Cybertelecom
Cybertelecom
Federal Internet Law & Policy
An Educational Project
Common Carriers Dont be a FOOL; The Law is Not DIY
- Common Carrier
- History
- Theory
- -Bailment
- - Market Power / Essential
- Duties
- - Non discrimination
- - Refusal to carry
- -Interconnection
-Liability
- Benefits
-Examples
-Telecom Carriers
-Telegraph
-Reference
- Telephone
- - AT&T
- ICC
- FCC
- William Jones paper


See Telecommunications Carriers (a subset of Common Carriers) regulated under Title II of the Communications Act.

"Infrastructures, for purposes such as transportation and communication, have long been vital to national welfare. They knit together a country's economy by facilitating the movement of people, products, services, and ideas, and play important roles in national security." - NSFNet Final ReportPDF p. 4.

Definition

Common carriage was applied to freight or carriage companies and inland and ocean water carriers. By common law, common carriers were 1) required to serve upon reasonable demand, any and all who sought out their services; 2) held to a high standard of care for the property entrusted to them; and 3) limited to incidental damages for breach of duty. -- Eli M. Noam, Beyond Liberalization II: The Impending Doom of Common Carriage, 18 Telecomm. Pol'y 435. Sec. II (1994).

Generally, to qualify as common carriage, carriage must be offered, on demand, to the public at large or to a group of people generally, and the carrier "must hold itself out as ready to engage in the transportation of goods for hire as a business, not as a casual occupation pro hac vice." J Story, Law of Bailments, section 495 (1832).

And "whether a carrier is a common carrier . . . does not depend upon whether its charter declares it to be such . . . but upon what it does." US v. Brooklyn Eastern District Terminal, 249 US 296 (1919). Self determination is still an important element of common carriage as discussed in NARUC I, where the court pointed out that while regulators cannot create a common carrier by simply defining them as such, they do have the power to compel carriers to act as common carriers. See NARUC v. FCC, 525 F2d at 644, n 76 ("it is clear that the Commission had the discretion to require (the service provider) to serve all potential customers indifferently, thus making them common carriers"). --[NY p. 50]

T. CHITTY & L. TEMPLE, A PRACTICAL TREATISE ON THE LAW OF CARRIERS OF GOODS AND PASSENGERS BY LAND, INLAND NAVIGATION, AND IN SHIPS *2, 14-15 (1857) "To render a person liable as a common carrier, he must exercise the business of carrying as a "public employment," and must undertake to carry goods for all persons indiscriminately; and hold himself out as ready to engage in the transportation of goods for hire as a business, and not as a casual occupation pro hac vice. "

Gisbourn v. Hurst, I Salk. 249, 250, 91 Eng. Rep. 220, 220 (1710) ("[Alny man undertaking for hire to carry the goods of all persons indifferently ... is ... a common carrier.").

R. HUTCHINSON, TREATISE ON THE LAW OF CARRIERS § 47 (1879)

J. STORY, LAW OF BAILMENTS § 495 (1832);

Dwight v. Brewster, 18 Mass. (1 Pick.) 50, 55 (1822)

Allen v. Sackrider, 37 N.Y. 341, 342 (1867)

Gordon v. Hutchinson, 1Watts & Serg. 285, 286 (Pa. 1841).

Private Carrier

Cellco Partnership v. FCC, 700 F.3d 534 (D.C. Cir. 2012) ("“common carriage is not all or nothing—there is a gray area in which although a given regulation might be applied to common carriers, the obligations imposed are not common carriage per se.” Id. In this “space between per se common carriage and per se private carriage,” we continued, “the Commission’s determination that a regulation does or does not confer common carrier status warrants deference.” " p. 547)

Commercially Reasonable

Cellco Partnership v. FCC, 700 F.3d 534 (D.C. Cir. 2012) ("we concluded that the data roaming rule imposed no per se common carriage requirements because it left “substantial room for individualized bargaining and discrimination in terms.” Cellco, 700 F.3d at 548. The rule “expressly permit[ted] providers to adapt roaming agreements to ‘individualized circumstances without having to hold themselves out to serve all comers indiscriminately on the same or standardized terms.’” Id. That said, we cautioned that were the Commission to apply the “commercially reasonable” standard in a restrictive manner, essentially elevating it to the traditional common carrier “just and reasonable” standard, see 47 U.S.C. § 201(b), the rule might impose obligations that amounted to common carriage per se, a claim that could be brought in an “as applied” challenge. Cellco, 700 F.3d at 548– 49.")

