Amicus Curiae Brief — Cincinnati Smsa Limited Partnership v. Public Utilities Commission of Ohio

Supreme Cou

FILE > U.S.

No. 02-1711 Mt

f [OFFICE OF Te CLERK

IN THE

Supreme Court of the Anited States

CINCINNATI SMSA LIMITED PARTNERSHIP.

a Petitioner,

q;

PUBLIC UTILITIES COMMISSION OF OHIO,

| Respondent.

On Petition for a Writ of Certiorari to the

Supreme Court of Ohio

BRIEF AMICUS CURIAE OF THE

CELLULAR TELECOMMUNICATIONS & INTERNET

ASSOCIATION IN SUPPORT OF PETITIONERS

MICHAEL F. ALTSCHUL HOWARD J. SYMONS

CELLULAR | Counsel of Record

TELECOMMUNICATIONS & SARA F. LEIBMAN

INTERNET ASSOCIATION ANGELA F. COLLINS

1250 Connecticut Avenue. N.W. MINTZ, LEVIN, COHN, FERRIS,

Suite 800 GLOVSKY AND PoPEO, P.C.

Washington. D.C. 20036 701 Pennsylvania Avenue, N.W.

(202) 785-0081 Suite 900

Washington, D.C. 20004

(202) 434-7300

July 21, 2003 Counsel for Amicus Curiae

AES ANNO NN ENN RNMREE IE AGATE SEARS EG

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 — WASHINGTON, D. C. 20001

TABLE OF CONTENTS

BPs PE FART EGE BMI orcccesncossnvsvessisvsersnvesesonenesese

INTEREST OF AMICUS CURIAE.............:ccsssseeeees ees

REASONS FOR GRANTING THE PETITION ............

‘

Il.

III.

STATES ARE FORBIDDEN FROM EN-

GAGING IN RATE REGULATION OF

FE Re GN ner nsonensvinsasennserserncinsons

A. Congress Created a New Regulatory Para-

digm for Wireless Services in Section 332..

B. Congress’s Deregulatory Scheme Bene-

fits Wireless Competition and CMRS

I hisidlsrihaacnr irinechebiinechiateedieaibniniins

THE OHIO SUPREME COURT’S DECI-

SION HAS NATIONAL CONSEQUENCES...

A. The Ohio Decision Regulates Wireless

Rates in Direct Violation of Section 332.....

B. The Ohio Decision Regulates Wireless

Entry in Contravention of Section 332 ........

C. Review by this Court Is Necessary To

Prevent the Destruction of Congress’

THE OHIO SUPREME COURT’S DECI-

SION CONFLICTS WITH CONGRES-

PCs ET sa:issiulcnileitisitesantaibinentcaeinnisunaion

GR a sdisa ti invnesdicdcninsliasiebanninncinbiessrsdsaaplonintacniocen

Page

11

13

16

il

TABLE OF AUTHORITIES

FEDERAL CASES Page

American Telegraph & Telegraph Co. v. Central

Office Telegraph, Inc., 524 U.S. 214 (1998) ..... fz, §3

Aubrey v. Ameritech Mobile Communications,

Inc., No. 00-CV-75080, 2002 U.S. Dist.

LEXIS 15918 (E.D. Mich. June 17, 2002)........ 1]

Bastien v. AT&T Wireless Services, Inc., 205

B35 SES CRE, Re tiitertieniesdicccamence 10

Brown v. Washington/Baltimore Cellular, Inc.,

109 F. Supp. 2d 421 (D. Md. 2000)... 1]

Cellnet Communications, Inc. v. FCC, 149 F.3d

479 GO CH. FRG ic sceretelhanen 4

DeCastro v. AWACS, Inc., 935 F. Supp. 541

CED ET. TR xcciccescinntiecciaenabacaaaencmibatecan 12

Fedor v. Cingular Wireless Corp., No. 01-CV-

6849, 2002 U.S. Dist. LEXIS 14786 (N.D. IIL.

Paramy, 02, DBRS iiistncasiisatcesaeteannbeasoiclecaiaiipeinipliadtie 8

Geier v. American Honda Motor Co., Inc., 529

U.S. Bb) Ge iisincscticcec ies 13, 14, 15

Gilmore v. Southwestern Bell Mobile System,

L.L.C., 210 F.R.D. 212 (N.D. Ill. 2001)............. 8

Hines v. Davidowitz, 312 U.S. 52 (1941) ........... 15

ITT World Communications, Inc. v. New York

Telegraph Co., 381 F. Supp. 113 (S.D.N.Y.

RD TAD:.....sssiceviiiisiisionsibepciadae eeaaacdaiaalaadiaalaaliliadiiibecasis 8

Lee v. Contel Cellular of the South, Inc., No. CV-

95-1057-JH, 1996 U.S. Dist. LEXIS 19636

(S.D. Alm. New. £5, FRR ccscsnicsivncantiiaienonsne 12

T.1.M.E. Inc. v. United States, 359 U.S. 464

Lj Sen een rar oe cn Ciosorekr rss Us we wen 8

TPS Utilicom Services, Inc. v. AT&T Corp., 223

F. Supp. 2d 1089 (C.D. Cal. 2002).................... 10, 14

Texas & Pacific Railway Co. v. Abilene Cotton

Oil Cor, FOR. SRF ccsiceseneeneirsitninicsianene 8

iil

TABLE OF AUTHORITIES—Continued

Page

United States v. Locke, 529 U.S. 89 (2000)........... 13

In re Wireless Telephone Radio Frequency Emis-

sions Products Liability Litigation, 248 F.

