Cybertelecom Federal Internet Law & Policy An Educational Project

Notes: Agency Jurisdiction

Notes Table of Contents

Jurisdiction

General

It is axiomatic that administrative agencies may issue regulations only pursuant to authority delegated to them by Congress. - ALA v. FCC, No. 04-1037, slip ip. at 2 (DC Cir. May 6, 2005)

 17. It is clear, and needs no elaboration or lengthy discussion here, that the Communications Act of 1934 confers comprehensive powers upon the Commission to regulate the rendition for hire of interstate and foreign communications services by wire and radio and all persons engaged in such services. Congress in 1934 acted in a field that was demonstrably both new and dynamic, and it therefore gave the Commission a comprehensive mandate, with not niggardly but expansive powers. (U.S. v. Southwestern Cable Company, 392 U.S. 157, 173 (1968)). Communications by wire or radio is broadly defined in the Act to mean:

 ... (The) transmission of writing, signs, signals, pictures, and sounds of all kinds... between the points of origin and reception of such transmission, including all instrumentalities, facilities, apparatus, and services (among other things, the receipt, forwarding, and delivery of communications) incidental to such transmission. (47 U.S.C. s 153(a)(b).)

 Congress in passing the Communications Act of 1934 could not, of course, anticipate the variety and nature of methods of communication by wire or radio that would come into existence in the decades to come. In such a situation, the expert agency entrusted with administration of a dynamic industry is entitled to latitude in coping with new developments in that industry. (Philadelphia Television Broadcasting Company v. FCC, 359 F.2d 282, 284 (D.C. Cir. 1966.)

Interstate versus Intrastate Jurisdiction

The Federal Communications Commission has jurisdiction over interstate jurisdiction. States have jurisdiction over intrastate jurisdiction. A key is a determination of what is interstate and what is interstate.

US v Sutcliffe , No. 04-50189 Opinion (9th Cir Oct 11, 2007) We are therefore in agreement with the Eighth Circuit's conclusion that "[a]s both the means to engage in commerce and the method by which transactions occur, 'the Internet is an instrumentality and channel of interstate commerce.'"

Preemption of State jurisdiction

-Robert J. Butler, In the Aftermath of California V. FCC: Computer III remand Proceedings Pose Difficult Policy Choices For the enhanced service Industry, 8 No. 5 Computer Law. 24, 25 (May 1991) (petition refered to is Investigation of Regulation of enhanced services, Formal Case No. 904, Order No. 9659 (D.C. PSC Feb 22, 1991); Public Notice, DA 91-223 (FCC Feb 22, 1991)).

1. Point to Point Communications



"In the GTE DSL Order, we found that the jurisdictional nature of communications traditionally is determined by the end points of the communication and not points of intermediate switching or exchanges between carriers.[4] We rejected the argument that, for jurisdictional purposes, an end-to-end ADSL communication must be separated into two components: an intrastate telecommunications service, provided in this instance by GTE, and an interstate information service, provided by the ISP.^[5] We emphasized that the Commission's decision to treat ISPs as end users for access charge purposes does not affect the nature of the end-to-end communication or the Commission's jurisdiction over such traffic.[6] Accordingly, we concluded that ISP traffic must be analyzed as a continuous transmission from the end user to a distant Internet website."

[4] GTE DSL Order at && 17-19.

[5] GTE DSL Order at & 20.

[6] GTE DSL Order at & 21.

---In Re GTE Telephone Operators GTOC Tariff No. 1 GTE Transmittal No. 1148, Memorandum Opinion And Order, CC Docket No. 98-79 ¶ 3 (February 26, 1999).


---

10. As many incumbent LECs properly note,[25] the Commission traditionally has determined the jurisdictional nature of communications by the end points of the communication and consistently has rejected attempts to divide communications at any intermediate points of switching or exchanges between carriers. In BellSouth MemoryCall, for example, the Commission considered the jurisdictional nature of traffic that consisted of an incoming interstate transmission (call) to the switch serving a voice mail subscriber and an intrastate transmission of that message from that switch to the voice mail apparatus.[26] The Commission determined that the entire transmission constituted one interstate call, because "there is a continuous path of communications across state lines between the caller and the voice mail service."[27] The Commission's jurisdictional determination did not turn on the common carrier status of either the provider or the services at issue;[28] BellSouth MemoryCall is not, therefore, distinguishable on the grounds that ISPs are not common carriers.