Criteria - Justification for Common Carrier Status

Some historians and commenters have focused on the issues of 1) monopoly or market power, and 2) essentiality as the drivers behind the imposition of common carrier duties. However, these rationale do not seem to adequately account for many instances of common carriage obligations imposed on competitive industries.-- [NY p. 48]

Monopoly / Market Power

"Common carriers bear these obligations merely based on their economic relationship with customers (i.e. status), independent of any requirement or finding of monopoly or market power." - Barbara Cherry, The Rise of Shadow Common Carriers (Dec. 2012).

Network services tend towards concentration.

  • Mark A. Lemley & David McGowan, Legal Implications of Network Economic Effects, 86 Calif. L. Rev. 479 (1998).
  • CARL SHAPIRO & HAL R. VARIAN,INFORMATION RULES: A STRATEGIC GUIDE TO THE NETWORKED ECONOMY 175–79 (1999);
  • OZSHY, THE ECONOMICS OF NETWORK INDUSTRIES 5 (2001)

Bailment

Essential

Infrastructure / Economic Input

"Infrastructure" is a term of considerable vagueness. It can best be described as those services that are a basic input to most other economic activities, and which provide substantial positive externalities to the economy as a whole. Transportation, energy, communications, education, and protection are prime examples. Network industries, in particular, are considered infrastructure services. The positive externalities to members of the network increase positively with added membership, for example by the greater reach of the telephone.21
    Infrastructure services can greatly contribute to the economic growth of individuals, regions and the nation. In consequence, in most countries they are provided by government. When historically they were provided in the past by private firms, English common law courts often imposed some quasi-public obligations, one of which one was common carriage. It mandated the provision of service of service to willing customers, bringing common carriage close to a service obligation to all once it was offered to some.
-- Eli M. Noam, Beyond Liberalization II: The Impending Doom of Common Carriage, 18 Telecomm. Pol'y 435. Sec. III.3. (1994).

Another attempt to identify common carrier obligations involves reference to infrastructure services. As infrastructure services, transportation and telecommunications have a special role with regard to the activities of other industries. Telecommunications have "positive externalities," such that as the network expands with new users, uses and greater interconnection, prior users receive greater benefits from their own access. Networks can greatly contribute to the economic growth of individuals, regions and the nation. Conversely, the have the potential to retard economic activity. In consequence, in most industrialized countries, telecommunications is still provided by the government as an infrastructure service. --[NY p. 48]

Network

Thomas Nachbar, Open Access, TPRC 2006 (rejecting "market power" as a justification for 'open access' requirements - arguing instead that it is the characteristic of 'transport network' that is crucial)

Public Utilities

"Until competition began to make inroads in the 1990s, telephone companies were treated as public utilities." - Sterling, Bernt, Weiss, Shaping American Telecommunications, p. 23 (2006)

Charles F Phillips, Regulation of Public Utilities: Theory and Practice, Third Edition PUR 1993

Justification for Common Carrier Regulation

Common carriage is a concept of common law. It does not in and of itself necessitate regulation by an agency. The fact that a firm is not regulated does not mean that it is not, at common law, a common carrier. In a competitive market, competition generally disciplines the common carrier firms. In other markets, regulation of common carriers takes the place of a competitive market. [Trebing, p. 301 ("For the most part, [the objectives of common carrier regulation] are similar to those of the perfectly competitive market.")

Harry M. Trebing, Common Carrier Regulation - The Silent Crisis, pp. 300-01: Justifications for economic regulation of common carriers

 

Carriers Distinguished From...