Supp. 2d 452 (D. Md. 2003) .0..... ee eeeeeeneeeees 13

STATE CASES

Ball v. GTE Mobilnet of California, 96 Cal. Rptr.

2d 801 (Cal. Ct. App. 2000)............. Sieialadanicincion 12.

Bryceland v. AT&T Corp., No. 05-01-00552-CV,

2002 Tex. App. LEXIS 8511 (Tex. App. Dec.

Be IIE tied a trian tat Marahiabiseitictienestoacbiadisaddebievins 12

Spielholz v. Superior Court of Los Angeles

County, 104 Cal. Rptr. 2d 197 (Cal. Ct. App.

iil AE UNts Caaliciacsicebacosednidostecsictvurrsniesinailbicbaxs 10

FEDERAL COMMUNICATIONS

COMMISSION DECISIONS

Developing a Unified Intercarrier Compensation

Regime, Notice of Proposed Rulemaking, 16

Fe es CEE Devices svnaiinca nienvinnssbteinnveiannines 10

Implementation of Sections 3(n) and 332 of the .

Communications Act, Regulatory Treatment of

Mobile Services, Second Report and Order, 9

Fs ae Pe © BITE icciitantsnssenssvisrssvcasareinecsoncts me tke

Implementation of Section 6002(b) of the Omni-

bus Budget Reconciliation Act of 1993, Annual

Report and Anaiysis of Competitive Market

Conditions With Respect to Commercial

Mobile Services, Seventh Report, 17 F.C.C.R.

ihc nkickiinchsieiaeuidainxiaananseriarstonnens 7

Interconnection and Resale Obligations Pertain-

ing to Commercial Mobile Radio Services,

First Report and Order, I! F.C.C.R. 18455 ~

RR icsptisticetabdenonvsihen verositarnincsnntonisheanseseewininnrensve 14

iV -

_ TABLE OF AUTHORITIES—Continued

‘ Page

Interconnection Between Local Exchange Car-

riers and Commercial Mobile Radio Service

Providers, Notice of Proposed Rulemaking, | |

Fh Six Pe Ce inert ehitenieailadcesinbsisnininiiin 10

Petition of Arizona Corporation Commission, To

Extend State Authority Over Rate and Entry

Regulation of All Commercial Mobile Radio

Services; Implementation of Sections 3(n) and

332 of the Communications Act, Regulatory

Treatment of Mobile Services, Report and

Order and Order on Reconsideration, 10

Pi Ren, CORE eee circa rchtlciaubihincebensbintibinis 5

Petition of New York State Public Service Com-

mission To Extend Rate Regulation, Report

and Order, 10 F.C.C.R. 8187 (1995)..............006 5

Petition of the Connecticut Department Public

Utility Control To Retain Regulatory Control

of the Rates of Wholesale Cellular Service

Providers in the State of Connecticut, Report

and Order, 10 F.C.C.R. 7625 (1995), aff'd sub

nom. Connecticut Dep’t Pub. Util. Control v.

FCC, 78 F.3d 842 (2d Cir. 1996).............scccsssees 5

Petition of the People of the State of California -

and the Public Utilities Commission of the

State of California To Retain Regulatory

Authority over Intrastate Cellular Service

Rates, Report and Order, 10 F.C.C.R. 7486

(1995), recon. denied, Order on Reconsid-

eration, 11 F.C.C:R. 706 (1995). 0.......ccseccseeccsenss 5

Petition of the State of Ohio for Authority To

Continue To Regulate Commercial Mobile

Radio Services, Report and Order, 10 F.C.C.R.

7842 (1995), recon. denied, Order on Recon-

sideration, 10 F.C.C.R. 12427 (1995)................ passim

aaa aii

Vv

TABLE OF AUTHORITIES—Continued

Page

Petition on Behalf of the Louisiana Public

Service Commission for Authority To Retain

Existing Jurisdiction over Commercial Mobile

Radio Services Offered Within the State of

Louisiana, Report and Order, 10 F.C.C.R.