11. Similarly, in Teleconnect, the Bureau examined whether a call using Teleconnect's "All-Call America" (ACA) service, a nationwide 800 travel service that uses AT&T's Megacom 800 service, is a single, end-to-end call.[29] Generally, an ACA call is initiated by an end user from a common line open end; the call is routed through a LEC to an AT&T Megacom line, and is then transferred from AT&T to Teleconnect by another LEC.[30] At that point, Teleconnect routes the call through the LEC to the end user being called.[31] The Bureau rejected the argument that the (ACA) 800 call used to connect to an interexchange carrier's (IXC) switch was a separate and distinct call from the call that was placed from that switch.[32] The Commission affirmed, noting that "both court and Commission decisions have considered the end-to-end nature of the communications more significant than the facilities used to complete such communications. According to these precedents, we regulate an interstate wire communications under the Communications Act from its inception to its completion."[33] The Commission concluded that "an interstate communication does not end at an intermediate switch. . . . The interstate communication itself extends from the inception of a call to its completion, regardless of any intermediate facilities."[34] In addition, in Southwestern Bell Telephone Company, the Commission rejected the argument that "a credit card call should be treated for jurisdictional purposes as two calls: one from the card user to the interexchange carrier's switch, and another from the switch to the called party" and concluded that "switching at the credit card switch is an intermediate step in a single end-to-end communication."[35]

[fn25] See, e.g., Ameritech Comments at 13; BellSouth Reply at 4-6; SBC Reply at 5; USTA Comments at 5-6.

[fn26] Petition for Emergency Relief and Declaratory Ruling Filed by BellSouth Corporation, 7 FCC Rcd 1619 (1992) (BellSouth MemoryCall).

[fn27] Id. at 1620.

[fn28] Id. at 1621-22. Indeed, the Commission expressly noted that, although BellSouth's "voice mail service is an enhanced service, that fact does not limit our authority to preempt." Id. at 1622 n.44.

[fn29] Teleconnect Co. v. Bell Telephone Co. of Penn., E-88-83, 10 FCC Rcd 1626 (1995) (Teleconnect), aff'd sub nom. Southwestern Bell Tel. Co. v. FCC, 116 F.3d 593 (D.C. Cir. 1997).

[fn30] Id. at 1627.

[fn31] Id. at 1627-28.

[fn32] Id. at 1626.

[fn33] Id. at 1629 (citing NARUC v. FCC, 746 F.2d 1492, 1498 (D.C. Cir. 1984) (concluding that a physically intrastate in-WATS line, used to terminate an end-to-end interstate communication, is an interstate facility subject to Commission regulation)). SeealsoUnited States v. AT&T, 57 F. Supp. 451, 454 (S.D.N.Y. 1944) (the Act contemplates the regulation of interstate wire communication from its inception to its completion), aff'd sub nom. Hotel Astor v. United States, 325 U.S. 837 (1945); New York Telephone Co., 76 FCC 2d 349, 352-53 (1980) (physically intrastate foreign exchange facilities used to carry interconnected interstate traffic are subject to federal jurisdiction).

[fn34] Teleconnect, 10 FCC Rcd at 1629.

[fn35] In the Matter of Southwestern Bell Tel. Co., CC Docket No. 88-180, Order Designating Issues for Investigation, 3 FCC Rcd 2339, 2341 (1988) (Southwestern Bell Tel. Co.).

--In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling (February 26, 1999)
 
 

17. As many commenters note, the Commission traditionally has determined the jurisdictional nature of communications by the end points of the communication and consistently has rejected attempts to divide communications at any intermediate points of switching or exchanges between carriers. In BellSouth MemoryCall, for example, the Commission considered the jurisdictional nature of traffic that consisted of an incoming interstate transmission (call) to the switch serving a voice mail subscriber and an intrastate transmission of that message from that switch to the voice mail apparatus. The Commission determined that the entire transmission constituted one interstate call, because "there is a continuous path of communications across state lines between the caller and the voice mail service."