Utilities

One must distinguish the notion of common carriage from several other intertwined concepts that are frequently but inaccurately used as synonyms. A common carrier need not be a "public utility" or a "regulated monopoly," and vice versa; for example, public buses operating as common carriers are usually neither utilities nor monopolies; conversely, public utilities in electricity provision are not usually common carriers.  Another concept, the "universal service obligation", is the requirement of a carrier to reach every willing user and desired destination, wherever located, while common carriage refers to service obligations toward users given a physical plant. Finally, "affordable rates," though often tied to common carriage, are a monopoly and utility issue; where common carriage is concerned with prices it is not with their absolute levels but rather with relative ones, to prevent price-discrimination as a way to unduly differentiate among users or uses.... In 1901, following many state courts, the U.S. Supreme Court held that at common law-- i.e., even without a specific statute-- a telegraph company is a common carrier and owes a duty of non-discrimination.8 Thus the concept of common carriage does not depend on public utility regulation, and a user's rights of service from a common carrier do not rely solely on statute. Statutory public service regulation augmented common law common carriage rather than supplanted it.9, 10  -- Eli M. Noam, Beyond Liberalization II: The Impending Doom of Common Carriage, 18 Telecomm. Pol'y 435. Sec. II (1994).

It is important to note that the concept of common carriage is distinct from public utility regulation. A user's right of service from a common carrier are not dependent on statute. Statutory public service regulation has augmented common law common carriage rather than supplanting it. See Hewitt v. New York, NH & HRR Co., 284 NY 117 (1940) (involving discrimination charges against a rail carrier), and Trailways of New England, Inc. v. CAB, 412 F2d 926, 931 (1st Cir. 1969) (regarding an air carrier), where the court stated, "not only is the right to be treated fairly and non-discriminatorily by a common carrier an expression of the pervasive precept of fairness between government and governed that runs through American jurisprudence, it is one derived from the common law of common carriers." [NY p. 44]

Regulated Monopolies

One must distinguish the notion of common carriage from several other intertwined concepts that are frequently but inaccurately used as synonyms. A common carrier need not be a "public utility" or a "regulated monopoly," and vice versa; for example, public buses operating as common carriers are usually neither utilities nor monopolies; conversely, public utilities in electricity provision are not usually common carriers.  Another concept, the "universal service obligation", is the requirement of a carrier to reach every willing user and desired destination, wherever located, while common carriage refers to service obligations toward users given a physical plant. Finally, "affordable rates," though often tied to common carriage, are a monopoly and utility issue; where common carriage is concerned with prices it is not with their absolute levels but rather with relative ones, to prevent price-discrimination as a way to unduly differentiate among users or uses... In 1901, following many state courts, the U.S. Supreme Court held that at common law-- i.e., even without a specific statute-- a telegraph company is a common carrier and owes a duty of non-discrimination.8 Thus the concept of common carriage does not depend on public utility regulation, and a user's rights of service from a common carrier do not rely solely on statute. Statutory public service regulation augmented common law common carriage rather than supplanted it.9, 10  -- Eli M. Noam,Beyond Liberalization II: The Impending Doom of Common Carriage, 18 Telecomm. Pol'y 435, Sec. II (1994).

Telecom Carriers

One must distinguish the notion of common carriage from several other intertwined concepts that are frequently but inaccurately used as synonyms. A common carrier need not be a "public utility" or a "regulated monopoly," and vice versa; for example, public buses operating as common carriers are usually neither utilities nor monopolies; conversely, public utilities in electricity provision are not usually common carriers.  Another concept, the "universal service obligation", is the requirement of a carrier to reach every willing user and desired destination, wherever located, while common carriage refers to service obligations toward users given a physical plant. Finally, "affordable rates," though often tied to common carriage, are a monopoly and utility issue; where common carriage is concerned with prices it is not with their absolute levels but rather with relative ones, to prevent price-discrimination as a way to unduly differentiate among users or uses.  -- Eli M. Noam, Beyond Liberalization II: The Impending Doom of Common Carriage, 18 Telecomm. Pol'y 435, Sec. II (1994).