TODD COG inci cciscrticsinsitcsscsinbiaaoniminnins 5 z

Petition on Behalf of the State of Hawaii, Public

Utility Commission, for Authority To Extend |

Its Rate Regulation of Commercial Mobile

Radio Services in the State of Hawaii, Report

and Order, 10 F.C.C.R. 7872 (1995)...........:s:08 6

Petitions for Rule Making Concerning Proposed

Changes to the Commission’s Cellular Resale

Policies, Notice of Proposed Rulemaking and

Onder, 6 FCC. UTED. CISPL) .ccccotconssnsenvevsvens 14, 15

Wireless Consumers Alliance, Inc. Petition for a

Declaratory Ruling Concerning Whether the

Provisions of the Communications Act of

1934, As Amended, or the Jurisdiction of the

Federal Communications Commission There-

under, Serve to Preempt State Courts From

Awarding Monetary Relief Against Commer-

cial Mobile Radio Service (CMRS) Providers

(a) from Violating State Consumer Protection

Laws Prohibiting False Advertising and other

Fraudulent Business Practices, and/or (b) in

the Context of Contractual Disputes and Tort

Actions Adjudicated under State Contract and

Torts Laws, Memorandum Opinion and Order,

ES FC ALE. FE CI vecccsccneenicerisivsincerensons 9

vi

TABLE OF AUTHORITIES—Continued

PUBLIC UTILITIES COMMISSION

OF OHIO DECISIONS

Commission Investigation into the Alternative

Regulatory Treatment of Commercial Mobile

Radio Service Providers, No. 97-1700-TP-

COI, 1999 Ohio PUC LEXIS 745 (Dec. 16,

FEDERAL STATUTES

4745.3... S5Fa} Ge i icccoenicaseiodision

AT UGA. © S52CG I ie Bdssirioeen nine

Omnibus Budget Reconciliation Act of 1993,

Pub. L. No. 103-66, Title VI, §§ 6002(b)

(2)(A), 6002(b)(2)(B), 107 Stat. 312, 392

MISCELLANEOUS

Cellular Telecomm. & Internet Ass’n, Semi- -

Annual Wireless Industry Survey Results June

1985—December 2002, available at http://

www.wow-com.com/industry/stats/surveys/

(last visited June 18, 2003) ...........cscsssoscossoseessees

Dan Meyer, Carriers Try To Pick up Marginal

Users With Cheap Calling Plans, RCR WIRE-

LESS PRR WE, ERE, 10, ZOE prssnncsicssnninsnsisesngpencente

H.R. Rep. No. 103-111, at 260-61 (1993), re-

printed in 1993 U.S.C.C.A.N. 378, 587.........000

H.R. Rep. No. 103-213, at 480-81 (1993), re-

printed in 1993 U.S.C.C.A.N. 378, 1169-70 .....

Page

Vii -

TABLE OF AUTHORITIES—Continued

Page

Rulemaking 00-02-004, Order Instituting Rule-

making on the Commission's Own Motion to

Establish Consumer Rights and Consumer Pro

tection Rules Applicable to All Telecommu-

nications Utilities, Draft Decision of Commis-

sioner Wood (Cal. PUC June 6, 2002)............... 13

SS ig Re A CIF a acekcenccnicnnenessentnineeniiimens 15

Sam Omatseye, Uptake in Services Will Require

Infrastructure Spending, RCR WIRELESS

POE, FAIR, Fg BOD eekartennscinsisninnnascasnnnedeiniaceninten 7

IN THE

Supreme Court of the Anited States

No. 02-1711

CINCINNATI SMSA LIMITED PARTNERSHIP,

Petitioner,

Vv.

PUBLIC UTILITIES COMMISSION OF OHIO,

Respondent.

On Petition for a Writ of Certiorari to the

Supreme Court of Ohio

BRIEF AMICUS CURIAE OF THE

CELLULAR TELECOMMUNICATIONS & INTERNET

ASSOCIATION IN SUPPORT OF PETITIONERS

INTEREST OF AMICUS CURIAE

The Cellular Telecommunications & Internet Association

(“CTIA”) is the international organization of the wireless

communications industry for both wireless carriers and manu-

facturers.' Membership in the association covers commercial

mobile radio service (“CMRS”) providers* and manufac-

' No counsel for any party in this case authored this brief in whole or in

part, and no person or entity other than amicus curiae and its mem-

bers made any monetary contribution to the preparation or submission of

this brief.

2 CMRS includes any mobile service “that is provided for profit and

makes interconnected service available (A) to the public or (B) to such

classes of eligible users as to be effectively available to a substantial

alice a aia

turers. CTIA represents more broadband Personal Communi-

cations Service carriers and more cellular carriers than any

other trade association. As such, CTIA is uniquely situated to

represent the interests of the wireless industry with respect to

the pending petition for writ of certiorari.”

REASONS FOR GRANTING THE PETITION

Wireless providers are an “integral part of the national

telecommunications infrastructure” and, “by their nature,

operate without regard to state lines.” H.R. REP. No. 103-

111, at 260 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 587.

Given the inherently interstate nature of wireless services and

their increasing importance to the economy, Congress recog-

nized that allowing the creation of more than fifty disparate

regimes for rate and entry regulation would inhibit the

wireless industry’s growth, undermine competition, and harm

consumers. Congress therefore expressly preempted states

from regulating the rates charged by wireless carriers or their

entry into the marketplace.

Congress provided states with limited jurisdiction to

regulate “the other terms and conditions” of wireless services,

but some states have been using this delegation as a backdoor

means to assert authority over wireless rates and entry. The

Public Utilities Commission of Ohio’s (the “PUCO’s”) deci-

sion in the lawsuit below, as affirmed by the Ohio Supreme

Court, is a case in point. The PUCO adjudicated a complaint

portion of the public.” 47 U.S.C. § 332(d)(1) (2003); see also Imple-

mentation of Sections 3(n) and 332 of the Communications Act,

Regulatory Treatment of Mobile Services, Second Report and Order, 9

F.C.C.R. 1411, 1443-63, 1508 (1994) (“CMRS Second Report and

Order”) (CMRS encompasses cellular service, personal communications

service, paging, airplane telephone service, and certain mobile satellite

services).

