinion and Order of April 14,
eS Pere ree rer yr errr

Appendix F
Pertinent provisions of the Communications Act of
1934 and of the Hobbs Act ...................0.

Appendix G

Decision of September 11, 1974, in Bell Telephone

are of Pennsylvania v. FCC, 503 F.2d 1250
ee CE re cate owe cau G webake b Keo onnebasns

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Page
Appendix H

Charts Illustrating Execunet and MTS .............. lh
Appendix I

Decision of July 28, 1977, in MCI Telecommunications
Corp. v. FCC, 561 F.2d 365 (D.C. Cir. 1977) .... li

APPENDIX A

a ee ed de -

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UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 75-1635

MCI TevLecommunicaTions CorPoRATION, MicrowAvE
Communications, Inc., anp N-Trrpie-C Ino.,
PETITIONERS

Vv.

FreperaL ComMMUNICATIONS CoMMISSION AND
Unrtep States oF AMERICA, RESPONDENTS

AMERICAN TELEPHONE AND TELEGRAPH CoMPANY,
Unitep States INDEPENDENT TELEPHONE ASSOCIATION,
Data Transmission Company (DATRAN), anp
SoutHern Paciric Communications CoMPANY
INTERVENORS

Motion for an Order Directing
Compliance With Mandate

Filed April 14, 1978
Michael H. Bader, William J. Byrnes, Kenneth A. Coz,

and Raymond C. Fay were on the pleadings for petitioners.

Robert R. Bruce, General Counsel, Daniel M. Armstrong,

Associate General Counsel, and John E. Ingle, Counsel,
Federal Communications Commission, were on the plead-
ings for respondents.

Paul J. Berman, Michael Boudin, and F. Mark Garling-

house were on the pleadings for intervenor American
Telephone and Telegraph Company.

Before Wricut, Chief Judge, and Tamm and WILKey,

Circuit Judges.

Opinion for the court filed by Chief Judge Wricut.

2a

Wricut, Chief Judge: Petitioners here, MCI Telecom-
munications Corporation, Microwave Communications, Inc.,
and N-Triple-C Inc. (hereinafter, collectively, MCI), re-
quest this court to issue an order directing the Federal
Communications Commission (FCC) and the American
Telephone & Telegraph Company (AT&T) to comply with
our mandate in MCI Telecommunications Corp. v. FCC,
561 F.2d 365 (D.C. Cir. 1977), cert. denied, —— U.S. —~—,
46 U.S. L. Weex 3446 (January 16, 1978) (hereinafter
Execunet). This motion by MCI was prompted by a declar-
atory ruling issued by the Commission, at the request of
AT&T, on Fabruary 23, 1978, holding that AT&T is under
‘‘no obligation’’ to provide the local physical interconnec-
tions necessary for MCI’s Execunet service.t MCI argues
that this ruling is inconsistent with and violative of our
Execunet decision, and that under our mandate AT&T is
required to provide interconnections for Execunet. For the
reasons set forth below, we agree, and we order the parties
to comply with our mandate.

I. Backerounp

The motion to direct compliance before us now is the
most recent stage in the long series of proceedings and
litigation in which MCT has attempted to secure and pre-
serve its authority to offer Execunet service.? Since the

1In the Matter of Petition of American Telephone and Telegraph
Company for a Declaratory Ruling and Expedited Relief, FCC
78-142, Memorandum, Opinion and Order, Adopted February 23,
1978, Released February 28, 1978 (hereinafter FCC Declaratory
Ruling).

? With Execunet a subscriber with a push-button telephone is
able to reach any telephone in a distant city served by MCI by
dialing a local MCI number followed by an access code and the
number in the distant city. Execunet subscribers are billed on a
time and distance basis for each call, subject to a monthly mini-
mum. See MCI Telecommunications Corp. v. FCC, 561 F.2d 365,
367 & n.3 (D.C, Cir. 1977), cert. denied, —— U.S. ——, 46 USS. L.
Week 3446 (Jan. 16, 1978) (hereinafter Execunet); MCI Tele-
communications Corp., 60 FCC2d 25, 26 n.1 (July 13, 1976).

3a

seminal FCC Specialized Common Carrier decision, Spe-
cialized Common Carrier Services, 29 FCC2d 870 (1971),
aff’d sub nom. Washington Utilities & Transportation
Com’n v. FCC, 513 F.2d 1142 (9th Cir.), cert. denied, 423
U.S. 836 (1975) (hereinafter Specialized Carrier), MCI
has met with almost continuous resistance from AT&T in
its efforts to provide communications services. We had
thought that this process finally culminated in our Execunet
decision upholding MCI’s authority to offer Execunet pend-
ding further rulemaking by the Commission. Now, how-
ever, we are faced with a new effort by AT&T, with the
approval of the Commission, to arrest the development of
Execunet services, and the question for immediate dispo-
sition is whether protection of the integrity of our Execunet
mandate requires that this new effort be terminated
through an order directing compliance with our mandate.
We believe it does.

Since the course of all of these earlier proceedings is set
out in some detail in our Ezecunet decision,® our purpose
here is only to outline briefly the background necessary to
consideration of this motion. In Specialized Carrier, supra,
the Commission sought to determine by rulemaking
‘‘w)hether as a general policy the public interest would be
served by permitting the entry of new carriers in the spe-
cialized communications field * * *.’? 29 FCC2d at 878. The
Commission answered that question affirmatively,‘ but did

® See Execunet, supra note 2, 561 F.2d at 367-373. See also Bell
Telephone Co. of Pennsylvania v. FCC, 503 F.2d 1250, 1254-1263
(3d Cir. 1974), cert. denied, 422 U.S. 1026 (1975).

* As to this question the Commission concluded :

[T]here is a public need and demand for the proposed facili-
ties and services and for new and diverse sources of supply,
competition in the specialized communications field is reason-
ably feasible, there are grounds for a reasonable expectation
that new entry will have some beneficial effects, and there is
no reason to anticipate that new entry would have any adverse
impact on service to the public by existing carriers such as to

4a

not seek to define precisely the boundaries of ‘‘the special-
ized communications field.’’®

outweigh the corsiderations supporting new entry. We further
find and conclude that a general policy in favor of the entry
of new carriers in the specialized communications field would
serve the public interest, convenience, and necessity.

Spectalized Common Carrier Services, 29 FCC2d 870, 920 (1971,
aff'd sub nom. Washington Utilities & Transportation Com’n v.
FCC, 513 F.2d 1142 (9th Cir.), cert. denied, 423 U.S. 836 (1975)
(hereinafter Specialized Carrier). The Commission went on to
address the question of ‘‘the appropriate means for local distribu-
tion of the proposed services,’’ Notice of Proposed Rulemaking,
24 FCC2d 318 (1970), concluding:

157, We reaffirm the view expressed in the Notice (para-
graph 67) that established carriers with exchange facilities
should, upon request, permit interconnection or leased channe!
arrangements on reasonable terms and conditions to be nego-
tiated with the new carriers, and also afford their customers
the option of obtaining local distribution service under reason-
able terms set forth in the tariff schedules of the local carrier.
Moreover, as there stated, ‘‘where a carrier has monopoly con-
trol over essential facilities we will not condone any policy or
practice whereby such carrier would discriminate in favor of
an affiliated carrier or show favoritism among competitors.’’
In view of the representations of AT&T and GT&E in this
proceeding, upon which we rely, and the self-interest of other
independent telephone companies in not losing potential new
business, there appears to be no need to say more on this ques-
tion at this time. Should any future problem arise, we will act
expeditiously to take such measures as are necessary and ap-
propriate in the public interest to implement and enforce the
policies and objectives of this Decision.

Specialized Carrier, supra, 29 FCC2d at 940 (emphasis added;
footnote omitted).

* See Execunet, supra note 2, 561 F.2d at 371, 379 n.68 (‘‘to
the extent that any definition of a specialized common carrier
emerges from the Commission’s discussion, that definition appears
to be simply that a specialized carrier is any carrier that does not
attempt to optimize its service offerings to the voice communica-
tions needs of the general public’’).

5a

Specialized Carrier served as the basis for the Commis-
sion’s later grants, under 47 U.S.C. § 214 (1970), of facili-
ties authorizations to carriers, including MCI, to provide
microwave communications services. AT&T, however, re-
fused to provide interconnections necessary for the spe-
cialized carriers to furnish these services. This refusal led
MCI to seek and secure from the Commission both a cease
and desist order against AT&T and an affirmative order
that AT&T was required to provide any physical connec-
tions ‘‘essential’’ to the rendition of ‘‘all’’ the services
which any of the specialized common carriers ‘‘ presently
or hereafter’’ are authorized to offer. Bell System Tariff
Offerings, 46 FCC2d 413 (1974), aff’d sub nom. Bell Tele-
phone Co. of Pennsylvania v. FCC, 503 F.2d 1250 (3d Cir.
1974), cert. denied, 422 U.S. 1026 (1975).

MCI filed a tariff revision including rates for Execunet
service in September 1974. That tariff was rejected by the
Commission at the request of AT&T. MCI immediately
sought a stay of the Commission’s order pending judicial
review. A stay was initially granted, then later modified in
light of the opposition of the FCC and AT&T. As modified
the stay permitted MCI to continue to serve its present cus-
tomers but prohibited any solicitation of new customers or
any expansion of service.’ In seeking and securing this
modification of the stay—as well as in its opposition to the
grant of the original stay—AT&T forcefully argued that a
broad stay would permit MCI to compete with AT&T’s long
distance service in high density, high profit areas, and that
this would have a substantial adverse impact on AT&T and
on the public interest. According to the pleadings filed in
this court by AT&T, such competition would undermine
AT&T’s practice of determining long distance rates through
cost averaging and would result in substantial increase in
costs in low density areas.’

* See Execunet, supra note 2, 561 F.2d at 369 & n.18.

™ See Memorandum of AT&T in Opposition to Petitioners’ Motion
for Stay Pending Review, July 14, 1975, at 44-47; Motion of AT&T

6a

After an initial remand at the Commission’s request for
further proceedings on the merits, we reversed the FCC’s
rejection of the Execunet tariff. We held that under the
Communications Act the tariff system provides the usual
mechanism for initiation of new services to be provided on
previously authorized facilities." Under this mechanism a
carrier files a tariff for the new service and, subject to a
possible stated suspension period, is permitted to imple-
ment that service until and unless the Commission deter-
mines that the service is not in the public interest.’ The
only limitation on the carrier’s ability to make use of tariff
filings to initiate new services relevant to this case is found
in Section 214(c) of the Act, 47 U.S.C. §214(c) (1970),
which permits the Commission, in granting facilities au-
thorizations, to limit the services which may be provided
on facilities which it authorizes.”

The Commission argued in Execunet that its Specialized
Carrier decision implicifly restricted the facilities authori-
zations of specialized carriers to ‘‘private line’’ services,
that Execunet is not such a ‘‘private line’’ service, and that
MCI therefore could not implement this service through a
tariff filing. In support of its position the Commission em-
phasized that its analysis of competitive effects in Special-

to Dissolve or Modify the Stay and for Expedited Review, August
18, 1976, at 24-29.

®* Execunet, supra note 2, 561 F.2d at 374, citing AT&T v. FCC,
487 F.2d 965, 870-881 (2d Cir. 1973).

®*The relevant tariff provisions are found in §§ 203-205 of the
Communication Act, 47 U.S.C. §§ 203-205 (1970). See Erecunet,
supra note 2, 561 F.2d at 374 n.44.

1° Section 214(¢) permits the Commission to ‘‘attach to the issu-
ance of the certificate such terms and conditions as in its judgment
the public convenience and necessity may require.’’ 47 U.S.C.
§ 214(c) (1970). See Execunet, supra note 2, 561 F.2d at 376-377
& n.56.

AMM ries a

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7a

ized Carrier assumed that the specialized carriers would
be limited to offering ‘‘private line’’ services.”

We rejected the Commission’s arguments, holding that
Section 214 requires an affirmative determination to restrict
a carrier’s facilities authorization, and that no such deter-
mination was made in Specialized Carrier. In reaching our
conclusion we placed emphasis on the Commission’s staff
report which formed the basis for the Specialized Carrier
decision. As to the competition argument, we found that the
staff report ‘‘ruminated more broadly [than the Commis-
sion suggested] on the issues posed by revenue diversion
and it appeared highly skeptical of the validity of AT&T’s
overall argument.’’ 561 F.2d at 378. Further, we noted that
the staff report ‘‘dealt explicitly with the question of how
the Commission ought to deal with possible adverse im-
pacts of service offerings other than those which were be-
fore the Commission in the Specialized Common Carrier de-
cision.’’ Id. at 378-379. We found that ‘‘[t]he undeniable
import of the staff’s analysis is that questions related to
the future impact of specialized carrier service offerings
other than those immediately at hand in the Specialized
Common Carrier case should be resolved in other proceed-
ings—in tariff proceedings, upon license renewal, or by
future rulemaking.’’ Id. at 379.