18. Similarly, in Teleconnect, the Bureau examined whether a call using Teleconnect's "All-Call America" (ACA) service, a nationwide 800 travel service that uses AT&T's Megacom 800 service, is a single, end-to-end call. Generally, an ACA call is initiated by an end user from a common line open end; the call is routed through a LEC to an AT&T Megacom line, and is then transferred from AT&T to Teleconnect by another LEC. At that point, Teleconnect routes the call through the LEC to the end user being called. The Bureau rejected the argument that the (ACA) 800 call used to connect to an interexchange carrier's (IXC's) switch was a separate and distinct call from the call that was placed from that switch. The Commission affirmed, noting that "both court and Commission decisions have considered the end-to-end nature of the communications more significant than the facilities used to complete such communications. According to these precedents, we regulate an interstate wire communication under the Communications Act from its inception to its completion." The Commission concluded that "an interstate communication does not end at an intermediate switch. . . . The interstate communication itself extends from the inception of a call to its completion, regardless of any intermediate facilities." In addition, in Southwestern Bell Telephone Company, the Commission rejected the argument that "a credit card call should be treated for jurisdictional purposes as two calls: one from the card user to the interexchange carrier's switch, and another from the switch to the called party" and concluded that "switching at the credit card switch is an intermediate step in a single end-to-end communication."

19. Consistent with these precedents, we conclude that the communications at issue here do not terminate at the ISP's local server, as some competitive LECs and ISPs contend, but continue to the ultimate destination or destinations, very often at a distant Internet website accessed by the end user. The fact that the facilities and apparatus used for GTE's ADSL service offering may be located within a single state does not affect our jurisdiction. As the Commission stated in BellSouth Memory Call, "this Commission has jurisdiction over, and regulates charges for, the local network when it is used in conjunction with the origination and termination of interstate calls." Indeed, in the vast majority of cases, the facilities that incumbent LECs use to provide interstate access are located entirely within one state.

-- In Re GTE Telephone Operators GTOC Tariff No. 1 GTE Transmittal No. 1148, Memorandum Opinion And Order, CC Docket No. 98-79 (October 30, 1999), recon. denied (February 26, 1999).
 
 

"Internet access providers typically provide their subscribers with the ability to run a variety of applications, including World Wide Web browsers, FTP clients, Usenet newsreaders, electronic mail clients, Telnet applications, and others. When subscribers store files on Internet service provider computers to establish "home pages" on the World Wide Web, they are, without question, utilizing the provider's "capability for . . . storing . . . or making available information" to others. The service cannot accurately be characterized from this perspective as "transmission, between or among points specified by the user"; the proprietor of a Web page does not specify the points to which its files will be transmitted, because it does not know who will seek to download its files. Nor is it "without change in the form or content," since the appearance of the files on a recipient's screen depends in part on the software that the recipient chooses to employ. When subscribers utilize their Internet service provider's facilities to retrieve files from the World Wide Web, they are similarly interacting with stored data, typically maintained on the facilities of either their own Internet service provider (via a Web page "cache") or on those of another. Subscribers can retrieve files from the World Wide Web, and browse their contents, because their service provider offers the "capability for . . . acquiring, . . . retrieving [and] utilizing . . . information." Most of the data transport on the Internet relates to the World Wide Web and file transfer." In re Federal-State Joint Board on Universal Service, Report to Congress, FCC 98-67 ¶ 76 (April 10, 1998).
 
 

1. Internet End Point

The jurisdictional analysis is less straightforward for the packet-switched network environment of the Internet.[68] An Internet communication does not necessarily have a point of "termination" in the traditional sense. An Internet user typically communicates with more than one destination point during a single Internet call, or "session," and may do so either sequentially or simultaneously. In a single Internet communication, an Internet user may, for example, access websites that reside on servers in various states or foreign countries, communicate directly with another Internet user, or chat on-line with a group of Internet users located in the same local exchange or in another country.[69] Further complicating the matter of identifying the geographical destinations of Internet traffic is that the contents of popular websites increasingly are being stored in multiple servers throughout the Internet, based on "caching" or website "mirroring" techniques.[70]

[fn68] See, e.g., Kevin Werbach, Digital Tornado: The Internet and Telecommunications Policy, OPP Working Paper No. 29, at 45 (Mar. 1997) (Digital Tornado).