> CTIA has obtained consent from the Petitioner and the Respondent to

file this brief.

3

alleging unreasonable rate discrimination, found that Peti-

tioner had violated Ohio law, calculated how much the

complainant had been “overcharged,” and enforced a separate

affiliate requirement for wholesale and retail CMRS opera-

tions. Based on the PUCO’s findings, an Ohic trial court

ruled that the complainant was entitled to damages in the

amount of the so-called overcharges and lost profits.

Each of Ohio’s decisions in this case—the PUCO’s in

assessing the reasonableness of Petitioner’s charges, the Ohio

Supreme Court’s in upholding the state agency’s unlawful

assumption of jurisdiction, and the Ohio trial court’s award of

damages—while framed as the adjudication of a rate dis-

crimination claim, is in fact tantamount to the state rate

regulation proscribed by federal law. Courts and the FCC

have consistently held that if a complaint challenges the

reasonableness of a wireless rate—even if the claim alleges

that the rate is unreasonably discriminatory—states lack juris-

diction to hear it. Moreover, as this Court has made clear, the

term “rates” must be interpreted broadly because rates are

significant only to the extent one knows what service is being

provided in return.

Although Ohio’s actions are especially blatant violations of

the prohibition against state ratemaking and entry regulation,

a number of other states and plaintiffs asserting state-law

causes of action also have begun chipping away at the

boundaries established by Congress. It was to avoid a

patchwork of precisely this kind of regulation that Congress

preempted states from imposing their traditional telecom-

munications regimes on wireless operations. Accordingly,

CTIA urges this Court to grant the petition and reverse the

decision of the Ohio Supreme Court.

4

I. STATES ARE FORBIDDEN FROM ENGAGING

IN RATE REGULATION OF WIRELESS

~ CARRIERS

A. Congress Created a New Regulatory Paradigm

for Wireless Services in Section 332

Seeking to promote competition in an industry that already

was exhibiting the potential for extraordinary growth and

innovation, in 1993, Congress amended the Communications

Act* “to dramatically revise the regulation of the wireless

telecommunications industry.” Cellnet Communications, Inc.

v. FCC, 149 F.3d 429, 433 (6th Cir. 1998). The statutory

amendments reduced regulation by, among other things,

establishing a comprehensive and consistent national regula-

tory framework for the various types of wireless providers

and gave the Federal Communications Commission (“FCC”)

flexibility to modulate the -levels of regulation based on

market conditions.

The most significant aspect of the 1993 changes was

Congress’s express preemption of states from regulating

wireless rates or entry:

Notwithstanding section[] 2(b) [which otherwise gives

states jurisdiction over intrastate rates] . . . no State or

local government shall have any authority to regulate the

entry of or the rates charged by any commercial mobile

_ service or any private mobile service, except that this

paragraph shall not prohibit a State from regulating the

other terms and conditions of commercial mobile

Services.

47 U.S.C. § 332(c)(3)(A). Section 332(c)(3) demonstrates

“an unambiguous congressional intent to foreclose state

regulation in the first instance [and] reflects a general

* See Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66,

Title VI, §§ 6002(b)(2)(A), 6002(b)(2)(B), 107 Stat. 312, 392 (1993).

OF

5

preference in favor of reliance on market forces rather than

regulation.” Petition of the State of Ohio for Authority To

Continue To Regulate Commercial Mobile Radio Services,

Report and Order, 10 F.C.C.R. 7842, 7844 4 8 (1995) (“Ohio

CMRS Order’), recon. denied, Order on Reconsideration, 10

F.C.C.R. 12427 (1995). Although states may continue to

regulate the “other terms and conditions” of wireless service,

such residual authority is necessarily limited. To the extent a

state touches on rate or entry regulation, it is not an other

term or condition and it is not permissible.

Ohio has been- rebuffed twice in its attempt to maintain

jurisdiction over wireless rates, which section 332(c)(1)(B)

permits only if a state can demonstrate the existence of cer-

tain conditions. See Ohio CMRS Order, 10 F.C.C.R. 7842.°

°47 U.S.C. § 332(c)(1)(B) (permitting states that regulated wireless

rates before enactment of the 1993 restrictions to continue regulation if

they could demonstrate to the FCC that market conditions fail to protect

consumers from unjust and unreasonable rates and practices). None of the

other six petitioning states was granted such approval either. See Petition

on Behalf of the Louisiana Public Service Commission for Authority To

Retain Existing Jurisdiction over Commercial Mobile Radio Services

Offered Within the State of Louisiana, Report and Order, 10 F.C.C.R.