AT&T, as well as the Commission, petitioned for cer-
tiorari, arguing, inter alia, as they had before this court,
that our decision would result in vigorous competition over

. high density routes, with potentially adverse effects on the

11 Ezecunet, supra note 2, 561 F.2d at 37 & n.58.

8a

public interest as well as on AT&T." Certiorari was denied
on January 16, 1978."

Hours after the Supreme Court’s denial of certiorari
AT&T announced its intention to cease providing any addi-
tional interconnections for Execunet or similar services,
and filed with the Commission a petition for declaratory
ruling that it was under ‘‘no obligation’’ to furnish MCI
or any other specialized carriers with any ‘‘additional’’
physical connections for Execunet-type services. The Com-
mission considered AT&T’s petition on an expedited basis,
and on February 23, 1978 it adopted a declaratory ruling in
substantial accord with AT&T’s request.

II. Tue Commisstion’s Decuaratory Rutine
1s INconsIsTENT WitH THE Execunet ManpaTE

The local physical interconnections which AT&T now re-
fuses to provide for Execunet service are admittedly essen-
tial to MCI’s ability to offer that service. As a result,
AT&T’s refusal to provide “additional” connections, up-
held in the Commission’s declaratory ruling, means that
MCT is in effect no better off than it was during the entire
course of the litigation in this court: notwithstanding our .
favorable decision, it is unable to expand Execunet. More-
over, nothing in the Commission’s ruling, or in AT&T’s
request, establishes any legal basis for a greater intercon-

* AT&T Petition for Certiorari, MCI Telecommunications Corp.
v. FCC (Sept. 1977), at 29-30 (‘‘If the lower court’s decision
stands, the telephone companies will be threatened with a massive
diversion of MTS traffic from the switched network. This diversion
ean occur at an extraordinary rate—literally in a matter of months
—because the specialized carriers have thousands of intercity cir-
cuits in operation and they utilize existing local distribution facili-
ties already in place. Past experience confirms the severity and
speed of this threat.’’), quoted in MCI Petition for Compliance
before the FCC, at 7.

- U.S. ——, 46 U.S. L. Werx 3446 (Jan. 16, 1978).

** The petition for a declaratory ruling was granted, and AT&T
declared without obligation to interconnect, with respect to prior
Commission orders, the provisions of the Communications Act, and

9a

nection obligation on AT&T with respect to maintenance of
physical connections already in place than with respect to
‘‘additional’’ connections, with the result that MCI might
well find itself in the near future unable even to provide
Execunet to its existing customers.”

Having successfully litigated the question of its right to
provide Execunet service, MCI certainly has good cause to
feel that this subsequent turn of events engineered by the
Commission and AT&T is strikingly unfair. Of course, as
AT&T and the Commission so vigorously argue, litigation
in the court does not always provide the victor with all that
he might wish, or with all that he expected or thought he
had won. But the fact of the matter is that our Execunet
decision did clearly contemplate—by virtue of AT#T’s
representations and actions—that AT&T was required to
provide interconnections for Execunet service.

Until the Supreme Court denied certiorari in Execunet,
AT&T provided MCI with the interconnections necessary
for Execunet service without any form of protest or objec-
tion. Never in the proceedings before this court did AT&T
even suggest that it was not required to provide these con-
nections, or that the question of MCI’s authority to provide
or expand its Execunet service was, as a practical matter,
of no consequence since AT&T could and would refuse to
provide the essential interconnections should we decide in
MCI’s favor. Quite to the contrary, in securing the modifi-

the mandate of this court in Execunet. The petition was denied
only ‘‘insofar as it requests a determination with respect to the
scope of petitioner’s interconnection obligations to specialized com-
mon carriers, if any, under the Sherman Act, the common law, or
any federal or state statute other than the Communications Act.”’
FCC Declaratory Ruling, supra note 1, § 83.

18 Indeed, the Commission’s order does not even restrict its hold-
ing to ‘‘additional’’ connections: it concludes ‘‘that our prior Sec-
tion 201(a) orders do not direct the petitioners to provide inter-
connection of facilities or services to any specialized common carrier
to enable such a specialized common carrier to provide any service
which is substantially equivalent to MTS or WATS.’’ Id. § 79.

10a

cation of our original stay, in its briefs and arguments to
this court, and in its petition for certiorari, AT&T consist-
ently emphasized that a decision in favor of MCI would
lead to vigorous and adverse competition.’"*°—a result which
would occur only if AT&T was required to provide the nec-
essary interconnections for Execunet. AT&T expected and
encouraged this court to take account of these representa-
tions in reaching our decisions in the Execunet matter ; cer-
tainly, it did not assume that in so doing we would at the
same time ignore the underlying assumptions supporting
the claims of competition. Indeed, even now AT&T does not
deny that it is required to provide interconnections for
existing Execunet service; it contends only that it is not
required to provide any ‘‘additional’’ connections,” not-
withstanding its earlier representations necessarily assum-
ing the contrary, upon which our Execunet decisions were
premised, as well as the absence of any apparent legal basis
for distinguishing existing connections from additional
ones.

In view of this background, AT&T's current refusal, with
the approval of the Commission, to provide interconnec-
tions to MCI does not simply raise questions for fairness
vis-a-vis MCT; it also raises questions as to the propriety of
allowing respondents here to renounce a position and obli-
gation which they assumed throughout the course of the
Execunet proceedings. But we need not rest our grant of
MCI’s compliance motion on the practical consequences
involved here or on considerations of fairness and estoppel.
For while it is true, as AT&T strongly emphasizes, that our
Execunet decision is not addressed explicitly to the inter-
connection issue or to AT&T's obligation to provide inter-

*® See notes 7 & 12 supra.

“* See Opposition of AT&T to MCI Motion for an Order Direct-
ing Compliance With Mandate, MCI Telecommunications Corp. v.
FCC (March 2, 1978), at 10.

Dhak. + eal nent d atin

lla

connection *“—a fact which is hardly surprising, given the
background of this case and the apparent assumption by
all the parties, as well as this court, that such an obligation
was in force—it is also true that our analysis and decision
of the Execunet case is plainly inconsistent with the analy-
sis and ruling of the Commission on February 23, 1978
holding AT&T under ‘‘no obligation’’ to provide inter-
connections for Execunet.

In reaching this conclusion the Commission addressed its
analysis to two questions: whether the Commission had
previously directed AT&T to provide these services pur-
suant to an order under Section 201(a) of the Communi-
cations Act; and, if not, whether AT&T is under an obliga-
tion to provide interconnection apart from a Section 201 (a)
order. While serious questions have been raised by the
Department of Justice as to the correctness of the Com-
mission’s disposition of the second question,”® we need not
address these doubts here, since it is the Commission’s
analysis and resolution of the first question which gives
rise to the inconsistency with our Execunet mandate. For
in concluding that its prior orders do not require AT&T
to provide interconnections for Execunet, the Commission
construes narrowly and restrictively the very same issues
and decisions which were broadly construed by this court
in Execunet.

For purposes of the Commission’s first question, the
critical interconnection order is the Bell System Tariff

-

18 See id. at 12-14. See also Response of Federal Communications
Commission to MCI Motion for an Order Directing Compliance
With Mandate, MCI Telecommunications Corp. v. FCC (March 6,
1978), at 7 (‘‘There was no mention of interconnection rights or
obligations, because none of the parties had raised these questions
either before the Commission or in the Court.’’).

19 See Comments of the United States Department of Justice, Jn
the Matter of Petition of American Telephone and Telegraph Com-
pany for Declaratory Ruling and Expedited Relief, submitted as
Appendix A to MCI Reply to Oppositions, MC/ T elecommunica-
tions Corp. v. FCC (March 9, 1978), at 7, 9 (arguing, inter alia,

12a

Offerings order, supra, requiring AT&T to provide inter-
connection for ‘‘all’’ of the services which any of the spe-
cialized carriers ‘‘presently or hereafter’’ are authorized
to offer. In its declaratory ruling the Commission sought
to construe this order as limited to ‘‘presently or hereafter
authorized private line service,’’ In the Matter of Petition
of AT&T for Declaratory Ruling and Expedited Relief,
FCC 78-142, Memorandum, Opinion and Order, Adopted
February 23, 1978, Released February 28, 1978, 58 (here-
inafter FCC Declaratory Ruling), allegedly relying on a
decision of the Third Circuit to that effect. See infra. In
the very next paragraph of its decision, however, the Com-
mission recognized ‘‘that the Specialized Carrier decision
encompassed specialized communication services other than
those which theretofore had been described as ‘private line
services’’’ and acknowledged that ‘‘private line’’ had
emerged as shorthand for the broader term ‘‘specialized
communication service’? because of the particular context
in which the interconnections issues were most frequently
raised. Jd. § 259. Thus the Commission continued:

We believe it is clear that the Specialized Common
Carrier decision as well as our order in Bell System
Tariff Offerings and the Court’s decision in Bell Tel.
Co. of Pennsylvania require interconnection for all
specialized interstate communication services, includ-
ing switched digital services such as those developed
by Datran. What is germane to the present proceed-
ing, however, is a determination as to what services
were explicitly excluded from consideration in Special-
ized Common Carrier, Bell System Tariff Offerings,
and Bell Tel. Co. of Pennsylvania. We believe it is

that ‘‘AT&T totally failed to make any factual showing of harm
in its petition seeking to invoke Commission protection against
competition in the intercity services market,’’ as well as that
se [r]ecent court decisions make it clear that local telephone com-
panies, including AT&T subsidiaries, are affirmatively obliged to
offer local interconnection or loop services to other carriers, in-
eluding MCI, to facilitate lawful services’’).

BDI: ened 9 bho bE mAs at

13a

clear that MTS and WATS services, and therefore
services by other names which are the functional equiv-
alent of MTS and WATS, were excluded from both
the considerations and holdings of these proceed-
ings. *.° *

Id. (emphasis in original). Paorased in these terms the Com-
mission’s reasoning is whoily at odds with that of this court
in Execunet. For in Execunet we held that MCI’s facilities
authorizations encompassed Execunet service precisely be-
cause Specialized Carrier did not explicitly and affirm-
atively exclude this type of service from consideration. In
relying on exactly the opposite conclusion to support its
declaratory ruling, the Commission acts in direct and ex-
plicit contradition to our Execunet decision.

The inconsistency between Execunet and the Commis-
sion’s declaratory ruling persists at the more general level
as well. The thrust of our entire option and decision in
Execunet, derived in part from our reading of the Com-
mission staff report, was that Specialized Carrier repre-
sented a broad decision by the Commission to allow carriers
such as MCI to enter the market and compete with AT&T,
subject only to later limitations based on public interest
determinations in tariff or rulemaking proceedings.” In its
February 23rd ruling, however, the Commission narrowly
construed Bell System Tariff Offerings, which was based
on Specialized Carrier, to exclude Execunet interconnec-
tions from those which AT&T was required to provide; and
it relied on interconnection obligations—as opposed to tar-
iffs or rulemaking—effectively to limit the services which
MCI and other carriers were authorized to provide by the
Specialized Carrier decision.

Both of these positions are clearly inconsistent with the
basic themes of our Execunet decision. For the expansive
interpretation of Specialized Carrier we advanced in Ez-
ecunet clearly mandates an equally expansive view of the
scope of the interconnection obligations of AT&T which

20 Execunet, supra note 2, 561 F.2d at 378-379. See pp. 7-8 supra.

l4a

were defined by that decision. And in fact the intercon-
nection order which the Commission issued on the basis
of Specialized Carrier, as well as its discussion of inter-
connection in Specialized Carrier itself,’ reflected the
broad reading of that decision to which we have adhered:
as noted earlier, it required AT&T to furnish interconnec-
tion for all “presently or hereafter authorized” services
provided by the specialized carriers.” Similarly, our em-
phasis on tariffs and ratemaking as the exclusive means
for future limitations on the specialized carriers’ develop-
ment * clearly contemplated that the carriers would be
free to expand their service offerings—and would be af-
forded the necessary interconnections—until and unless
it was found that the public interest demanded otherwise.
The Commission’s narrow construction of AT&T's exist-
ing interconnection obligation is not only theoretically
inconsistent with this position, but also means in practice
that a specialized carrier cannot implement new offerings
until and unless it is able to establish that the public in-
terest mandates the services** and that a new order

** See note 4 supra, quoting Specialized Carrier, 29 FCC2d at
940 (‘‘established carriers with exchange facilities should, upon
request, permit interconnection or leased channel arrangements on
reasonable terms and conditions to be negotiated with the new
carriers, and also afford their customers the option of obtaining
local distribution service under reasonable terms set forth in the
tariff schedules of the local carrier’).

** Bell System Tariff Offerings, 46 FCC2d 413 (1974), aff’d sub
nom. Bell Telephone Co. of Pennsylvania v. FCC, supra note 3.