Duties of Carrier

"Although the nature and scope of the duties imposed on common carriers have evolved over the last century, see, e.g., Orloff v. FCC, 352 F.3d 415, 418–21 (D.C. Cir. 2003) (discussing the implications of the relaxation of the tariff-filing requirement), the core of the common law concept of common carriage has remained intact. In National Association of Regulatory Utility Commissioners v. FCC, 525 F.2d 630, 642 (D.C. Cir. 1976) (“NARUC I”), we identified the basic characteristic that distinguishes common carriers from “private” carriers—i.e., entities that are not common carriers—as “[t]he common law requirement of holding oneself out to serve the public indiscriminately.” “[A] carrier will not be a common carrier,” we further explained, “where its practice is to make individualized decisions, in particular cases, whether and on what terms to deal.” Id. at 641. Similarly, in National Association of Regulatory Utility Commissioners v. FCC, 533 F.2d 601, 608 (1976) (“NARUC II”), we concluded that “the primary sine qua non of common carrier status is a quasi-public character, which arises out of the undertaking to carry for all people indifferently.” (Internal quotation marks omitted)." - Verizon v. FCC, Slip at 48 (DC Cir. Jan. 14, 2014)

Under common law, common carriers bear the tort obligations: to serve upon reasonable request; without unreasonable discrimination; at just and reasonable rates; and with adequate care. - Barbara Cherry, The Rise of Shadow Common Carriers (Dec. 2012).

By force of common law, and enforced by the courts, common carriers 1) were required to serve upon reasonable demand, any and all who sought out their services and 2) were held to a high standard of care for the property entrusted to them (although they were held to normal standards of negligence for incidental damages beyond that to the carried freight.). --[NY p. 41]

"The relationship of carrier and passenger is not confined to the journey itself.  It includes not only the duty to transport the passenger safely from one place to another but also, insofar as it is reasonable within the carrier's ability to do so, to provide safe ingress and egress."  MPJI MD-CLE 8-241 The Maryland Institute for Continuing Professional Education of Lawyers, Inc. May 2002, Maryland Civil Pattern Jury Instructions, 4th Edition, Chapter 8. § 8:2

"A common carrier is required to use the utmost degree of care, skill and diligence in everything that concerns tis passengers' safety.  However, the carrier does not guarantee the safety of its passengers." MPJI MD-CLE 8-241 The Maryland Institute for Continuing Professional Education of Lawyers, Inc. May 2002, Maryland Civil Pattern Jury Instructions, 4th Edition, Chapter 8. § 8:3

"The common carrier designation carries significant importance because operators are held to a heightened duty of utmost care and diligence rather than the ordinary negligence duty of reasonable care under the circumstances....  The rationale behind imposing a heightened duty of care on common carriers involves several factors.  First, those who travel on common carriers essentially surrender themselves to the carriers care and custody. Secondly, these patrons waive their freedom of movement and actions while in the custody of a common carrier.  As these carriers have the exclusive control of their devices, courts have held common carriers to a higher standard than a mere duty of ordinary care under the circumstances."  --Chad A. Gerardi, A Tale Involving the Magic Kingdom, Pirates, and a Court's Broad Interpretation of Common Carrier Liability, 1 Chap. L. Rev. 171, 171 (1998).

Cannot Impose Common Carrier Obligations on Non Common Carriers

“A telecommunications carrier shall be treated as a common carrier under this [Act] only to the extent that it is engaged in providing telecommunications services.” 47 U.S.C. § 153(51)

Maritime

Any contract, rule, regulation, or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this chapter, shall to that extent be void: Provided, That in any action brought against any such common carrier under or by virtue of any of the provisions of this chapter, such common carrier may set off therein any sum it has contributed or paid to any insurance, relief benefit, or indemnity that may have been paid to the injured employee or the person entitled thereto on account of the injury or death for which said action was brought. 45 U.S.C. §55 (2000).
 