7898 (1995); Petition of Arizona Corporation Commission, To Extend

State Authority Over Rate and Entry Regulation of All Commercial

Mobile Radio Services; Implementation of Sections 3(n) and 332 of the

Communications Act, Regulatory Treatment of Mobile Services, Report

and Order and Order on Reconsideration, 10 F.C.C.R. 7824 (1995);

Petition of New York State Public Service Commission To Extend Rate

Regulation, Report and Order, 10 F.C.C.R. 8187 (1995); Petition of the

People of the State of California and the Public Utilities Commission of

the State of California To Retain. Regulatory Authority over Intrastate

Cellular Service Rates, Report and Order, 10 F.C.C.R. 7486 (1995),

recon. denied, Order on Reconsideration, 11 F.C.C.R. 796 (1995); Peti-

tion of the Connecticut Department Public Utility Control To Retain

Regulatory Control of the Rates of Wholesale Cellular Service Providers

in the State of Connecticut, Report and Order, 10 F.C.C.R. 7025 (1995),

aff'd sub nom. Connecticut Dep't Pub. Util. Control v. FCC, 78 F.3d 842

(2d Cir. 1996); Petition on Behalf of the State of Hawaii, Public Utility

6

The FCC held that “given the rapidly evolving market struc-

ture in which mobile services are provided,” the PUCO had

not met its heavy burden of demonstrating that “the conduct

and performance of CMRS providers ill-serve consumer

interests by producing rates that are not just and reasonable,

or are unreasonably discriminatory.” Ohio CMRS Order, 10

F.C.C.R. at 7843 4 6. In light of the addition of five or six

new wireless competitors in almost every market in the

decade since the PUCO made its request, as well as the

hundreds of new services and innovative rates plans carriers

have introduced, the burden imposed on Ohio and other states

seeking to increase their involvement in wireless regulation

has only gotten heavier.

B. Congress’s Deregulatory Scheme _ Benefits

Wireless Competition and CMRS Consumers

Congress’s expectation that a uniform national regulatory

regime would foster growth and benefit wireless consumers

has been borne out. As of December 2002, CMRS providers

had over 140 million subscribers and more than 190,000

employees in the United States. See Cellular Telecomm. &

Internet Ass’n, Semi-Annual Wireless Industry Survey Results

June 1985—December 2002, available at http://www.wow-

com.com/industry/stats/surveys/ (last visited June 18, 2003).

Wireless carriers have devised flexible rate plans and pricing

strategies to attract customers and respond to changes in

market demand, and there are more service options available

more now than ever before. See Dan Meyer, Carriers Try To

Pick up Marginal Users With Cheap Calling Plans, RCR

WIRELESS NEws, Mar. 11, 2002, at 3. Because new appli-

cations such as “Wireless Internet, third generation services,

unlicensed wireless network hubs, text messaging and the

oe

Commission, for Authority To Extend Its Rate Regulation of Commercial

Mobile Radio Services in the State of Hawaii, Report and Order, 10

F.C.C.R. 7872 (1995).

7

introduction of complex games and entertainment products

are driving the use of wireless networks” wireless infra-

structure spending is expected to rise between four and five

percent in the next two to three years. Sam Omatseye,

Uptake in Services Wili Require Infrastructure Spending,

RCR WIRELESS NEws, Apr. 7, 2003, at 16. Today, there are

six nationwide mobile telephony operators in the United

States and the price wars among those carriers can be fairly

characterized “as ‘competitive,’ ‘intense,’ and ‘aggressive.’”

Implementation of Section 6002(b) of the Omnibus Budget

Reconciliation Act of 1993, Annual Report and Analysis of

Competitive Market Conditions With Respect to Commercial

Mobile Services, Seventh Report, 17 F.C.C.R. 12985, 12990,

13012 (2002).

The FCC’s guiding principle in implementing section 332

was that the CMRS market should be “driven by techno-

logical innovation, service quality, competition-based pricing

decisions, and responsiveness to consumer needs—and not by

strategies in the regulatory arena.” CMRS Second Report and

Order, 9 F.C.C.R. at 1420 9 19. This goal is wholly under-

mined by state actions, such as the PUCO’s, that have the

potential to force wireless carriers to adhere to fifty plus

different sets of rules instead of allowing them to pass on to

consumers the savings gained from the exploitation of

nationwide business models.

Il. THE OHIO SUPREME COURT’S DECISION

HAS NATIONAL CONSEQUENCES

The PUCO’s decision to rule on a complaint challenging

the reasonableness of Petitioner’s rates for wireless services

was a direct violation of section 332(c)’s express preemption

provision and should be reversed. Ohio’s defiance of the

boundaries drawn by Congress, however, potentially has

adverse ramifications far beyond the state’s borders and for

many more wireless carriers than the petitioner in this case.

8

If the Ohio Supreme Court’s order affirming the state

agency’s impermissible action is allowed to stand, there is a

strong possibility that other states will view it as a green light

to implement or enforce policies that similarly fail to respect

section 332(c)’s restrictions on their power.

Considered in the context of the goals Congress hoped to

accomplish through preemption of state authority over wire-

less rates and entry, there is little question that the state’s

residual jurisdiction over “other terms and conditions” must

be read narrowly. If Congress’s express directive that states

have no role in wireless rate or entry regulation is to have any

meaning, “rate” and “entry” cannot be considered mere

subsets of “other terms and conditions.”

A. The Ohio Decision Regulates Wireless Rates in

Direct Violation of Section 332

The PUCO’s actions in the case at bar are not at all close to

the line between “rates” and “other terms and conditions.”

On the contrary, the agency proceeding that gave rise to this

case was the adjudication of a complaint directly alleging

unreasonable wireless rates, which is unmistakably rate

regulation. See Texas & Pac. Ry. Co. v. Abilene Cotton Oil

Co., 204 U.S. 426, 432, 440-42 (1907); see also T.I.M.E. Inc.

v. United States, 359 U.S. 464, 473-74 (1959) (the “crucial

question of reasonableness could not be decided by courts”).