** Execunet, supra note 2, 561 F.2d at 378-379. See pp. 6-8 supra,

** Compare Execunet, supra note 2, 561 F.2d at 374 (‘‘it is well
recognized that the tariff provisions of the Communications Act
(Sections 203-205, 47 U.S.C. §§ 263-205), like the cognate sections
of the Interstate Commerce Act * * * embody a considered legis-
lative judgment that carriers should in general be free to initiate
and implement new rates or services over existing communications
lines unless and until the Commission, after hearing, determines
that such rates or practices are unlawful, subject only to a limited
period of suspension set out in the statute’) (footnotes omitted;
emphasis in original).

=

15a

should therefore be issued directing AT&T to provide in-
tereonnections. This twists the issues we contemplated in
this case beyond recognition; it deliberately frustrates the
purpose of the litigation, the basis on which it was pre-
sented by the parties, and the intended effect of our de-
cree.

In our view, then, the only conclusion to the issues pre-
sented here which is consistent with our reasoning and
holding in Execunet is that the Commission decisions in
Specialized Carrier and Bell System Tariff Offerings im-
pose upon AT&T an obligation to provide interconnections
for Execunet. In holding otherwise in its February 23rd
declaratory ruling, therefore, the Commission acted incon-
sistently with our Execunet mandate. And in refusing to
provide these interconnections to MCI, AT&T is acting
inconsistently with the view of its legal obligations re-
flected in our Execunet decision.

III. Tue Bell Telephone Decision

One final argument remains to be addressed. The Com-
mission has asserted that the position it has taken in this
action is mandated by the decision of the Third Circuit in
Bell Telephone Co. of Pennsylvania v. FCC, supra, and
that this position represents the only means by which the
Commission can simultaneously comply with the decisions
of the two circuits.?® As we have already made clear, how-
ever, the Commission’s February 23rd decision does not
effectuate compliance with our Execunet decision. Nor can
the Commission claim that it was required to decide as it
did in order to comply with Bell Telephone. For in our
view there is absolutely no conflict between the Execunet
and Bell Telephone decisions; the latter in no way com-
pels or even provides support for the Commission ruling
that AT&T is under no obligation to provide intercon-
nections for Execunet.

28 See FCC Declaratory Ruling, supra note 1, {ff 56, 61; Response
of Federal Communications Commission, supra note 18, at 20.

l6a

The interconnection orders under review in Bell Tele-
phone were issued by the Commission after AT&T refused
to provide to MCI the interconnections necessary for FX
and CCSA service.** FX, a service similar to though
somewhat more limited than Execunet, allows an indi-
vidual in one state in effect to maintain a Jocal phone in
another state and thereby avoid making or receiving tra-
ditional long distance calls from that state. For example,
an individual in Washington with FX can be reached by
telephone subscribers in New York City and can himself
reach New York City subscribers through a local loop in
Washington, a Washington-New York interexchange line,
and a business line in the New York City exchange area.
CCSA, a Common Control Switching Arrangement, serves
to link the various offices of a large company through
switches on a local telephone company’s premises.” In
the orders being challenged in Bell Telephone the Commis-
sion had first concluded that its prior actions—notably, its
Specialized Carrier decision—had imposed upon AT&T
the obligation to provide FX and CCSA interconnections
to MCI and other specialized carriers.** Lest its prior
orders were not clear, however, the Commission again
reviewed the interconnection question, concluding that
“achievement of our objective that competition in the pro-
vision of interstate private line communications services
be on a full, fair and nondiscriminatory basis requires the

** See Bell Telephone Co. of Pennsylvania v. FCC, supra note 3,
503 F.2d at 1254-1259,

“Id. at 1254 n.4, quoting Bell System Tariff Offerings, supra
note 22, 46 FCC2d at 418 & n.5.

** Bell System Tariff Offerings, supra note 22, 46 FCC2d at 426-
427, See also Letter from Bernard Straussburg, Chief of the Com-
mon Carrier Bureau, FCC, to AT&T, August 31, 1973 (‘‘it is our
view that, as requested by MCI, the associated Bell companies are
required to permit interconnection or provide local channel ar-
rangements to MCI’’), quoted in Bell Telephone Co. of Pennsyl-
vania v. FCC, supra note 3, 503 F.2d at 1256.

———————

er ees

his oe hh Se Ma ts A HD IMs

Sethi eo

17a

‘ysuance of broad interconnection orders. Our orders
herein therefore make clear that Bell is to provide inter-
connections for all of the authorized services of the spe-
cialized carriers, including FX and CCSA.” 503 F.2d at
1259, quoting 46 FCC2d at 426-427 (emphasis added).

An essential question posed by AT&T’s petition for re-
view in Bell Telephone was whether the Commission’s
order was the first time that AT&T had been directed to
provide FX and CCSA interconnections, or whether, as
the Commission argued, AT&T’s obligations to provide
these connections were fixed by Specialized Carrier and
the Bell Telephone orders merely represented the Com-
mission’s method of enforcing a previously announced
mandate.” The Third Circuit adopted the Commission’s
view. The court noted that Specialized Carrier contained
no specific reference to FX or CCSA, but it construed that
decision broadly to include the services in question.” In
so doing the Third Circuit decision provides strong sup-
port—not conflicting authority—for the similarly broad
construction we accorded in Execunet to Specialized Car-
rier and to the Commission’s Bell Telephone order. For
just as the Third Circuit found Specialized Carrier suffi-
ciently broad to include FX and CCSA service, notwith-
standing the absence of specific references to these serv-
ices, so too we have found that decision broad enough
to encompass Execunet, notwithstanding the similar ab-
sence of specific references.”

2 Bell Telephone Co. of Pennsylvania v. FCC, supra note 3, 503
F.2d at 1259,

8° Jd. at 1258-1260. In so doing the court emphasized the broad
language the Commisgion itself employed in the Specialized Carrier
proceeding. Jd. at 1262-1263. See note 4 supra, quoting Specialized
niga 29 FCC2d at 940; Execunet, supra note 2, 561 F.2d at
-879,

*t Indeed, one of AT&T’s stronger arguments against the Bell
Telephone result is directly supportive of the result we reach here.
In arguing that FX and CCSA should not be considered within

18a

Nonetheless, AT&T and the Commission, pointing to the
Third Circuit’s discussion of an overbreadth challenge,
argue that that discussion forecloses the FCC from find-
ing that AT&T is required to interconnect for Execunet
under the Specialized Carrier and Bell Telephone orders.”
We disagree. In Bell Telephone AT&T argued, inter alia,
that the order under review, by requiring it to provide
“the interconnection facilities essential to the rendition of
all of [the specialized carriers’] presently or hereafter
authorized interstate and foreign communications serv-
ices,” 503 F.2d at 1283, imposed an “unbounded intercon-
nection order.” Jd, at 1273 (emphasis in original). The
court rejected this challenge and upheld the order, noting:

Were we to read the Commission’s order in a
vacuum, we would be inclined to agree with petitioner
that the order is somewhat vague and, to a certain
extent, overbroad. On its face, the order gives little
guidance as to the types of services that AT&T
will be required to provide “hereafter.”

the scope of Specialized Carrier, AT&T emphasized that FX and
CCSA services were already being provided at the time by AT&T
and independent carriers, and that the FCC in Specialized Carrier
was ‘‘contemplating other, more unique services.’’ 561 F.2d at 1262.
The Third Circuit did not find this dispositive, concluding that
‘‘({w]hile there is language in [Specialized Carrier] indicating a
concern with new, customized services, we interpret this language
as referring not only to types of services provided, but also to the
delivery of private line services to ultimate customers who there-
tofore had been unable to obtain private line services fashioned to
their particular needs,’’ Jd. We need only point out that to the
extent both AT&T and the Third Circuit recognized in Specialized
Carrier a concern with and an interest in encouraging ‘‘new, cus-
tomized service,’’ that is a recognition which we share in finding
that decision dispositive of MCI’s right—in theory and in practice
—to provide Execunet.

*? See FCC Declaratory Ruling, supra note 1, 158; Response of
Federal Communications Commission, supra note 18, at 10-11, 20;
AT&T Opposition, supra note 17, at 19.

at ee Cee es nate Oe Re NS ar Deka’ wale eultees | as are

ee ee ek ee ee) ee

Pca a tw A arte Lin ONT AN ee Pe Ce

19a

Nevertheless, we find it unnecessary to remand on
this ground. Orders are not to be read in a vacuum,
but rather must be read and interpreted in the con-
text in which they appear. * * * Viewed in its entirely,
the FCC’s opinion in Docket 19896 operates to pre-
clude AT&T from treating its Long Lines Department
and its affiliates differently than it treats the special-
ized common carriers. * * * As we read the order, the
FCC has required A T & T to provide to the spe-
cialized carriers those (interconnection) elements of
private line services which A T & T supplies to its
affiliates and furnishes to customers through its Long
Lines Department. * * °

Id. at 1273-1274.

The question presented by the arguments of the FCC
and AT&T here is whether the above paragraphs clearly
limit the Bell Telephone interconnection order so as to
exclude Execunet, which the Commission has determined
is not a “private line” service.** In concluding that it does
not, we think two factors are of importance. First, the
overbreadth and vagueness with which the Third Circuit
was concerned were directed not to any uncertainty as
to wha‘ services the specialized common carriers them-
selves would provide, but rather to the fact that “[o]n
its face, the order gives little guidance as to the types of
services that AT&T will be required to provide ‘here-
after.’” Id. (emphasis added). Such concerns are not
involved in this case, however, since Execunet apparently
does not call for any novel forms of service from AT&T,
but rather requires virtually the same forms of intercon-
nection as are provided for FX.** Second, and more im-
portant, the Commission itself has not found or suggested

%3 FCC Declaratory Ruling, supra note 1, J 53, quoting MCI Tele-
communications Corp., 60 FCC2d 25, 63 (1976).

*¢ See MCI Reply to Oppositions, supra note 19, at 14.

20a

that the court’s Bell Telephone decision in fact limits
AT&T’s interconnection obligations to “private line” serv-
ices, as that term is currently defined by the Commission.
Rather, the Commission, notwithstanding its emphasis on
the Third Circuit's use of the term “private line” as a
limiting factor in its decision, itself recognizes that Bell
Telephone imposes upon AT&T an obiigation to provide
interconnection for services not traditionally considered
“private line’—and that it did so at the time it was en-
tered. To quote the Commission once again: “We believe
it is clear that the Specialized Common Carrier decision
as well as our order in Bell System Tariff Offerings and
the Covrt’s decision in Bell Tel. Co. of Pennsylvania re-
quire interconnection for. all specialized interstate com-
munication services * * *.” FCC Declaratory Ruling,
supra, at {59 (emphasis in original). Having made this
determination, and having explained the Third Circuit’s
use of “private line” as a shorthand or abbreviated term,
the Commission then formulates the final and dispositive
question for resolution as that of “what services were ex-
plicitly excluded from consideration in Specialized Com-
mon Carrier, Bell System Tariff Offerings, and Bell Tel.
Co. of Pennsylvania.” Id. (emphasis in original). And
that is precisely the question we addressed and answered
in Execunet, finding that Execunet services were not ex-
plicitly excluded.

The Commission’s analysis of Bell Telephone, then, far
from providing authority which conflicts with our con-
struction of the Execunet decision, culminates finally in
the very question which was not addressed in Bell Tele-
phone but which was answered in Execunet. Neither the
Commission nor AT&T is now free to choose to ignore
the answer given by this court, in lieu of one more favor-
able to their position we rejected in Execunet.

Motion granted.

APPENDIX B

lb

UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

September Term, 1977
No. 75-1635

MCI Telecommunications Corporation,
Microwave Communications, Inc.
N-Triple-C Inc., Petitioners

Vv.

Federal Communications Commission and
United States of America, Respondents

American Telephone and Telegraph Co., et ail.,
Intervenors

Before: Wricut, Chief Judge, and Tamm and WILEEy,
Cireuit Judges.

(Freep May 11, 1978)

Order

Intervenor United States Independent Telephone Asso-
ciation has filed a motion for a further stay of this court’s
order of April 14, 1978. For the reasons stated in the
attached per curiam, it is Orprerep that that motion is
hereby denied.

Intervenor American Telephone and Telegraph Com-
pany has filed a motion for a temporary stay of this
court’s order of April 14, 1978 until May 12, 1978, to per-
mit application to the Chief Justice of the United States.
It is Ornperep that the motion of intervenor American
Telephone and Telegraph Company is hereby granted.

2b

It is FurtHer Orperep that if the application is made
at or before noon on May 12, 1978 the stay is extended
until the Chief Justice Acts.