Discrimination

For centuries, common carriage principles have played an important role in the infrastructure services of transportation and communications. They intended to guarantee that no customer seeking service upon reasonable demand, willing and able to pay the established price, however set, would be denied lawful use of the service or would otherwise be discriminated against... The prohibition on unreasonable discrimination is the most important component of the common carrier obligation.15 However, this is not absolute. Courts have recognized that some categorization of users is possible. "[A] specialized carrier whose service is of possible use to only a fraction of the population may nonetheless be a common carrier if he holds himself out to serve indifferently all potential users." -- Eli M. Noam, Beyond Liberalization II: The Impending Doom of Common Carriage, 18 Telecomm. Pol'y 435, Sec. II (1994).

The first common carrier case on record in English common law is of a ferryman in 1348. [133] Later cases discuss other common occupations such as innkeepers, [134] marshalls, [135] and surgeons. [Y.B. 9 Ed. IV. 32 pl. 4.] These were common or public occupations at common law with an obligation to serve all at reasonable rates. 'If a man takes upon him a public employment, he is bound to serve the public as far as the employment extends; and for refusal an action lies, as against a farrier refusing to shoe a horse . . . Against an innkeeper refusing a guest when he has room . . . Against a carrier refusing to carry 646, 654 (1701), per C. J. Holt. In effect, this not being full.' Lane v. Cotton, 1 Ld.Raym. 646, 654 (1701), per C. J. Holt. In effect, this early law of common or public callings was a forerunner of later government regulation of business, and these common callings were the first 'public service companies.' --[FCC 1981]

Common callings received greater definition in English common law courts and in parliamentary enactments. Consistent throughout was the primary duty of non-discriminatory service. By 1814, with the blooming of the industrial revolution and the expanding commercial class, common callings were generally limited to those few businesseswhich are today still considered common, i.e.., carriers and inn keepers. --[NY p. 41]

Exception to Obligations :: Refusal to serve

The duty to carry does not mean that a carrier is never justified in refusing to provide service. It is well established that "if goods are not of the character that the carrier transports he may refuse carriage." Gorton, Supra at 109. Yet, the reasons for refusal are very limited and related to potential damage to other's goods, or to unreasonably high risks for the carrier in its capacity as insurer, or are belong the reasonable capacity restraints of the carrier.

For example, in Leighton v NY Tel., plaintiff, desiring and denied telephone service due to a wartime lack of telephone sets, demanded that extension phones be withdrawn from service in order to provide service to new customers, and provide them adequate service. While recognizing a statutory and common law obligation to serve, the court found the limitation on service justified due to the impracticality of the carrier determining where it could fairly remove installed facilities from existing customers for the benefit of new customers. --[NY p. 58]

The Electronic Communications Privacy Act prohibits wiretapping of customers service, except where incident to the rendition of service or in order to protect the service provider's network or property. Similarly, the FCC's 2010 Open Internet Rules prohibited discrimination except for reasonable network management.

"this allowance “merely preserves a common carrier’s traditional right to ‘turn[] away [business] either because it is not of the type normally accepted or because the carrier’s capacity has been exhausted.’” Verizon’s Br. 20 (quoting NARUC I, 525 F.2d at 641). Railroads have no obligation to allow passengers to carry bombs on board, nor need they permit passengers to stand in the aisles if all seats are taken. It is for this reason that the Communications Act bars common carriers from engaging in “unjust or unreasonable discrimination,” not all discrimination. 47 U.S.C. § 202 (emphasis added)." - Verizon v. FCC, Slip at 58 (D.C. Cir. 2014)

Refusal to Carry:: Illegal Purpose

Common carriers have an obligation to provide service to any and all comers, except where service is clearly being used for illegal purposes. Movietime Inc v. NY Telephone Co., 277 App Div 1057, 101 NY Supp.2d 71 (2d Dept 1950). However, these grounds are very limited. In Nadel v NY Tel., 170 NYS2d 95 (1957) petitioner's phone service was disconnected because of the carrier's suspicion that the telephone would be used for illegal gambling transactions. The court directed that service be reinstated, finding that the telephone company "is not at all qualified, in the absence of evidence of illegal use, to withhold from the petitioner, at will an essential and public utility." 170 NYS2d at 98.