[fn69] See, e.g., Digital Tornado at 45. See also Adelphia, et al., Reply at 11 n.21.

[fn70] See, e.g., MCI WorldCom Ex Parte at 7.

--In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling ¶ 18 (February 26, 1999)
 

In general, an originating LEC end user's call to an ISP served by another LEC is carried (1) by the originating LEC from the end user to the point of interconnection (POI) with the LEC serving the ISP; (2) by the LEC serving the ISP from the LEC-LEC POI to the ISP's local server; and (3) from the ISP's local server to a computer that the originating LEC end user desires to reach via the Internet. If these calls terminate at the ISP's local server (where another (packet-switched) "call" begins), as many CLECs contend, then they are intrastate calls, and LECs serving ISPs are entitled to reciprocal compensation for the "transport and termination" of this traffic. If, however, these calls do not terminate locally, incumbent LECs argue, then LECs serving ISPs are not entitled to reciprocal compensation under section 251(b)(5).

--In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling ¶ 7 (February 26, 1999)

Consistent with these precedents,[36] we conclude, as explained further below, that the communications at issue here do not terminate at the ISP's local server, as CLECs and ISPs contend,[37] but continue to the ultimate destination or destinations, specifically at a Internet website that is often located in another state.[38]

[fn36] Although the cited cases involve interexchange carriers rather than ISPs, and the Commission has observed that "it is not clear that ISPs use the public switched network in a manner analogous to IXCs," Access Charge Reform Order, 12 FCC Rcd at 16133, the Commission's observation does not affect the jurisdictional analysis.

[fn37] See, e.g., ACSI Comments at 5; Adelphia, et al., Comments at 12-13; ALTS Letter at 6-7; Cox Comments at 5.

[fn38] This conclusion is fully consistent with BellSouth MemoryCall. Although MCI WorldCom relies on BellSouth MemoryCall to support its argument that the ISP is the relevant endpoint for purposes of the jurisdictional analysis (see Letter from Richard S. Whitt, Director -- Federal Affairs/Counsel, MCI WorldCom, Inc., to Magalie R. Salas, Secretary, FCC (October 2, 1998)), there, as here, the Commission analyzed the communication from its inception to the "transmission's ultimate destination." BellSouth Memory Call, 7 FCC Rcd at 1621.

--In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling ¶ 12 (February 26, 1999)
 
 

2. End to End Analysis

We disagree with those commenters that argue that, for jurisdictional purposes, ISP-bound traffic must be separated into two components: an intrastate telecommunications service, provided in this instance by one or more LECs, and an interstate information service, provided by the ISP.[42] As discussed above, the Commission analyzes the totality of the communication when determining the jurisdictional nature of a communication.[43]

[fn42] See, e.g., RCN Comments at 6; TCG Comments at 4-5; WorldCom Comments at 8-9.

[fn43] See United States v. AT&T, 57 F. Supp. 451, 453-55 (S.D.N.Y. 1944), aff'd, 325 U.S. 837 (1945).

--In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling ¶ 13 (February 26, 1999)

Ancillary Jurisdiction

Title I: 47 USC 151 - 161

47 USC 154(i): "The Commission may perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this Act, as may be necessary in the execution of its functions."

• Midwest Video Tapes TV Museum
  

The FCC has "authority to promulgate regulations to effectuate the goals and accompanying provisions of the Act in the absence of explicit regulatory authority, if the regulations are reasonably ancillary to existing Commission statutory authority." -- United States v. Southwestern Cable Co., 392 U.S. 157, 178 (1968).