Per Curiam
For the Court

/s/ Grorce A. FisHER
George A. Fisher
Clerk

Per Curiam: The United States Independent Telephone
Association (USITA), an intervenor in this action, has
filed with this court a petition for a stay of the panel’s
unanimous decision of April 14, 1978 granting MCI Tele-
communications Corporation’s motion for an order direct-
ing compliance with our mandate in MCI Telecommunica-
tions Corp. v. FCC, 561 F.2d 365 (D.C. Cir. 1977), cert.
denied, —— U.S. ——, 46 U.S. L. Week 3446 (Jan. 16,
1978) (Execunet I). See MCI Telecommunications Corp.
v. FCC, —— F.2d —— (D.C. Cir. No. 76-1635), decided
April 14, 1978) (Execunet II). In seeking a stay USITA
raises again the very same arguments unanimously re-
jected by this panel in Execunet I, which the Supreme
Court declined to review, in Execunet II, and in the peti-
tions for rehearing. These same arguments were raised as
well in the suggestions for rehearing en bane filed by the
Commission, AT&T, and USITA, which led not one judge
on this court to request a vote on en banc consideration. See
Rule 35(b), Fev. R. App. P. It is our view that this case
has been amply litigated, and that the time has come for
enforcement of our original mandate in Execunet I. USITA
has not ‘‘made a substantial case on the merits,’’ Washing-
ton Metropolitan Area Transit Com’n v. Holiday Tours,
Inc., 599 F.2d 841 (D.C. Cir. 1977), nor has it demonstrated
that there will be irreparable injury without a stay, or
that a stay is necessary to serve the public interest and
will not substantially harm the opposing parties in this

3b

proceeding,’ id.; Virginia Petroleum Jobbers Ass’n v. FPC,
259 F.2d 921, 925 (D.C. Cir. 1958). We therefore deny the
petition for a further stay. In order to allow AT&T to seek
a stay from the Circuit Justice, however, we hereby grant
its motion for a temporary stay. But lest there be any con-
fusion as to our views, we hereby set forth briefly, hope-
fully for the last time, the issues at stake in this case and
the reasons why we believe the arguments raised once again
here to be wholly without merit.

I

The background of these proceedings is detailed at length
in both the original opinion, Execunet I, supra, 561 F.2d at
367-373, and our recent opinion granting MCI’s motion,
Ezecunet II, supra, slip op. at 4-9. What is involved is
MCI’s provision of Execunet service, whereby a subscriber
making use of local AT&T-furnished interconnections at
both ends of an MCI-furnished interstate line can reach any
telephone in a distant city served by the MCI line. In the
proceedings under review in Ezecunet I the Commission
rejected MCI’s tariff for Execunet service on the ground
that its earlier decisions establishing the scope of MCI’s
facilities authorizations—notably the Specialized Carrier
decision, Specialized Common Carrier Services, 29 FCC2d
870 (1971), aff’d sub nom. Washington Utilities € Trans-
portation Com’n v. FCC, 513 F.2d 1142 (9th Cir.), cert.

* Indeed, the Department of Justice, in opposing the FCC’s
grant of AT&T’s petition for a declaratory ruling which led to our
Execunet II decision, emphasized that ‘‘AT&T totally failed to
make any factual showing of harm in its petition to invoke Com-
mission protection against competition in the intercity services
market.’’ See Comments of the United States Department of Jus-
tice, In the Matter of Petition of American Telephone and Tele-
graph Company for Declaratory Ruling and Expedited Relief,
submitted as Appendix A to MCI Reply to Oppositions, MCI Tele-
communications Corp. v. FCC (March 9, 1978), at 7. AT&T and
the FCC have yet to make such a showing, or to demonstrate in
any way that the public interest would be adversely affected by
expansion of Execunet service.

4b

denied, 423 U.S. 836 (1975)—did not encompass Execunet-
type services. This court reversed unanimously, holding
that MCI did have authority to provide Execunet service.
We found that an affirmative determination to exclude
certain services is necessary to restrict a carrier’s facilities
authorization, and that no such determination had been
made in Specialized Carrier. In reaching this determination
this court broadly construed the scope of the Specialized
Carrier decision and emphasized that that decision con-
templated rulemaking and tariff review according to public
interest standards as the exclusive mechanisms for impos-
ing future controls on the development of specialized car-
riers such as MCI.

Certiorari was denied in Execunet I on January 16, 1978.
On the same day AT&T filed with the Commission a peti-
tion for a declaratory ruling that it was under no obliga-
tion to furnish the local connections necessary for MCI’s
provision of Execunet service. The Commission responded
by issuing a declaratory ruling to that effect on February
23, leading MCI to request that this court grant a motion
directing the FCC and AT&T to comply with the Execunet
I mandate. Since the Commission’s declaratory ruling un-
dermined our Execunet I mandate, on April 14, 1978 we
granted the motion directing compliance.

Our grant of MCI’s motion for compliance was based on
the clear and intentional inconsistency of the Commission’s
February 23 declaratory ruling with our opinion and deci-
sion in Execunet I. In its declaratory ruling the Commis-
sion framed the critical question as ‘‘a determination as to
what services were explicitly excluded from consideration’’
in its earlier decisions, and concluded that Execunet ser-
vice was so excluded. FCC Declaratory Ruling 59 (em-
phasis in original). That is precisely the question, however,
which was presented and determined—in directly contra-
dictory fashion—by this Court in Execunet J. In relying
on the opposite conclusion to support its declaratory ruling

5b

the Commission, we found, had acted in ‘‘direct and explicit
contradiction” to our Execunet I mandate. Execunet II,
supra, slip op. at 14. In addition, we found the Commis-
sion’s interpretation of Specialized Carrier and its reliance
on interconnection obligations effectively to limit the ser-
vice offerings of MCI to be directly at odds with the basic
themes of our Execunet I decision: “that Specialized Car-
rier represented a broad decision by the Commission to
allow carriers such as MCI to enter the market and com-
pete with AT&T, subject only to later limitations based on
public interest determinations in tariff or rulemaking pro-
ceedings.’’ Jd. Finally, we addressed and rejected the argu-
ment that the Commission’s position in its declaratory
ruling was mandated by the Third Circuit’s decision in Bell
Telephone Co. of Pennsylvania v. FCC, 503 F.2d 1250 (3rd
Cir. 1974), cert. denied, 422 U.S. 1026 (1975), finding our
decision to be wholly consistent with—and indeed deriving
support from—that reached by the Third Circuit in Bell
Telephone.

Subsequently, we granted a stay of our order pending
disposition of the petitions for rehearing and suggestions
for rehearing en banc to afford the Commission and AT&T
the fullest opportunity to press their claim. Extensive pe-
titions for rehearing and suggestions for rehearing en banc
were then filed by the FCC and AT&T, as well as by
USITA. We unanimously denied the petitions for rehear-
ing on May 8, 1978. Rehearing en banc was denied on the
same day, with no judge on this court having requested a
vote on the suggestions. See Rule 35(b), Fev. R. App. P.

II

In seeking a stay of our order, USITA continues to stress
the two points which have been emphasized throughout
these proceedings: that the interconnection obligation of
AT&T was neither mentioned nor addressed in Execunet I,
and that Ezecunet II is inconsistent with the Third Cir-

6b

cuit’s decision in Bell Telephone Co. of Pennsylvania v.
FCC, supra.

As to the first point, the fact is that until the Supreme
Court denied certiorari in Execunet I AT&T provided the
interconnections necessary for Execunet service without
any form of protest or objection. The obligation of AT&T
as a common carrier to provide the necessary interconnec-
tions was conceded all through the Execunet I proceedings,
and they were indeed so provided. In securing the modifica-
tion of our original stay of the Commission’s ruling in E2-
ecunet I, in its briefs and arguments to this court, and in its
petition for certiorari, AT&T repeatedly and consistently
stressed that a decision in favor of MCI would lead to
further expansion and vigorous and adverse competition—
a result which could occur only if AT&T was required to
provide the necessary interconnections. It was only after
the Supreme Court’s denial of certiorari—and only a few
hours afterwards, at that—that AT&T claimed for the first
time that it was not required to provide interconnection for
Execunet service. It was thus that we concluded in Ezecu-
met JI that our decision in Execunet I, consistent with
AT&'T’s representations during those proceedings, clearly
contemplated that AT&T was and is required to provide
interconnection for Execunet service. Slip op. at 10. None-
theless, our grant of MCI’s motion was not based on any
abstract contemplation of the court, let alone on the private
intentions of the members of the panel. See AT&T Petition
for Rehearing at 11. Rather, it was grounded on the very
clear and concrete contradictions between the court’s rea-
soning, interpretations, and conclusions in Execunet I and
those of the Commission in its declaratory ruling. The fact
that interconnection obligations were not specifically ad-
dressed in Execunet I because they were assumed by the
parties hardly eliminates these contraditions; if anything,
it provides further support for the grant of MCI’s motion
to direct compliance with this court’s mandate.

7b

The argument for a further stay of our mandate based
on the alleged inconsistency with Bell Telephone is, we
think, no more persuasive. Indeed, in Bell Telephone the
court held that AT&T was required to provide interconnec-
tion for services similar to though somewhat more limited
than Execunet. The court reached this conclusion by
broadly construing the Commission’s Specialized Carrier
decision to include the services in question, notwithstand-
ing the absence of any explicit mention of them in the
Commission decision—just as we have construed Special-
ized Carrier to encompass Execunet service notwithstand-
ing the similar absence of specific references. Certainly, no
one could argue that a decision by one court that AT&T
is required to provide interconnection for one service fore-
closes a subsequent decision that AT&T is also required
to provide interconnection for a similar service which
makes use of identical forms of interconnection.

There is, then, absolutely no inconsistency between the
holdings of Bell Telephone and Execunet I and II. The only
inconsistency even asserted derives instead from the Third
Circuit’s reasoning in rejecting AT&T’s argument that the
interconnection order under review in Bell Telephone,
which required AT&T to provide interconnections ‘‘essen-
tial to the rendition of all of [the specialized carriers’]
presently or hereafter authorized interstate and foreign
communications services,’’ imposed an ‘‘unbounded” and
illegal interconnection obligation. Bell Telephone, supra,
503 F.2d at 1273, 1283. In response the court noted that
while the order on its face gave little guidance as to the
types of services that AT&T will be required to provide
‘thereafter,’’ when read in context ‘‘the FCC has required
AT&T to provide to the specialized carriers those intercon-
nection elements of private line services which AT&T sup-
plies its affiliates and furnishes to customers through its
Long Lines Department.” Jd. at 1273-1274. Relying on this
statement, AT&T argues that its interconnection obliga-
tions are limited by the Third Circuit decision to ‘‘ private
line’’ services and that Execunet is not such a service.

8b

But as the FCC has recognized in its declaratory ruling,
the Third Circuit’s use of the term ‘‘private line” cannot
be interpreted to limit the interconnection obligations aris-
ing from Specialized Carrier to ‘‘private line services’’ as
that term is currently defined. Rather, the Commission has
explained the court’s use of the term as a shorthand or
abbreviated expression encompassing a broader range of
services than that which the Commission currently defines
as private line services. See FCC Declaratory Ruling,
supra, at 159; Execunet II, supra, slip op. at 21. The rele-
vant question, then, according to the Commission itself, is
what services were explicitly excluded from consideration
in Specialized Carrier and the decisions which followed it.
The Bell Telephone case answered this question with re-
spect to the services at issue in that case, but it did not
address it, let alone answer it, with respect to Execunet
services. That was the issue we addressed and decided in
Execunet I. And it is the Commission’s rejection of the
answer we provided in Execunet I which necessitated our
grant of MCI’s motion to direct compliance.

III

Only one point remains to be addressed. USITA empha-
sizes, as did the Commission and AT&T in their suggestions
for rehearing en banc, that it is the responsibility of the
Commission to determine whether competition by services
such as Execunet is in the public interest. With that point
we are in complete agreement. Recognition of the Com-
mission’s public interest responsibilities, however, provides
no basis for upholding its February 23 declaratory ruling
in view of the clear inconsistencies with the Execunet case.
For the Commission’s declaratory ruling was not based on
considerations of the public interest, and it in no way re-
flected a Commission decision that expansion of Execunet
service would adversely affect the public interest. Rather,
it reflected only the Commission’s interpretation of the
statutory provisions of the Communications Act and of

9b

earlier decisions rendered by the Commission, the Third
Circuit, and, most importantly, this court in Execunet I. In-
deed, it was the Commission’s prohibition of Execunet ser-
vice without any consideration of the public interest in the
first instance which led to this long series of litigation.

The Commission has now commenced inquiry into the
broad questions of competition and the public interest posed
by the development of services such as Execunet. That in-
quiry is one which we welcome. How long it takes is another
question. But its existence does not justify allowing AT&T
to maintain its de facto monopoly pending any final rules
where this court has held, in a full proceeding between
these parties, that consideration of the provisions of tho
Communications Act and of the relevant agency and judi-
cial precedents establishes MCI’s right to enter the market
now.”