“To the extent that there is complaint of the unreasonableness

of the rate . . . [e]ven if the complaint is that the rate is

discriminatory,” state agencies lack jurisdiction to hear it.

ITT World Communications, Inc. v. New York Tel. Co., 381 F.

Supp. 113, 119 (S.D.N.Y. 1974) (emphasis in original) (citing

Abilene Cotton, 204 U.S. at 448); see also Fedor v. Cingular

Wireless Corp., No. 01-CV-6849, 2002 U.S. Dist. LEXIS

14786, at *5 (N.D. Ill. Aug. 12, 2002) (challenge to the

reasonableness of a wireless carrier’s rates is completely

preempted by section 332(c)); Gilmore v. Southwestern Bell

9

Mobile Sys., L.L.C., 210 F.R.D. 212, 221 (N.D. Ill. 2001)

(questions regarding the reasonableness of rates “are gen-

erally within the particular expertise of the FCC and the

regulation of such involves exercising agency discretion.”).

The PUCO’s determination that it was acting under its

“other terms and conditions” authority is not supported by the

statutory language or the case law interpreting section 332(c).

Although the statute’s legislative history lists “the require-

ment that carriers make capacity available on a wholesale

basis,” among the terms and conditions that states may

oversee (H.R. REP. No. 103-111, at 261) the FCC explicitly

rejected the PUCO’s attempt to interpret that legislative

statement as giving the agency permission “to ensure that

wholesale cellular rates [in Ohio] are not below cost through

its complaint authority.” Ohio CMRS Order, 10 F.C.C.R. at

7852 4 43. The FCC explained that “Ohio may not prescribe,

set, or fix rates in the future because it has lost authority

to regulate ‘the rates charged’ for CMRS rates ....” Ohio

CMRS Order, 10 F.C.C.R. at 7852 4 43.

Here, the complainant asked the PUCO “to make an out-

right determination of whether a price charged for a CMRS

service was unreasonable,” which is precisely what state

agencies are “preempted from doing . . . by [s]ection 332.”

Wireless Consumers Alliance, Inc. Petition for a Declaratory

Ruling Concerning Whether the Provisions of the Communi-

cations Act of 1934, As Amended, or the Jurisdiction of the

Federal Communications Commission Thereunder, Serve to

Preempt State Courts From Awarding Monetary Relief

Against Commercial Mobile Radio Service (CMRS) Providers

(a) from Violating State Consumer Protection Laws

Prohibiting False Advertising and other Fraudulent Business

Practices, and/or (b) in the Context of Contractual Disputes

and Tort Actions Adjudicated under State Contract and Torts

Laws, Memorandum Opinion and Order, 15 F.C.C.R. 17021,

17035 § 25 (2000). “[A] claim that directly challenges a rate

10

and seeks a remedy to limit or control the rate prospectively

or retrospectively is an attempt to regulate rates... .”

Spielholz v. Superior Court of Los Angeles County, 104 Cal.

Rptr. 2d 197, 204 (Cal. Ct. App. 2001): It therefore cannot

also be considered an effort to regulate “carrier practices,

separate and apart from their rates.” Ohio CMRS Order, 10

F.C.C.R. at 7852 ¥ 43. |

B. The Ohio Decision Regulates Wireless Entry in

Contravention of Section 332

Although states retain “traditional authority to monitor

commercial activities within [their] borders,” section 332(c)

bars states from imposing requirements on wireless providers

that must be satisfied before the provider may legally operate

in the state. Ohio CMRS Order, 10 F.C.C.R. at 7853 ¥ 44.

State law is preempted when it “tread[s] directly on the very

areas reserved to the FCC: the modes and conditions under

which [a wireless provider] may begin offering service.”

Bastien v. AT&T Wireless Servs., Inc. 205 F.3d 983, 989 (7th

Cir. 2000); see also TPS Utilicom Servs., Inc. v. AT&T Corp.,

223 F. Supp. 2d 1089, 1108 (C.D. Cal. 2002) (express

preemption in section 332(c) “prevents second guessing” of

FCC criteria for wireless licensing). As the FCC found in

rejecting the PUCO’s petition seeking to regulate CMRS

providers in Ohio, “the statutory language is not broad

enough to accommodate Ohio’s apparent interest in asserting

authority to regulate marketplace entry by CMRS providers.”

Ohio CMRS Order, 10 F.C.C.R. at 7853 4 45.