The Commission recognized that it may exercise ancillary jurisdiction only when two conditions are satisfied: (1) the Commission’s general jurisdictional grant under Title I covers the regulated subject and (2) the regulations are reasonably ancillary to the Commission’s effective performance of its statutorily mandated responsibilities. See 18 FCCR. at 23,563. The Commission’s general jurisdictional grant under Title I plainly encompasses the regulation of apparatus that can receive television broadcast content, but only while those apparatus are engaged in the process of receiving a television broadcast. Title I does not authorize the Commission to regulate receiver apparatus after a transmission is complete. As a result, the FCC’s purported exercise of ancillary authority founders on the first condition. There is no statutory foundation for the broadcast flag rules, and consequently the rules are ancillary to nothing. Therefore, we hold that the Commission acted outside the scope of its delegated authority when it adopted the disputed broadcast flag regulations.

. . . . .

The FCC may act either pursuant to express statutory authority to promulgate regulations addressing a variety of
designated issues involving communications, see, e.g., 47 U.S.C. § 303(f) (granting the Commission authority to prevent interference among radio and television broadcast stations), or pursuant to ancillary jurisdiction, see, e.g., 47 U.S.C. § 154(i) (“[t]he Commission may perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the execution of its functions”).

Although somewhat amorphous, ancillary jurisdiction is nonetheless constrained. In order for the Commission to regulate under its ancillary jurisdiction, two conditions must be met. First, the subject of the regulation must be covered by the Commission’s general grant of jurisdiction under Title I of the Communications Act, which, as noted above, encompasses “‘all interstate and foreign communication by wire or radio.’” United States v. Southwestern Cable Co., 392 U.S. 157, 167 (1968) (quoting 47 U.S.C. § 152(a)). Second, the subject of the regulation must be “reasonably ancillary to the effective performance of the Commission’s various responsibilities.” Id. at 178.

. . . . .

As the court explained in Motion Picture Ass’n of America, Inc. v. FCC, 309 F.3d 796, 801 (D.C. Cir. 2002) (“MPAA”), an “agency’s interpretation of [a] statute is not entitled to deference absent a delegation of authority from Congress to regulate in the areas at issue.” The court observed that the Supreme Court’s decision in Mead “reinforces” the command in Chevron that “deference to an agency’s interpretation of a statute is due only when the agency acts pursuant to ‘delegated authority.’” Id. (quoting Mead, 533 U.S. at 226). See also Cal. Indep. Sys. Operator Corp. v. FERC, 372 F.3d 395, 399 (D.C. Cir. 2004); Bluewater Network v. EPA, 370 F.3d 1, 11 (D.C. Cir. 2004); AT&T Corp. v. FCC, 323 F.3d 1081, 1086 (D.C. Cir. 2003); Ry. Labor Executives’ Ass’n v. Nat’l Mediation Bd., 29 F.3d 655,
670-71 (D.C. Cir. 1994) (en banc).

. . . . .

The Supreme Court has delineated the parameters of the Commission’s ancillary jurisdiction in three cases: United States v. Southwestern Cable Co., 392 U.S. 157 (1968), United States v. Midwest Video Corp., 406 U.S. 649 (1972) (“Midwest Video I”), and FCC v. Midwest Video Corp., 440 U.S. 689 (1979) (“Midwest Video II”). In Southwestern Cable and Midwest Video I, the Court upheld the Commission’s regulation of cable television systems as a valid exercise of its ancillary jurisdiction, but also made clear that the Commission’s ancillary authority has limits. In Midwest Video II, the Court found that the Commission had overstepped those limits. Because Southwestern Cable, Midwest Video I, and Midwest Video II are central to our analysis of whether the Commission lawfully exercised its ancillary jurisdiction in this case, we discuss these cases in some detail.

ALA v. FCC, No. 04-1037, slip ip. at 4 & 17 (DC Cir. May 6, 2005)

Computer and Communications Industry Ass'n v. FCC, 693 F.2d 198(D.C.Cir.1982),cert. denied,461 U.S.938(1983) Affirming FCC ancillary jurisdiction of non common carrier activities of carriers

Other cases of the exercise of ancillary jurisdiction:  Promotion of Competitive Networks in Local Telecommunications Markets, Wireless Commun. Ass'n Int'l, Inc., Petition to Amend Section 1.4000 of the Commission's Rules, First Report and Order and Further Notice of Proposed Rulemaking in WT Docket No. 99-217, Fifth Report and Order and Memorandum Opinion and Order in CC Docket No. 96-98, and Fourth Report and Order and Memorandum Opinion and Order in CC Docket No. 88-57, FCC 00-366, 15 FCC Rcd 22983 (2000) (finding over-the-air reception devices are subject to Title I jurisdiction).