The decisions reached by this court have been informed
by full briefing and argument in Execunet I and by volumi-
nous submissivns by the parties in Execunet IJ. The parties
have been afforded ample opportunities to present their
positions to this court, and to the Supreme Court in their
petitions for review of Execunet I. Our decision in Execu-
net II simply enforces the mandate of Execunet I, which
the Supreme Court chose not to review.

? Indeed, FCC Commissioner Joseph R. Fogarty, who dissented
from both the Commission’s declaratory ruling in favor of AT&T
and its decision to seck a stay and rehearing by this court, stated:
‘I believe it is improper and counterproductive to continue this
litigation any further, following two reversals by the Court of
Appeals and denial of Review by the Supreme Court. Enough is
enough. I would devote all available resourees of this Commission
to expedite determination of a reasonable competitive market struc-
ture for domestic telecommunications services.’’ Statement of Com-
missioner Joseph R. Fogarty, In re Motion for a Stay of the United
States Court of Appeals Order Directing Compliance with Execu-
net Mandate, submitted as Attachment A to MCI Oppositions to
Stay, at 1.

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APPENDIX C

le

BEFORE THE
FEDERAL COMMUNICATIONS COMMISSION

Wasuinoton, D.C, 20554

FCC 78-142
97470

In THE MATTER oF

Petition or AMERICAN TELEPHONE AND TELEGRAPH CoMPANY
FOR A DecLARATORY RuLING AND Expepirep RELIEF

Memorandum, Opinion and Order

Adopted: February 23, 1978; Released: February 28, 1978

By the Cemmission: Chairman Ferris issuing a separate
statement; Commissioner Fogarty dissenting and is-
suing a statement.

1. We have before us a ‘‘Petition for a Declaratory
Ruling and Expedited Relief’’ filed on January 16, 1978 by
the American Telephone and Telegraph Company (AT&T).*
That petition stated that AT&T will not provide any addi-
tional connections to local exchange services to “Other Com-
mon Carriers’’ for their use in the provision of service of-
ferings which are not private line services and that AT&T
believes such a course of conduct does not violate the cease
and desist order in Bell System Tariff Offerings, 46 FCC 2d

*That petition has been styled as ‘‘In the Matters of BELL
System Tarirr Orrertnos of Local Distribution Facilities for Use
by Other Common Carriers; and Letter of Chief, Common Carrier
Bureau, dated October 19. 1973, to Laurence E. Harris, Vice Presi-
dent MCI Telecommunications Corporation, FCC Docket No.
19896.’’ Inasmuch as Docket No. 19896 has been terminated for
more than two years, the petition should have been styled as a
new proceeding. The petition and all comments or other pleadings
relating to this petition will be filed in the instant proceeding,
which shall be considered as separate and distinct from the termi-
nated Docket 19896 proceeding.

2c

413 (1974), affirmed sub nom. Bell Tel. Co. of Pennsylvania
v. FCC, 503 F.2d 1250 (3rd Cir. 1974), cert. denied, 422 U.S.
1026 (1975). The petition requested that we issue a declara-
tory ruling affirmirg that AT&T has ‘‘no present obligation
to provide additional connections to local exchange service
to Other Common Carriers (‘‘OCCs’’) for their use in the
provision of service offerings which are not private line
services.’’ ?

2. Oppositions to AT&T’s request for such a declara-
tory ruling have been filed by MCI Telecommunications
Corporation (MCI), Southern Pacific Communications
Company (SPC), Satellite Business Systems (SBS), Amer-
ican Satellite Corporation (ASC), Telenet Communications
Corporation (Telenet), Aeronautical Radio, Inc. (ARINC)
and the United States Department of Justice. Comments in
support of AT&T’s position have been filed by Continental
Telephone Corporation (Continental), GTE Service Cor-

? The petition does not define ‘‘Other Common Carriers.’’ How-
ever, inasmuch as the Bell System Tariff Offerings cease and desist
order was issued for the purpose of clarifying and enforeing
AT&T’s obligation to interconncet with specialized common car-
riers pursuant to our decision in Specialized Common Carrier
Services, 29 FCC 2d 870 (1971), affirmed sub nom. Washington
Utilities & Transportation Commission vy. FCC, 513 F.2d 1142
(9th Cir.), cert. denied, 423 U.S, 836 (1975), the term ‘‘Other
Common Carriers’ ‘n the AT&T petition appears to be synony-
mous with the term ‘‘specialized common ecarriers’’ in the Bell
System Tariff Offerings order which directed AT&T to furnish
certain interconnection facilities to ‘‘specialized common carriers.’’
AT&T's Reply Comments confirm that the petition does not relate
to international record carriers or value-added carriers who are
authorized to provide only non-voice services. Neither the petition
nor the reply comments indicate that AT&T contemplates any
change in intereonnection arrangements with Western Union or
the independent telephone companies. Accordingly, the discussion
and decision herein relates only to interconnection arrangements
between telephone companies and specialized common carriers and
not to such arrangements between and among telephone companies,
or between telephone companies and Western Union, international
record carriers, or value-added carriers.

3e

poration (GTI), and the United States Independent Tele-
phone Association (USITA). In addition, the following
parties have filed comments regarding AT&T’s petition as
it relates to their individual circumstances, but have taken
no formal position before the Commission; Association of
Data Processing Service Organizations, Inc. (ADAPSO),
Graphnet Systems Inc. (Graphnet), Computer and Busi-
ness Equipment Manufacturers Association (CBEMA),
Western Union International, Inc. (WUI), ITT World
Communications, Inc. (ITT Worldcom), and RCA Global .
Communications, Inc. (RCA Globeom). Additional reply
comments have been filed by AT&T, MCI, USITA, GTE
and Continental.

I. Contentions oF THE Parties
A. Contentions of AT&T

3. AT&T begins by stating that its interpretation of
the recent Court of Appeals decision in MCI Telecommuni-
cations Corp. v. FCC (‘‘Ezecunet’’), 561 F.2d 365 (D.C.
Cir. 1977), cert. denied, No. 77-420, 46 U.S.L.W. 3448
(January 16, 1978), is that the Court ruled that our Special-
ized Common Carrier decision, supra, did not limit Other
Common Carriers to providing only private line services
over their existing facilities. AT&T states that it does not
dispute that holding for purposes of this proceeding. How-
ever, AT&T contends that the Execunet decision did not
alter the Commission’s finding that MCI’s Execunet serv-
ice and other similar services are not private line services,
nor did the Court address AT&T’s interconnection obliga-
tions, if any, to the OCCs for the provision of non private
line services. Under existing law, argues AT&T, it is re-
quired to interconnect its facilities with the OCCs for the
provision of only private line services. Because the Com-
mission has determined that Execunet type services are
not private line services, AT&T maintains that it is not now
legally required to interconnect with the OCCs to enable
them to provide other than private line services. Before

de

the Commission can order AT&T to interconnect, argues
AT&T, a hearing pursuant to Section 201(a) of the Com-
munications Act is required so as to enable the Commis-
sion to ascertain whether the interconnection of AT&T’s
local exchange services for the provision of non private
line services by the OCCs would be in the public interest.
Because a hearing on that issue has not been held, AT&T
concludes that it is under no present obligation to offer its
local exchange facilities to the OCCs for the provision of
Fixecunet/MTS type services.

4. AT&T advances four legal arguments in support of
this position. First, AT&T contends that the Commission
specifically determined in its Docket No. 19896 proceeding,
Bell System Tariff Offerings, supra, that the extent of
AT&T’s Section 201(a) interconnection obligation with re-
spect to the specialized carriers was limited to private line
services, and did not encompass public message services.
AT&T directs our attention to a portion of the Commis-
sion’s decision which focuses on whether FX and CCSA
are private line services and asserts that such an analysis
would have been pointless if AT&T’s interconnection obli-
gation went beyond connections for private line services.
See also Bell Tel. Co. of Pennsylvania, supra, 503 F.2d at
1273.

5. Second, AT&T avers that in the Specialized Com-
mon Carrier proceeding, the Commission had before it only
applications by OCCs to provide private line services. Con-
sequently, when the Commission ruled in Docket No. 19896
that AT&T already had a Section 201(a) hearing with re-
spect to interconnection of the OCCs in the Specialized
Common Carrier proceeding, it is obvious, reasons AT&T,
that the Commission was considering only whether the
public interest would be served by requiring AT&T to inter-
connect its local exchange facilities for private line services,
and not for public message services. Thus, AT&T concludes
that the Specialized Common Carrier proceeding does not
constitute a hearing or contain the public interest findings

5¢e

necessary to impose a present obligation upon AT&T for it
to provide public exchange service connections for use by
the OCCs for other than private line services.

6. Third, AT&T states that recent Commission deci-
sions have explicitly restated that the Specialized Common
Carrier proceeding did not require carrier-to-carrier inter-
connection for other than private line services, and that
before the Commission can order such interconnection on
the part of local telephone companies, a Section 201(a)
hearing must be conducted. See Southern Pacific Comuni-
cations Company (‘‘SPRINT II’’), 63 FCC 2d 309, 320
(1977), MCI Telecommunications Corporation (‘‘SPLS
II’’), 63 FCC 2d 237, 247 (1977).* Furthermore, AT&T
states that these decisions also have made it clear that it
has no interconnection obligation for non private line serv-
ices because without an interconnection hearing and deci-
sion, such interstate services could currently be terminated
by the specialized carriers only through resale of local ex-
change service obtained under an intrastate tariff. This, in
turn, would violate the general requirement that all por-
tions of an interstate service be offered pursuant to an
interstate tariff on file with this Commission. Until we con-
duct a hearing pursuant to Section 201(a) of the Act to
determine whether it is in the public interest to terminate
specialized interstate services via facilities used in common
with public message services, then AT&T contends that
such services could not be lawfully terminated because no
interstate tariffs are on file which offer such termination
service or facilities.

7. Fourth, AT&T contends that the reason the Execu-
net court concluded that the specialized carriers were not
restricted to the provision of private line services over
their existing authorized facilities was because the Com-

*The SPRINT II and SPLS II decisions were vacated and re-
manded for reconsideration after AT&T filed its petition. MCI
Telecommunications Corp. v. FCC, No. 76-2071 (D.C. Cir., Feb-
ruary 3, 1978).

6c

mission had made no inquiry into whether competition for
public message services was in the public interest, and
therefore, the Commission had no basis upon which to re-
strict the specialized carriers from providing non private
line, Execunet-type services. The Court did not address the
scope of AT&T’s interconnection obligation for such serv-
ices. But implicit in the Court’s holdings, states AT&T, is
that the Commission also made no public interest findings
which could require AT&T to provide connections and serv-
ices to be used by the OCCs for the equivalent of public
message services. Until a Section 201(a) hearing is con-
ducted into these issues, argues AT&T, the Commission
cannot conclude that the public interest requires intercon-
nection for non private line services.

8. AT&T’s next major argument is that before the in-
terconnection question is ever reached, the Commission
must first determine whether it is in the public interest for
OCCs to provide MTS/Execunet-type services, i.e., services
that would directly compete with the switched public mes-
sage telephone network. In Execunet, the Court stated:

we have not had to consider, and have not considered,
whether competition like that posed by Execunet is in
the public interest. That will be the question for the
Commission to decide should it elect to continue these
proceedings. 561 F.2d at 380.

Accordingly, AT&T claims that in the absence of a thresh-
old determination by the Commission that Execunet-type
services are in the public interest, it cannot be said that
AT&T is under an existing obligation under Section 201(a)
of the Act, or otherwise, to provide local exchange connec-
tions to the OCCs to enable them to provide non private
line services. AT&T contends that the Commission must
first be in a position to determine whether and how the pub-
lic interest would be served by authorizing the OCCs to
provide MTS services before it can require AT&T to inter-
connect with the OCCs for the provision of those services.

Te

9. Next, AT&T asserts that the public interest would be
disserved if AT&T were now to provide additional facilities
and connections for use by OCCs in furnishing non private
line services. To provide these additional facilities and con-
nections to the OCCs prior to a determination that it would
be in the public interest to do so, states AT&T, could em-
bark the industry on an irreversible course of intercity
MTS competition without the Commission ever having con-
sidered the implications of such competition to the public,
the carriers, and the industry.

10. Finally, AT&T requests the Commission to act expe-
ditiously on its petition because it anticipates, in the wake
of the Execunet decision, receiving requests from OCCs for
facilities and connections to local exchange services for their
use in the provision of MTS/Execunet-type services. More-
over, because AT&T believes no interconnection obligation
for such services currently exists, and because AT&T be-
lieves the Commission has addressed this precise question
in its Docket 19896 proceeding and determined that such
connections would not be in the public interest, it states that
it will await the Commission’s ruling on the instant Petition
before it processes any interconnection requests by the
OCCs for non private line exchange services.