The FCC has determined that section 332 precludes not

only a regulation that directly prohibits entry but also one that

“effectively precludes CMRS entry.” Developing a Unified

Intercarrier Compensation Regime, Notice of Proposed

Rulemaking, 16 F.C.C.R. 9610, 9638 4 80 (2001) (citing

Interconnection Between Local Exchange Carriers and Com-

mercial Mobile Radio Service Providers, Notice of Proposed

11

Rulemaking, 11 F.C.C.R. 5020, 5072-73 4 lil (1996));

Aubrey v. Ameritech Mobile Communications, inc., No. 00-

CV-75080, 2002 U.S. Dist. LEXIS 15918 (E.D. Mich. June

17, 2002) (section 332(c) preempts states from determining

what technology wireless providers must use to serve a

particular market). The PUCO’s separate subsidiary require-

ment is impermissible under this standard because it prevents

wireless providers in Ohio from lawfully selling their services

both to resellers and directly to the public. Indeed, even the

PUCO acknowledged that this rule could unreasonably pre-

vent the sale of wireless services—in 1999 it eliminated the

separate subsidiary requirement in order “to ensure that no

company will be restricted from entering the Ohio market as

a result of a mandated structural organization.” Commis-

sion Investigation into the Alternative Regulatory Treatment

of Commercial Mobile Radio Service Providers, No. 97-

1700-TP-COI, 1999 Ohio PUC LEXIS 745, at *41 4 2

(Dec. 16, 1999). ;

C. Review by this Court Is Necessary To Prevent

the Destruction of Congress’ Carefully Bal-

anced Wireless Regulatory Regime

The PUCO has not been alone in its efforts to intrude in

areas placed off limits by section 332(c). A number of other

states, as well as courts adjudicating state-law causes of

action, also have taken actions in recent years that conflate

the line between “rate and entry” and. “other terms and

conditions.”

For example, both state and federal courts often permit the

“other terms and conditions” exception of section 332(c) to

swallow the provision’s express preemption directive by

refusing to bar lawsuits so long as plaintiffs cast their state-

law claims for restitution in terms of fraud, unfair practices,

or non-disclosure. See, e.g., Brown v. Washington/Baltimore

Cellular, Inc., 109 F. Supp. 2d 421, 423 (D. Md. 2000) (“late

fees are not included in ‘rates’ of service, but rather are part

12

of the ‘other terms and conditions’ of service” because late

fees are intended to act as a penalty for late payment);

DeCastro v. AWACS, Inc., 935 F. Supp. 541 (D.N.J. 1996)

(award of monetary damages based on state deceptive

advertising or non-disclosure claims is not rate regulation);

Lee v. Contel Cellular of the South, Ine., No. CV-95-1057-

JH, 1996 U.S. Dist. LEXIS 19636 (S.D. Ala. Nov. 25, 1996)

(assessment of “rounding” practice in calculating bills is

unlawful rate regulation under section 332(c), but state fraud

and deceptive practices claims asking for the same relief

implicate “other terms and conditions”); Bryceland v. AT&T

Corp., No. 05-01-00552-CV, 2002 Tex. App. LEXIS 8511

(Tex. App. Dec. 3, 2002) (fraud, deceptive practices and

breach of contract are not preempted); Ball v. GTE Mobilnet

of California, 96 Cal. Rptr. 2d 801 (Cal. Ct. App. 2000) (state

unfair business practice claims relating to inadequate

disclosure or misrepresentation not preempted). In declining

to preempt the state-law complaints, these decisions ignore

the guidance provided by this Court that the “rates charged

by” language of the Communications Act must be construed

broadly. American Tel. & Tel. Co. v. Central Office Tel.,

Inc., 524 U.S. 214, 223 (1998) (“[R]ates . . . do not exist in

isolation. They have meaning only when one knows the

services to which they are attached. Any claim for excessive

rates can be couched as a claim for inadequate services and

vice versa.”).

Some state regulators also have begun to assert their

authority over wireless rates and entry in the guise of “con-

sumer protection.” The California Public Utilities Commis-

sion, for instance, recently proposed sweeping regulations

that would, among other things, dictate the maximum level of

late payment charges, excuse customers from paying early

termination fees, mandate the payment of five percent interest

on the monthly unused balance of a customer deposit, and

require wireless carriers to seek the state commission’s

approval before introducing any new services with “privacy

13

implications.” See Rulemaking 00-02-004, Order Instituting

Rulemaking on the Commission’s Own Motion to Establish

Consumer Rights and Consumer Protection Rules Applicable

to All Telecommunications Utilities, Draft Decision of Com-

missioner Wood (Cal. PUC June 6, 2002) (“California Draft

Decision”). Other states are watching California’s actions

carefully and, absent a clear directive from this Court, there

exists the strong probability that wireless carriers will be

sucked into the traditional state-by-state regulatory regime

that Congress sought to “dramatically revise” a decade ago.

Congress preempted a patchwork of state regulatory

schemes because, as one court has explained, “‘the risk of

fifty different states articulating fifty different rules’...

conflicts with Congress’s objectives of achieving national

uniformity in wireless telecommunications services... .” In

re Wireless Telephone Radio Frequency Emissions Products

Liability Litigation, 248 F. Supp. 2d 452, 463 (D. Md. 2003)

(quoting /n re Wireless Telephone Radio Frequency Emis-

sions Products Liability Litigation, 216 F. Supp. 2d 474, 491

(D. Md. 2002)). In light of the conflict among the courts on

this issue and the potential for further over-stepping by a!

states, not just Ohio, review by this Court is necessary to

clarify the boundary beyond which states may not stray.