See Cable Vision v KUTV, 211 FSupp 47 (D Idaho 1962) (early application of ancillary jurisdiction by the FCC).

Data Processing / Enhanced Services

Information-service providers, by contrast, are not subject to mandatory common-carrier regulation under Title II, though the Commission has jurisdiction to impose additional regulatory obligations under its Title I ancillary jurisdiction to regulate interstate and foreign communications, see §§151–161.

NCTA v. BrandX, No. 04-277, 545 U.S. __, Slip at 4 (S.Ct. June 27, 2005)

United States v. Southwestern Cable Co., 392 U.S. 157, 167-168 (1968).

"Title I is not an independent source of regulatory authority; rather, it confers on the FCC only such power as is ancillary to the Commission's specific statutory responsibilities.  See United States v. Southwestern Cable Co., 392 U.S. 157, 178, 88 S. Ct. 1994, 2005, 20 L.Ed.2d 1001 (1968) (FCC's Title I power "restricted to that reasonably ancillary to the effective performance of the Commission's various responsibilities").  In the case of enhance [telephone] services, the specific responsibility to which the Commission's Title I authority is ancillary to its Title II authority is over common carrier services.  See CCIA v. FCC, 693 F.2d 198, 213 (D.C. Cir. 1982) (upholding FCC regulation of enhanced services as ancillary to Commission's authority over interstate basic telephone services);  GTE Serv. Corp. v. FCC, 474 F.2d 724, 731 (2d Cir. 1973) (same)."
- People of the State of California v. FCC, 905 F.2d 1217, 1241 n. 35 (9th Cir. 1990).

In United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 20  L.Ed.2d 1001 (1968), it was settled beyond peradventure that the Commission may  assert jurisdiction under section 152(a) of the Act over activities that are  not within the reach of Title II. ⁷⁸  In that case, however, the Supreme  Court limited the Commission's jurisdiction to that which is "reasonably  ancillary to the effective performance of the Commission's various  responsibilities." ⁷⁹  One of those responsibilities is to assure a nationwide system of wire communications services at reasonable prices.⁸⁰
-- Computer and Communications Industry Association v. Federal Communications Commission, 693 F.2D 198, 213, 224 U.S.APP.D.C. 83 (D.C. Cir. 1982) (citing FN78. United States v. Southwestern Cable Co., 392 U.S. at 172-73, 88 S.Ct. at 2002-03. FN79. Id. at 178, 88 S.Ct. at 2005. FN80. 47 U.S.C. s 152 (1976)).

"The Commission found that enhanced services and CPE were not  within the scope of its Title II jurisdiction but were within its ancillary  jurisdiction."
Computer and Communications Industry Association v. Federal Communications Commission, 693 F.2D 198, 205, 224 U.S.APP.D.C. 83 (D.C. Cir. 1982)

⁷⁸Computer II , 77 FCC 2d at 432-33, paras. 124-27.
⁷⁹  Id.

²¹⁵Implementation of the Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as amended, CC Docket No. 96-149, First Report and Order and Further Notice of Proposed Rulemaking, 11 FCC Rcd 21905, 21955, ? 102 (1996) ("all of the services that the Commission has previously considered to be 'enhanced services' are 'information services'"), Order on Reconsideration, 12 FCC Rcd 2297 (1997), further recon. pending, Second Report and Order, 12 FCC Rcd 15756 (1997), aff'd sub nom. Bell Atlantic Telephone Companies, et al v. FCC, et al., 131 F.3d 1044 (D.C. Cir. 1997).
²¹⁶ Computer and Communications Industry Association v. FCC, 693 F.2d 198, 213 (D.C. Cir. 1982), cert. denied, Louisiana Public Service Commission v. FCC, 461 U.S. 938 (1983).  Pending before the court were several FCC orders, known broadly as Computer II, in which the Commission asserted ancillary jurisdiction over information service.  The court designated the following orders as comprising the Computer II decision:  "Final Decision, In re Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), 77 FCC 2d 384 (1980) (Computer II Final Decision); Memorandum Opinion and Order, Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), 84 FCC 2d 50 (1980) (Computer II Reconsideration Decision); Memorandum Opinion and Order on Further Reconsideration, Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), 88 FCC 2d 512 (1981) (Computer II Further Reconsideration Decision.)"  Id. at n.1
²¹⁷ Computer and Communications Industry Association, 693 F.2d at 213.
²¹⁸ Id. at 213, referring to United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994, 2005 (1968) (Commission has jurisdiction over that which is "reasonably ancillary to the effective performance of the Commission's various responsibilities").
²¹⁹ Id.