B. Contentions of Parties
in Opposition

11. MCI and SPC present the principal arguments
against AT&T’s petition for declaratory relief. Accord-
ingly, our presentation of the arguments in opposition will
concentrate primarily upon the MCI and SPC pleadings.
To the extent that other parties have submitted arguments
different than those advanced by MCI and SPC, however,
they also will be given specific attention.

12. SPC begins by contesting AT&T’s argument that
the Specialized Common Carrier proceeding limited
AT&T’s obligation to provide facilities and connections to
OCCs for only private line services. SPC argues that

8c

Specialized Common Carrier did not restrict the new spe-
cialized carrier applicants to private line services, but au-
thorized competition in the broader specialized communica-
tions field to include a full range of new and innovative
service offerings. SPC points to Datran’s authorization to
provide a switched all digital end-to-end network, as op-
posed to other applicants then before the Commission
which proposed only point-to-point, rather than switched,
services. SPC states that Datran’s service would not have
met the essential criteria of a private line service set forth
in the Commission decision in Execunet. Therefore, SP
concludes that AT&T cannot now contend that its intercon-
nection obligation is limited to private line services when
AT&T had an obligation to provide interconnection to Da-
tran for its fully switched, non private line service.

13. Next, both MCI and SPC disagree with AT&T that
Specialized Common Carrier, Docket 19896, and Bel! Te. Co.
of Pennsylvania require AT&T to provide interconnection
to OCCs for only their private line services. It is the >si-
tion of MCI and SPC that AT&T must provide ini_ son-
nection facilities to OCCs for all their authorized services,
and that AT&T can treat the OCCs no differently than it
does its own Long Lines Department. First, SPC and MCT
argue that the Specialized Common Carrier decision made
no mention of limiting AT&T’s interconnection obligation
to private line services, but included all specialized carrier
communications services. Second, these same parties vig-
orously argue that the Commission decision in Docket
19896 prohibited AT&T from engaging in conduct which
would result in denial or unreasonable delay ‘‘in establish-
ing physical connections with MCI and other specialized
common carriers for their presently or hereafter author-
ized interstate and foreign communications services.’’ 46
FCC 2d at 439. Consequently, SPC maintains that when
these decisions are read together, the test of AT&T’s inter-
connection obligation is not whether an OCC service is a
private line service, but whether the service has been au-
thorized. If the service is authorized, then, states SPC,

9e

AT&T is bound to provide interconnection facilities. MCI
points out that the question of whether Execunet and sim-
ilar services are authorized was specifically addressed in
the Execunet case, where the Court held that MCI was
authorized to provide Execunet service over its existing
facilities. Therefore, argues MCI, AT&T is legally obli-
gated to furnish interconnection so that its service can be
provided. MCI contends that AT&T’s present refusal to
interconnect its monopoly local distribution facilities to al-
low MCT to provide a service that the Court determined
MCI was authorized to provide would constitute a total
abnegation of the Court’s mandate.

14. With respect to AT&T’s argument that the Com-
mission and Court discussions concerning AT&T’s inter-
connection obligations for FX and CCSA imply that such
obligation extends only to private line services, MCI states
that the reason these two private line services were the
focus of the Docket 19896 proceeding was because AT&T
had refused to provide interconnection for them. But in
addressing these two services, MCI contends that the Com-
mission did not abandon or limit the broad basis of its
holding regarding the interconnection of ‘‘all authorized
services.’? MCI supports this argument by quoting a pas-
sage from Docket 19896 which states, ‘‘that Bell is to pro-
vide interconnection facilities for all authorized carriers,
including FX and CCSA.” 46 FCC 2d at 427.‘

15. SPC counters AT&T’s contention that a hearing
pursuant to Section 201(a) of the Act must be held before
the Comission can order AT&T to interconnect with the
OCCs for the provisions of other than private line services
by submitting two reasons why such a hearing is not re-
quired. First, SPC argues that the initial clause of Section
201(a) establishes the duty of every common carrier to
furnish service upon ‘‘reasonable request.’’ It is unneces-
sary to proceed to the second clause to establish the obli-

*SBS strongly supports this argument.

10¢

gation of AT&T to provide the requested service or facility,
states SPC, if the request is reasonable. Second, SPC be-
lieves that if a hearing is required by Section 201(a), such
opportunity has already been afforded to AT&T on pre-
vious occasions, and AT&T did not present arguments
against. such interconnection when given the opportunity
to do so.

16. SPC argues that the only possible reason that
AT&T could consider its interconnection request to be
unreasonable is because Execunet-type services would
involve the resale or sharing of local exchange facilities
and some intrastate tariffs may prohibit this. However,
SPC claims that when facilities are used solely for in-
terstate purposes, restrictions in an intrastate tariff
are preempted by federal policies where the two conflict.
Therefore, if the federal authority authorizes an inter-
state service, and conflict with a local tariff is preempted,
then the request is not unreasonable. ARINC carries
this argument a step further by contending that once
an interstate service has been authorized by the Commis-
sion, then only technical incompatibility would make such
a request unreasonable, and absent that factor, Section
201(a) would require AT&T to furnish local exchange
facilities so that the authorized interstate service could
be provided.

17. If the Commission believes the first clause of Sec-
tion 201(a) does not apply here, then SPC contends that
the “opportunity for hearing” required by the second
clause has already been afforded to AT&T, and there-
fore, the Commission must rule that AT&T’s intercon-
nection obligations include providing facilities for Ex-
ecunet-type services. SPC states that AT&T was given
numerous concrete opportunities to establish how such
interconnection could disserve the public interest when
it was presented with actual tariff filings proposing such
interconnection. See Execunet, 60 FCC 2d. 25 (1976);
Southern Pacific Communications Company (SPRINT

lle

1), 61 FCC 2d 144 (1976); MCI (SPLS I), 61 FCC 2d 131
(1976); Southern Pacific Communications Company,
(SPRINT II), supra and MCI (SPLS II), supra (1977).
SPC argues that AT&T failed to demonstrate in these
proceedings that some public interest reason exists why
the Commission should not require interconnection for
non private line services. Moreover, SPC states that
Bell Tel. Co. of Pennsylvania makes it clear that a dis-
tinct full evidentiary hearing is not required by Section
201(a). Consequently, AT&T has been afforded the “op-
portunity for hearing” mandated by Section 201(a), and
having failed to make its case, the Commission may now
lawfully order the interconnection necessary for author-
ized carriers to provide Execunet-type services without
further hearing and as a part of this proceeding.

18. AT&T’s argument that a public interest finding is a
condition precedent to any ruling by the Commission on
AT&T’s obligation to provide local interconnection to
OCCs for MTS/Execunet-type services, states SPC, is
misplaced. In fact, SPC contends that with respect to
MCI’s Execunet service, and similar authorized service
offerings of SPC, AT&T’s argument is the reverse of the
process contemplated by the Ezecunet Court. In the Ez-
ecumet case, SPC maintains that the Court ruled that
MCT has always been authorized to provide its Execunet
service, and that until the Commission initiates and com-
pletes a proceeding which would restrict these authoriza-
tions, Execunet and comparable services of other car-
riers possess the same legal validity as any other au-
thorized service, and therefore, must be interconnected.
The threshold issue described by AT&T may be relevant
in a proceeding initiated by the Commission to restrict
the scope of future authorizations, argues SPC, but not
to restrict the authorizations for existing service cate-
gories that the Execumet Court determined to be without
limitation for existing facilities.

12c

19, If the Commission were to grant AT&T’s petition,
MCI, SPC, and the Department of Justice contend that
such action would raise serious antitrust implications.
All three of these parties rely heavily on an established
principle of antitrust law known as the “bottleneck” or
“essential facilities” doctrine. This principle.establishes a
general obligation upon those who control access to es-
sential facilities to make such available to actual or po-
tential competitors without unreasonable restriction. All
three parties cite Otter Tail Power Co. v. United States,
410 U.S. 366, 377 (1973) in support of this principle. To
be an essential facility, it is sufficient if duplication of
the facility would be economically infeasible and if denial
of its use inflicts a severe handicap on potential market
entrants. See Hecht v. Pro-Football, Inc., —— F.2d ——
(D.C. Cir., No. 75-1819, December 20, 1977, pp. 17-19)
which MCI and SPC both cite. The parties then state
that AT&T has a de facto monopoly control of local dis-
tribution facilities, that these facilities are essential to
the provision of their authorized Execunet-type services,
and that it is impractical, if not impossible, for the spec-
ialized carriers to duplicate these facilities. Accordingly,
AT&T’s denial of an obligation to interconnect with the
OCCs for provision of its authorized services is a clas-
sic example of the “essential facilities” doctrine and, the
parties argue, cannot be countenanced by the Commis-
sion because it would be a violation of the antitrust laws
and contrary to the public interest.

Telenet argues that AT&T’s obligation to provide non-
discriminatory access to its monopoly local exchange
facilities for authorized services is broader than, and
exists independently of the Commission’s holdings in
Docket 19896, or even Section 201(a) of the Act. Where
a carrier has essential control over monopoly facilities,
Telenet argues the interconnection obligation arises out
of the Sherman Act, and interpretations thereof, pro-
scribing a monopolists “refusal to deal.” Both Telenet

ee ee —

13¢

and SBS contend that if AT&T is relieved of its obli-
gation to provide connections for MCI’s Execunet Serv-
ice, then the authorization found by the Court to have
been made for that service would be virtually nullified.
MCI states further that a denial of AT&T’s petition
would be in keeping with our policy of full and fair com-
petition established in Specialized Common Carrier. The
Department of Justice also argues that the Execunet de-
cision held that AT&T possesses no de jure monopoly,
and therefore, AT&T cannot be granted its request for
expedited relief so as to deny competing carriers access
to essential local loop facilities in order to preserve its
monopoly position of intercity service.

20. With regard to another antitrust matter, the De-
partment of Justice states that those who advocate re-
strictions on competition have the burden of proving,
with facts, that such restrictions are in the public inter-
est. The Department believes that AT&T’s petition fails
to meet this threshold burden, and therefore must be
denied. AT&T’s mere assertion that its revenues and
pricing policies would be adversely affected if intercon-
nection for Execunet-type services was provided to the
OCCs, contends the Department, is obviously insufficient
to act as a basis for the protection AT&T seeks. Under
Carroll Broadcasting Co. v. FCC, 208 F. 2d 440 (D.C.
Cir. 1958), a case relied on by the Execunet Court, the
Department urges that we cannot equate injury to regu-
lated firms with injury to the public interest. The Car-
roll case, contends the Department, stands for the propo-
sition that competitors may severely injure each other
to the great benefit of the public. Absent a factual show-
ing of harm to the public by AT&T, the Department
states that the Commission cannot assume that preserv-
ing AT&T’s de facto monopoly over MTS/Execunet-type
services is desirable in the public interest. Finally, the
Department concludes that for the past twenty years
AT&T has predicted cataclysmic effects from the pro-

14e

competitive rulings of the Commission and courts, and,
as yet, no evidence has surfaced to indicate that compe-
tition has caused a deterioration in service or an increase
in rates to any class of customers. Therefore, the De-
partment urges that we deny AT&T’s petition and re-
frain from instituting a hearing into whether AT&T
should be required to interconnect for non private line
services, unless AT&T can make some initial showing as
to why such a restriction would serve the public as dis-
tinguished from its own corporate interests.

21. Telenet and ASC believe that AT&T’s attempt to
limit its present interconnection obligation to OCCs for
the provision of services which are private line services is
too ambiguous and creates the potential for abuse. ASC
strenuously objects to allowing AT&T to become the final
arbiter of what constitutes a permissible private line ser-
vice for purposes of interconnection. ASC believes that
this would put the OCCs in the untenable position of prov-
ing to AT&T that every new service offering was not an
Execunet-type or other non private line service. ASC
argues that the authority to evaluate the public interest
justifications for any new service should not be delegated
to AT&T. Therefore, ASC requests that the Commission
limit its review to whether Execunet service must be pres-
ently interconnected, and not to the more general issue of
interconnection of OCC services.

22. Telenet states that the OCC concept is one of
AT&T’s design, and therefore, AT&T could change its
view of what constitutes an OCC at any time. While this
could lead to abuse, Telenet contends that regardless of
how AT&T chooses to classify a common carrier, AT&T
nevertheless has an obligation to provide access to mo-
nopoly facilities which are essential to the provision of
any service authorized and certificated by the Commis-
sion.