Iii. THE OHIO SUPREME COURT’S DECISION

CONFLICTS WITH CONGRESSIONAL GOALS

Even if the PUCO’s actions were not expressly preempted

under section 332(c), they are not permissible because they

directly conflict with “the careful regulatory scheme estab-

lished by federal law.” United States v. Locke, 529 U.S. 89,

106-07 (2000); Geier v. American Honda Motor Co., Inc.,

529 U.S. 861, 870 (2000); see also Central Office Tel., Inc.,

524 U.S. at 227-28. Federal regulations preempt state law to

the extent there is an “actual conflict” between the two

regimes. Geier, 529 U.S. at 871-72. The Supremacy Clause

14

invalidates not only conflicting state laws “that make it

‘impossible’ for private parties to comply with both state and

federal law,” it nullifies state laws “that prevent or frustrate

the accomplishment of a federal objective.” /d. at 873-74; see

also TPS Utilicom Servs., Inc., 223 F. Supp. 2d at 1109

(lawsuit involving FCC auction of spectrum licenses pre-

empted because it “would interfere with Congress’s full pur-

pose and objectives under the [Communications Act]”).

The FCC, in implementing the Communications Act, has

twice rejected the same kind of separate wholesale/retail

subsidiary requirement established by the PUCO and to

which Petitioner was found by the Ohio Supreme Court to

have violated. See Petitions for Rule Making Concerning

Proposed Changes to the Commission’s Cellular Resale Poli-

cies, Notice of Proposed Rulemaking and Order, 6 F.C.C.R.

1719, 1725 § 52 (1991) (“Resale NPRM and Order’); Inter-

connection and Resale Obligations Pertaining to Commercial

Mobile Radio Services, First Report and Order, 11 F.C.C.R.

18455, 18462-63 § 12 (1996) (“CMRS Interconnection

Order’). In declining to adopt a separate affiliate require-

ment, the FCC noted that it would not “be wise policy at this

time to consider the need for separate accounting for

wholesale/retail operations, regulate wholesale rates of return

or require that rate cards be filed with the Commission.”

Resale NPRM and Order, 6 F.C.C.R. at 1725 9 52. The FCC

found that imposing such requirements on wireless providers

“could lead to pricing distortion, including possible higher

prices” and undermine its goals of “encouraging entry and

promoting competition in the marketplace.” /d. at 1722, 1725

| 23, 53; CMRS Interconnection Order, 11 F.C.C.R. at

18462 4 12 (reaffirming its previous ruling that “the rule does

not require providers to structure their operations or offerings

in any particular way, such as to promote resale, or adopt

wholesale/retail business structures... .”).

15

In Geier, this Court, noting that the Department of Trans-

portation had previously “rejected” the very standard plaintiff

sought to apply in her lawsuit, concluded that “a rule of state

tort law imposing such a duty . . . would have presented an

obstacle to the variety and mix of devices that the federal

regulation sought.” Geier, 529 U.S. at 879, 881 (emphasis in

original). The FCC, likewise, made a deliberate decision to

leave wireless services free from traditional separation

requirements because such regulations would “be counter-

productive” to the FCC’s goals and had the potential to

“circumvent competition-driven investment” in the wireless

market. Resale Order and NPRM, 6 F.C.C.R. at 1725 4 53.

The PUCO’s separate subsidiary requirement, accordingly, is

preempted “as an obstacle to the accomplishment and

execution of the full purposes and objectives of Congress.”

Geier, 529 U.S. at 873 (quoting Hines v. Davidowitz, 312

U.S. 52, 67 (1941)).

Ohio’s intrusion into wireless ratemaking also conflicts

with explicit congressional intent. As discussed above,

Congress created a “uniform national policy” to “promote

competition for wireless services” and to avoid “State regu-

lation [that may] be a barrier to the development of

competition in the market.” H.R. REP. No. 103-213, at 480-

81 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 1169-70

(incorporating the findings of $.335, 103d CONG. (1993));

H.R. Rep. No. 103-111, at 260 (1993), reprinted in 1993

U.S.C.C.A.N. 378, 587. In implementing section 332(c), the

FCC similarly sought to ensure that its regulations would be

“perceived by the investment community as a positive factor

that creates incentives for investment in the development of

valuable communications services rather than as a burden

standing in the way of entrepreneurial opportunities.” CMRS

Second Report and Order, 9 F.C.C.R. at 1421 § 22. The

PUCO’s broad foray into wireless regulation, by contrast,

threatens to create a competition-inhibiting “policy that is

balkanized state-by-state.” Ohio CMRS Order, 10 F.C.C.R.

16

at 7852 9 14. As such, neither the PUCO’s order nor the

Ohio Supreme Court’s affirming decision can coexist with the

explicit congressional objectives expressed in section 332(c)

and the FCC’s wireless policies.

CONCLUSION

For the reasons set forth above, the petition for writ of

certiorari should be granted.

MICHAEL F. ALTSCHUL

CELLULAR

TELECOMMUNICATIONS &

INTERNET ASSOCIATION

1250 Connecticut Avenue, N.W.

Suite 800

Washington, D.C. 20036

(202) 785-0081

July 21, 2003

Respectfully submitted,

HOWARD J. SYMONS

Counsel of Record

SARA F. LEIBMAN

ANGELA F. COLLINS

MINTZ, LEVIN, COHN, FERRIS,

GLOVSKY AND POPEO, P.C.

701 Pennsylvania Avenue, N.W.

Suite 900

Washington, D.C. 20004

(202) 434-7300

Counsel for Amicus Curiae