And in a similar case, Shillitani v. Valentine, 53 NYS 2d 127 (1945), the court stated that absent illegal use, "a telephone company may not refuse to furnish service and facilities because of a mere suspicion or mere belief that they may be or are being used for an illegitimate end; more is required." 53 NYS at 131. The court went on to quote approvingly of a California case (People v. Brophy, 49 Cal.App.2d 15, at 33, 120 P2d 946, at 965) where the police exercised veto power over telephone installations. The California court, found the arrangement unenforceable and stated, "public utilities and common carriers are not the censors of public or private morals, nor are they authorized or required to investigate or regulate the public or private conduct of those who seek service at their hands." --[NY p. 58]

Interconnection

Reasonable opportunities for interconnection are an essential element of the common carrier's duty of service. Railroads, for example, are required to interconnect at the point of choosing of the tendering carrier, unless otherwise specified by the shipper. 49 USC 10742 & 10763 (1983). See also McKinney's Consolidated Laws of New York, Transportation Law, sections 97, 106, 112 which require interconnection with shippers and other railroads. And see Louisville & Nash RR v US, 238 US 1 (1915). --[NY p. 41]

Telegraph networks were required to interconnect.

Telecom carriers under the Telecom Act of 1996 are required to interconnect.

See Kingsbury Agreement 1913 where AT&T agrees to interconnection after antitrust suit.

US Telephone v Central Union, 171 F 130 (1909) (long distance carriers must interconnect, cannot discriminate against, local carriers)

During the first era of telephone competition, independent telephone companies sought interconnection with the Bell telephone system. However the Bell telephone system, with its concept of "universal service" (one integrated system) fought this. AT&T only wanted to interconnect with Bell Telephone companies that bought Bell equipment and agreed only to interconnect with Bell companies. Litigations arose and AT&T was concerned about the obligations of telegraph companies to interconnect. AT&T's first strategy was simply to buy those who brought suit. Eventually in 1896 a judge ruled that while common carriers could not discriminate and must offer service to all, "all" meant customers and not rival companies. [Mueller p 50] "'Common carriers' had no obligation to be 'common carriers of common carriers'"

Post Roads Act 1866: Telegraph companies can freely use federal land and fell trees on the condition that they interconnect. [Brands p 2] [Brenner p 7]

Duty Individuals with Disabilities

"A common carrier has a duty to provide a reasonable level of care to a passenger with a disability." MPJI MD-CLE 8-241 The Maryland Institute for Continuing Professional Education of Lawyers, Inc. May 2002, Maryland Civil Pattern Jury Instructions, 4th Edition, Chapter 8. § 8:4

Benefit

Antitrust

See AT&T Antitrust

In return for reduced discretion, a carrier  obtained certain benefits, including limited liability for the consequences of its own actions. Some types of common carriers have been given, by statute, powers of eminent domain, use of public rights-of-way, and protection against competition.  -- Eli M. Noam, Beyond Liberalization II: The Impending Doom of Common Carriage, 18 Telecomm. Pol'y 435, Sec. II (1994).

The Shipping Act of 1916 was enacted, in large measure, to provide the liner shipping industry operating in the foreign commerce of the United States with a measure of immunity from antitrust laws. -- Daniel Eldredge, Classifying Cruise Ships as Common Carriers under the Shipping Act, a Jurisdictional Struggle: American Association of Cruse Passengers v. Carnival Cruise Lines, 15 Tul Mar. L.J. 397, 399 (1991).

Right of Way

In return for reduced discretion, a carrier  obtained certain benefits, including limited liability for the consequences of its own actions. Some types of common carriers have been given, by statute, powers of eminent domain, use of public rights-of-way, and protection against competition.  -- Eli M. Noam, Beyond Liberalization II: The Impending Doom of Common Carriage, 18 Telecomm. Pol'y 435, Sec. II (1994).

See Jones, Common Carriers being granted access to ROW and right of eminent domain

Liability