15¢

C. Comments of Other Parties

23. The international record carriers (IRCs), ITT
Worldcom, RCA Globeom and WUI have all expressed
concern that the language used in AT&T's petition to
describe the extent of its interconnection obligations is
overly broad, and if sustained by the Commission could
be construed to allow AT&T to refuse interconnection
with the IRCs for their non private line services. The
specific language at issue is AT&T’s statement that:

this pleading concerns only whether Petitioners have
a duty to provide to MCI and other OCCs additional
facilities and connections to Petitioner’s exchange
services for use by OCCs in their provision of Ex-
ecunet-type services or any other offering which is
not a private line service. (Emphasis added)

Because AT&T categorizes the IRCs as OCCs, and be-
cause the international telex and dataphone-type services
offered by the IRCs are not private line services, these
parties contend that a literal application of the language
in the AT&T petition could permit AT&T to refuse the
IRCs interconnection facilities for these services. The
IRCs state that interconnection for these international
services raises entirely different issues than those in-
volved in the AT&T dispute with the domestic special-
ized carriers. Accordingly, the IRCs request that we dis-
tinguish the AT&T/IRC interconnection matters and
expressly limit the AT&T petition to those matters in-
volving the interconnection of domestic specialized car-
riers to the public switched telephone network.

24. CBEMA, ADAPSO and Graphnet have also
noted their concern that the above-cited sweeping lan-
guage used by AT&T in its petition, if granted by the
Commission, could be used by AT&T to deny intercon-
nection to local exchange services which are essential to

16¢

the provision of services authorized for value-added car-
riers and for OCCs offering specialized data and alter-
nate voice/data services. Moreover, these parties contend
that AT&T’s “unspoken definition of private line serv-
ices” could create substantial confusion if AT&T’s dec-
laration is granted. ADAPSO contends that the decisions
relied on by AT&T to define its interconnection obliga-
tions to OCCs apply only to voice use private line serv-
ices. Accordingly, CBEMA, ADAPSO,* and Graphnet
request that whatever action is taken, the Commission
should not alter AT&T’s present interconnection obliga-
tions to these earriers, and in addition, should expressly
incorporate the Commission’s prior definitions and dis-
cussions of what constitutes a private line service.

D. Comments in Support

25. GTE agrees with AT&T that its present legal
obligation to interconnect with the specialized carriers
is limited to private line services. In support of this
argument, GTE stresses the representations made by
counsel for MCI in the Specialized Common Carrier pro-
ceeding. At that time, GTE observes that it was MCI’s
intention to provide only private line services which
were the equivalent of private microwave. When the
Commission subsequently ordered AT&T to interconnect
with the specialized carriers for their authorized services
pursuant to Specialized Common Carrier, GTE argues
that the interconnection order obviously extended to only
private line services because those services were the only

’ ADAPSO has also filed a ‘‘Motion to Respond to American
Telephone and Telegraph Company.’’ ADAPSO made this request
based on its concern that the scope of AT&T’s requested relief
might not be adequately clarified by AT&T in its Reply. In order
to expedite our ruling in this matter, we hereby deny ADAPSO’s
request. However, we believe ADAPSO’s concerns have been di-
rectly addressed in n.2, supra.

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kind the specialized carriers were authorized to provide.
Since that decision in Execunet did not upset the Com-
mission’s determination that Execunet service is not pri-
vate line service, GTE contends that before AT&T can
be required to interconnect, a hearing pursuant to Sec-
tion 201(a) must be held to ascertain whether intercon-
nection to local exchange services should be provided to
the specialized carriers for the provision of Execunet/
MTS type services.

26. USITA reminds the Commission that the inde-
pendent telephone companies are also subject to the
policies announced in Specialized Common Carrier, and
that these companies agree with AT&T that a hearing
is required before the Commission can order the inde-
pendent carriers to offer interconnection to the OCCs
for the provision of non private line services. Moreover,
the Commission must make a fundamental public inter-
est determination “whether competition like that posed
by Execunet is in the public interest,” Execunet, 561 F.
2d at 380, states USITA, before it can require the tele-
phone companies to interconnect for these services.

27. Continental asserts that a Section 201(a) deter-
mination has nev er been made with respect to the inter-
connection of non private line services. Continental ar-
gues that the Evzecunet decision actually supports
AT&T’s position because it left to the Commission the
question of whether the provision of Execunet-type serv-
ices by specialized carriers is in the public interest. By
recognizing that the Commission has never made such
a public interest finding, Continental contends that the
Court implicitly acknowledged that there could not have
been a previous Section 201(a) finding that the public
interest mandates interconnection of these services with
local exchange facilities. Accordingly, Continental believes
that the Execunet decision confirms AT&T’s obligation

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to interconnect with the specialized carriers for only pri-
vate line services.

28. In a separate petition, Continental states that in
the wake of the Evecunet decision, MCI, SPC, and ITT’s
United States Transmission Systems, as well as other
specialized carriers, will be seeking to offer Execunet/
MTS type services because no affirmative public interest
determination pursuant to Section 214(c) of the Act, 47
U.S.C. § 214(c), has yet been made to restrict the facili-
ties authorizations of the specialized carriers to private
line services, as required by Execunet. Therefore, Con-
tinental argues that these carriers are now free to offer
services that are essentially the same as, and compete
directly with, message toll service. Continental claims
that if the growth of Execunet-type service by means of
the existing facilities authorizations is not temporarily
halted pending a hearing as to whether it is in the pub-
lic interest for specialized carriers to provide such serv-
ices, the competitive responses of the established carriers
will lead to an abandonment of nationwide rate averag-
ing and a reduction or elimination of contributions from
message toll services to local exchange carrier revenue
requirements. The toll settlement contribution from mes-
sage toll service amounts to over 60 percent of Conti-
nental’s revenue requirement, and if some of these con-
tributions were diverted by reason of competition for
MTS services, then Continental maintains that this could
irreparably disrupt its current pricing policies, with a
significant impact upon its telephone subscribers. Fur-
thermore, Continental argues. that if the growth of Ex-
ecunet-type services is left unchecked, additional inter-
connects would disrupt the marketplace, confuse the pub-
lic concerning continued availability of these services
and promote expansion of specialized carrier facilities
that could prove wastefully duplicative. Should the Com-
mission subsequently decide that these services are not

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in the public interest, a decision to eliminate or condition
the services would then become exceedingly difficult to
implement, states Continental. Accordingly, Continental
requests the Commission to utilize the broad statutory
authority conferred upon it by Section 4(i) of the Act,
47 U.S.C. §154(i), to prevent further growth of Execu-
net-type services pending resolution of the vital question
of whether competition in the MTS marketplace is in the
public interest. Continental states that in U.S. v. South-
western Cable, 392 U.S. 157 (1968), the Supreme Court
specifically affirmed the Commission’s authority under
Section 4(i) to issue interim orders preserving the status
quo until the Commission can make a determination as to
whether the expansion of a regulated service is in the
public interest.

29. For the same reasons described above, USITA
joins Continental in its request to preserve the special-
ized carrier situation as it exists at the moment.

E. AT&T’s Reply

30. AT&T begins its reply by framing what it be-
lieves is the critical issue now before the Commission—
“whether the Commission has ever ordered the Bell Sys-
tem to interconnect its facilities with those of MCI and
other specialized carriers for their use in providing the
functional equivalents of message telephone service.”
AT&T states that its petition does not request the Com-
mission to adopt new interconnection policies or to re-
treat from existing ones, but requests only that the Com-
mission affirm its past interconnection policies by ruling
that AT&T has no present obligation to provide addi-
tional connections to local exchange facilities to OCs
for their use in providing Execunet-type services. In this
respect, AT&T responds to the contentions of the IRCs
and value-added carriers that the petition could be con-
strued to alter their present interconnection arrange-

20c

ments. AT&T assures these carriers that the services
they now provide “are not functionally equivalent to
MTS; thus, if granted, the Petition would not affect the
provision of connections to IRCs or value-added car-
riers for such services.”

31. Next, AT&T disagrees with the comments of the
Department of Justice that it has not satisfied all pre-
conditions to the grant of declaratory relief. In stating
that AT&T has failed to make a “factual showing of
harm” in support of its petition, the Department of Jus-
tice, states AT&T, clearly misunderstands the issue.
AT&T argues that it is seeking only a determination of
its legal obligations under existing Commission orders,
and is not seeking relief from outstanding obligations.
Only in the latter case, argues AT&T, might a factual
showing of harm be relevant. AT&T also disagrees that
its petition seeks creation of a de jure monopoly for in-
tercity services, as the Department of Justice believes.
Rather, states AT&T, the only determination sought is
whether it has an obligation under prior Section 201(a)
orders to interconnect with the OCCs for their provision
of non-private line services.

32. AT&T next asserts that the orders in Docket
19896 clearly establish the Bell System’s interconnection
obligation with respect to private line services, but do
not, as the Oppositions argue, require interconnection
for all authorized OCC services. In Docket 19896, no
OCC sought to establish or justify interconnections for
Execunet-type services, states AT&T, and therefore that
proceeding cannot be deemed to have provided the notice,
opportunity for hearing, and public interest findings re-
quired by Section 201(a) to establish such an intercon-
nection obligation. Furthermore, since a policy of com-
petition for public switched message services has never
been adopted by the Commission, AT&T contends that it

2lc

cannot now be said that the existing Commission inter-
connection orders require it to provide connections to
OCCs so that they can offer such services. Finally,
AT&T states that repeated statements throughout the
Docket 19896 proceeding clearly indicate that its scope
was limited to private line services. In fact, argues
AT&T, when the Third Circuit affirmed Docket 19896 in
Bell Tel. Company of Pennsylvania, supra, it rejected
AT&T’s argument that the Commission’s interconnection
orders were unduly vague and overbroad on the express
representations made by MCI, SPC, and the Commission
that the interconnection obligation extended to only pri-
vate line services. See 503 F. 2d at 1273-74.

33. With respect to the argument made by SPC and
ARINC that the first clause of Section 201(a) itself es-
tablishes an interconnection obligation, AT&T maintains
that such an interpretation of the statute is contrary to
its plain language. That clause, states AT&T, does not
deal with carrier interconnection, but with the provision
of communications services to customers. The second
clause deals with physical connections to other carriers
and requires a hearing to determine if such a connection
is in the public interest.

34. Turning to the Execunet decision, AT&T asserts
that the Court’s mandate directs only what the Court has
said in its opinion and judgment. Because neither the
opinion nor the judgment discusses or decides whether
the Bell System has a legal obligation under Section 201
(a) to provide connections to MCI for Execunet-type
services, then AT&T disputes MCI’s contention that the
mandate compels the provision of additional connections
for Execunet service. AT&T argues that in resolving the
authorization question, the Court did not have to decide
the interconnection question, nor did it do so. Moreover,
AT&T disagrees with MCI’s assessment that the entire

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Execumet proceeding will be rendered futile if intercon-
nection is denied. Because the Execunet decision found
that MCI was authorized to provide Execunet service,
then AT&T argues that this places MCI in a position
to request the Commission to expand the Bell System’s
interconnection obligations under Section 201(a) of the
Act. Because the Court did not decide the issue, states
AT&T, does not render the decision a futility. AT&T
also maintains that since the Commission in Execunet
did not decide the scope of AT&T’s interconnection obli-
gation in relation to public switched message services,
such as Execunet, that the Court would have violated the
separation of function between an administrative agency
and a court by deciding an issue, such as interconnection,
which was never presented to the court.

35. In reference to the antitrust ‘‘essential facilities”
doctrine which SPC, MCI and the Department of Justice
use in support of their theory that AT&T’s monopoly con-
trol over local distribution facilities creates an obligation
upon AT&T to make these facilities available to competi-
tors, AT&T answers that these antitrust arguments rest
on false assumptions. First, AT&T argues that this is not a
de novo proceeding under Section 201(a) where such an
argument might be made to establish a new interconnection
obligation. The absence of such a hearing, argues AT&T, is
exactly why the relief it seeks is warranted. Second, AT&T
contends that even in a new Section 201(a) proceeding to
establish interconnection obligations, under the Communi-
cations Act it is the public interest standard which governs
and not antitrust law. AT&T cites FCC v. RCA Communi-
cations, 346 U.S. 86, 93 (1953) ; Hawatian Telephone Co. v.
FCC, 498 F.2d 771 (D.C. Cir. 1974) and Satellite Business
Systems, 62 FCC 2d 997 (1977), among other cases, to sup-
port its argument that competitive considerations are only
one part of the public interest standard, and that the Com-
mission cannot presume, as does antitrust law, that compe-

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tition is in the public interest. AT&T argues that the Otter
Tail case relied upon by the Oppositions clearly distin-
guished antitrust principles from the public interest regula-
tory standard involved therein, and concluded that while
antitrust consideration might be relevant, they are not de-
terminative. Finally, AT&T states that even in an unregu-
lated industry, the anti: ust cases do not support such a
broad reading of the ‘‘essential facilities’’ doctrine as ad-
vanced by the Oppositions.

36. AT&T next states that it has never acknowledged
any obligation to provide interconnection for Execunet and
is not estopped from raising the issue. The reason the Bell
System originally provided interconnection facilities for
Execunet, states AT&T, was because it was not aware of
the true nature of the service. The Execunet proceeding
dealt with the lawfulness of this service offering, and not
to interconnection. Hence, AT&T contends that because this
issue was never raised, estoppel principles do not apply.

37. Finally, AT&T maintains that the relief requested
will preserve the Commission’s ability to determine the
public interest. If the Bell System were required to provide
additional connections for Execunet-type services, without
a Section 201(a) hearing, then AT&T argues that the OCCs
have enough intercity facilities already in place to alter
substantially the present structure of the nation’s telecom-
munications industry. By granting AT&T’s petition, AT&T
believes the Commission can avoid such deleterious conse-
quences and thereby retain its ability to determine what
should be the appropriate structure of the industry, and
whether competition in public switched message services
would serve the public interest.

F, Other Reply Comments

88. MCI contends that the language of the Bell System
Tariff Offering order stating that AT&T is obligated to in-

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terconnect for all presently or hereafter authorized services
settles the question presented by AT&T’s petition. MCI
also says that telephone company assertions that the tele-
phone companies will suffer financial injury if MCI con-
tinues to provide Execunet service are unfounded.

39. USITA contends that the basis for this current dis-
pute involves differing interpretations of the Execunet de-
cision. The Execunet case simply held, argues USITA, that
the Commission committed reversible error in rejecting the
Execunet tariff on the grounds that MCI’s facility authori-
zations were restricted to private line services. However,
USITA contends MCI and SPC interpret the decision as
authorizing Execunet-type services by the specialized car-
riers and that AT&T must therefore furnish local exchange
facilities for all authorized services under the holding in
Bell Tel. Company of Pennsylvania v. FCC. USITA asserts
that Execunet did not authorize anything, and specifically
left to the Commission the question of ‘‘whether competi-
tion like that posed by Execunet is in the public interest.’’
561 F 2d at 380. USITA argues that if the Commission
cannot now correct the judicially found error by condition-
ing the specialized carrier’s authorizations, as MCI would
have it, then the Commission will have lost control of its
licensing processes.

40. GTE observes that neither MCI nor SPC has
shown that Execunet-type services fit within the scope of
private line services, and therefore, argues GTH, they fail
to support their conclusion that terminating facilities
must be provided. In this regard, USITA states that tele-
phone company’s local exchange facilities are not the only
way by which MCI or SPC may reach their customers.
Other available options recognized by the Commission in
Specialized Common Carrier, states USITA, are customer
provided facilities or specialized carrier facilities. In argu-
ing the ‘‘essential facilities’’ doctrine, USITA contends that
the Department of Justice overlooked these alternatives.

25¢

41. SPC’s reliance on Datran’s authorization for a
switched data service as proof that the specialized carriers
were given authority to provide other than private line
service, argues GTE, is incorrect. Datran proposed to offer
data transmission links, and in 1970 and 1971, GTE asserts
these were ‘‘generally understood to be private line.’
Finally, GTE states that the Department of Justice posi-
tion urging immediate expansion of Execunet-type services
ignores the requirements of Sections 1 and 214 of the
Communications Act, 47 USC §§ 151,214. Because Execu-
net-type service has been found by the Commission to be
equivalent to MTS, GTE asserts that Exzecunet did not
prohibit the Commission from limiting the expansion of
this service until further analysis and hearings can be held.

Discussion

II. Bacxcrounp

42. In 1970 we instituted a rulemaking proceeding to
examine common policy questions presented by a large
number of applications from entities other than AT&T and
Western Union for authority to construct facilities to pro-
vide specialized interstate common carcrier communications
services. Specialized Common Carrier Services, 24 FCC 2d
318. Some of those applicants such as Data Transmission
Corporation (Datran) proposed to provide specialized
services which were substantially different from any ser-
vice then being offered by the established carriers. Other
applicants proposed to provide specialized services which
appeared to be competitive with existing specialized serv-
ices of established carriers which the established carriers
had traditionally described as ‘‘ private line’’ services. Af-
ter extensive proceedings, we concluded that ‘‘a general
policy in favor of entry of new carriers in the specialized
communications field will serve the public interest ...”’
Id. at 920.

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43, Existing carriers filed comments in that proceeding
opposing new entry. AT&T alleged that the entry of new
carriers in the interstate communications market would ad-
versely affect the public interest, claiming in particular that
‘‘cream-skimming’’ by new entrants providing service on
major intercity routes would undermine the nationally-
averaged uniform rate structure which then prevailed for
all intercity services and would deprive the public of the
benefits of economies of scale by delaying the installation
of large capacity facilities. Jd. at 910. USITA expressed
concern that new entry would result in reduced revenue set-
tlements to local independent telephone companies from
existing intercity carriers which would have an adverse
impact upon the independent telephone companies’ ability
to provide local exchange service. Id. at 914, n. 37. The
nature of USITA’s concern is more fully described in our
First Report in Docket No. 20003 (Economic Inquiry), 61
FCC 2d 766 (1976). Under existing separation and settle-
ment procedures, a portion of the revenues from interstate
message telephone toll service (MTS) and wide area tele-
phone toll service (WATS) are returned to the local tele-
phone operating companies in payment for the use of local
exchange facilities in rendering interstate services. A re-
duction in the amount of interstate revenues returned to
the local telephone companies through this process, which
could result from either diversion of interstate traffic and
revenues to a specialized carrier not subject to the separa-
tions and settlement proceedings or from a repricing of
MTS and WATS to meet specialized carrier competition,
would allegedly force local telephone companies to raise
rates for local exchange service to cover their relatively
fixed operating costs.

44. Our Specialized Common Carrier decision con-
cluded that entry of the new carriers could not produce the
kind of impact claimed by AT&T ‘‘in view of the very small

a

27¢

percentage of AT&T’s existing market that is vulnerable to
competition of the kind proposed here’’ (id. at 910) and
that the independent telephone companies would not be
adversely affected (id. at 914). We noted that ‘‘the portion
of AT&T’s total business which might be jeopardized, i.e.,
the interstate private line business, represented only a very
small fraction of Bell’s total revenues’’ (id. at 911) and de-
clared that ‘‘it is difficult to visualize how independent tele-
phone companies would be adversely affected.’’ (id. at 914).

45. The Specialized Common Carrier decision also ad-
dressed the problem of providing local distribution for in-
terstate services of the new carriers and declared ‘‘that es-
tablished carriers with exchange facilities should, upon re-
quest, permit interconnection or leased channel arrange-
ments on reasonable terms and conditions to be negotiated
with the new carriers, and also afford their customers the
option of obtaining local distribution service under reason-
able terms set forth in the tariff schedules of the local
earrier.’’ Id. at 940.

46. In the summer of 1973, MCI advised the Commis-
sion that AT&T was refusing to interconnect with MCI for
the provision of services which the AT&T Long Lines De-
partment provides to its private line customers. After
letters from the Chairman of the Commission and the Chief
of the Common Carrier Bureau failed to resolve the dis-
pute, the Commission instituted a proceeding to clarify
AT&T’s interconnection obligations with the specialized
common carriers. 44 FCC 2d 245 (1973). We rejected
AT&T’s contention that specialized common carrier serv-
ices do not encompass private line services such as FX or
CCSA which require interconnection with the public
switched telephone system. Bell System Tariff Offerings,
supra. We concluded that the Specialized Common Carrier
decision contemplated that the new carriers would be au-
thorized to offer services which compete with interstate
private line services offered by AT&T, including private

28c

line services which must interconnect with or utilize a part
of the switched public telephone network.

47. Paragraph 53(a) of the Bell System Tariff Offer-
ings Order (46 FCC 2d at 438) directed AT&T to:

(a) Furnish to MCI Telecommunications Corporation,
MCI New York West, Inc. and other specialized com-
mon carriers the interconnection facilities essential to
the rendition of all of their presently or hereafter au-
thorized interstate and foreign communications ser-
vices and to enable the said specialized common car-
riers to terminate their authorized interstate and for-
eign communications services, including interconnec-
tion by the specialized carriers into a telephone com-
pany’s local exchange facilities for the purpose of fur-
nishing Foreign Exchange (FX) service or for inser-
tion into telephone company Common Control Switch-
ing Arrangements (CCSA) ;”’

48. AT&T filed a petition for review in the United
States Court of Appeals for the Third Circuit. AT&T chal-
lenged the decision on various grounds including the al-
leged ‘‘overbreadth’”’ of the interconnection order. The brief
filed in that Court on behalf of the Federal Communications
Commission and the United States observed (Brief, p. 49,
n. 14):

AT&T also argues that the Commission’s cease and
desist order is overly broad in stating that intercon-
nection is required for services ‘‘hereafter’’ authorized.
Read in context, however, it is clear that the Commis-
sion was saying that MCI and the other specialized
carriers were to be afforded the same service as Long
Lines and the independent telephone companies. See
FTC v. Cement Institute, 333 U.S. 683 (1948). ‘‘ Here-
after’’ simply embraces those private line services
which Long Lines and the independents provide or
may provide, and which the specialized ‘carriers do not

29¢

now provide but may become authorized to provide
in future procesdings. The Commission included this
language in recognition of the developing nature of the
industry and in the interest of averting further litiga-
tion in an area of well defined policy. See FCC v.
Pottsville Broadcasting Co., 309 U.S. 134, 138 (1940);
NLRB v. Local 282, International Brotherhood of
Teamsters, 428 F.2d 994 (2d Cir. 1970). The breadth
of the order is modified still further: Every time the
word ‘‘hereafter’’ appears, it is followed by the word
‘*authorized.’’ Thus, only after authorization is ob-
tained from the Commission is interconnection re-
quired, and the telephone companies have every right
to oppose authorizations in the ‘‘hereafter.’’ Finally,
if any serious questions arise, AT&T can seek guidance
from the Commission. Lafayette Radio Electronics
Corp. v. U.S. and FCC, 345 F.2d 278, 281-82 (2d Cir.
1964).

49. Some of the intervenors’ briefs which were filed in
that proceeding contained similar observations with respect
to the breadth of the interconnection order. The brief for
SPC said that the order does not impose an ‘‘unbounded”’
interconnection obligation and that ‘‘the Commission ob-
viously was seeking to require the telephone companies to
provide the specialized carriers with all private line ser-
vices (itself a substantial limitation) of the same or simi-
lar character.’’ (Brief, p. 61). The brief for MCI said
(Brief, pp. 52-53) : ‘*{WJhile it is correct that the Commis-
sion’s language requires Bell to permit physical connec-
tiens ‘essential’ for ‘all’ of the private line services which
any of the specialized carriers are now or may ‘hereafter’
be authorized to offer, the obligation is qualified and limited
by the duty set forth in the Decision that such interconnec-
tion facilities must be ‘similar to, these presently provided
to Bell’s Long Lines Department on a non-discriminatory
basis.’ ’’

30¢

50. In its opinion affirming the Bell System Tariff
Offerings order the Court of Appeals said: ‘‘Were we to
read the Commission’s order in a vacuum, we would be in-
clined to agree with petitioner that the order is somewhat
vague and, to a certain extent, overbroad.’’ 503 F.2d at
1273. The Court added that orders are not to be read in a
vacuum, observed that the Commission opinion ‘‘[v]iewed
in its entirety .. . operates to preclude AT&T from treating
its Long Lines Department and its affiliates differently
than it treats the specialized common carriers’’ (Jbid.)
and concluded (Jd. at 1273-1274): ‘‘As we read the order,
the FCC has required AT&T to provide to the specialized
carriers those (interconnection) elements of private line
services which AT&T supplies to its affiliates and furnishes
to customers through its Long Lines Department.’’ (em-
phasis added).

51. Shortly before the Court of Appeals issued its de-
cision affirming the Bell System Tariff Offering order
AT&T filed revised tariffs covering facilities and services
which AT&T furnishes to other carriers including special-
ized common carriers. We instituted an investigation of
those tariffs. AT&T then proposed that we convene and
chair negotiations among AT&T and other carriers for the
purpose of resolving a variety of technical, operational,
and other issues concerning the specific arrangements which
would be provided for interconnecting AT&T and other
common carrier facilities and services. Several months of
negotiation led to a Settlement Agreement which we ac-
cepted as a basis for terminating the tariff investigation.
AT4T, 52 FCC 2d 727 (1975). AT&T filed tariffs imple-
menting that agreement which remain in effect to this date.

52. Meanwhile, MCI had filed revised tariffs on Sep-
tember 10, 1974, which identified a number of ‘‘modular’’
service elements which could be combined to create a variety
of service offerings. Although members of our staff ex-
pressed concern regarding certain ambiguities in the re-

3lce

vised tariff, that tariff was permitted to enter into effect
by operation of law on October 10, 1974.

53. In the spring of 1975 AT&T advised us that it be-
lieved a metered use service called ‘‘ Execunet’’ which MCI
was offering pursuant to its modular tariffs was not a pri-
vate line service and was equivalent to MTS. After review-
ing comments filed by both A

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_1494%3A2. Public record. Not legal advice.