²²⁰ See generally United States v. Southwestern Cable Co., 392 U.S. 157, 88 S.Ct. 1994 (1968); see also Second Computer Inquiry,  77 FCC 2d. at 432, ? 126.
²²¹ In Computer III, the Commission adopted a new regulatory regime that substituted "nonstructural" safeguards for Computer II's requirements that information services be offered only through a separate subsidiary. The Commission determined that information services could be offered by carriers on an integrated basis, provided that those previously subject to separation requirements file a plan for "comparably efficient interconnection" (CEI).   See Amendment of Section 64.702 of the Commission's Rules and Regulations (Computer III), CC Docket No. 85-229, Phase I, 104 FCC 2d 958, 118-21 (1986) (Phase I Order), recon., 2 FCC Rcd 3035 (1987) (Phase I Recon. Order), further recon., 3 FCC Rcd 1135 (1988) (Phase I Further Recon. Order), Phase I Order and Phase I Recon. Order vacated, California v. FCC, 905 F.2d 1217 (9th Cir. 1990); Phase II, 2 FCC Rcd 3072 (1987) (Phase II Order), recon., 3 FCC Rcd 1150 (1988) (Phase II Recon. Order), Phase II Order, vacated, California v. FCC, 905 F.2d 1217 (9th cir. 1990); Computer III Remand Proceedings, 5 FCC Rcd 7719 (1990) (ONA Remand Order), recon., 7 FCC Rcd 909 (1992), pets. for review denied, California v. FCC, 4 F.3d 1505 (9th Cir. 1993); Computer III Remand Proceedings:  Bell Operating Company Safeguards and Tier 1 Local Exchange Company Safeguards, 6 FCC Rcd 7571 (1991) (BOC Safeguards Order); BOC Safeguards Order vacated in part and remanded, California v. FCC, 39 F.3d 919 (9th Cir. 1994) (California III).   Since that requirement took effect, carriers have filed numerous CEI plans covering both voice mail and interactive menus, among other services.  See, e.g., Bell Operating Companies Joint Petition for Waiver of Computer II Rules, 10 FCC Rcd 13758, 13770-13774, App. A (Com.Car.Bur. 1995) (BOC CEI Plan Approval Order).
²²² See Attachment to Letter from Brian F. Fontes, CTIA, to Chairman William E. Kennard, dated July 7, 1999 (ex parte submission in WT Docket No. 96-198).

²²³ 47 U.S.C. ? 151.
²²⁴ 47 U.S.C. ? 152.
²²⁵ 47 U.S.C. ?? 153(33), 153(51).

²²⁶          See, e.g., AccLiv. comments at 2-3; NAD comments at 16-17; NCOD comments at 1-2; Kear comments at 2; Mulvany comments at 3; Nelson comments at 3; Vickery comments at 2-3; MiATC comments at 2; Illinois Deaf and Hard of Hearing Commission comments at 3-4; DDTP comments at 4-5; CPB/WGBH National Center for Accessible Media comments at 6,  LaPointe comments at 2-3, Janes comments at 3;  ACB comments at 4; WID comments at 4-5; Lake County Center for Independent Living comments at 3-4; Dietrich comments at 1; Ireland comments at 2; The Lighthouse comments at 2; UCPA comments at 3-4; AFB comments at 6-8; Oklahoma Department of Rehabilitation Services comments at 2-3.
²²⁷        See, e.g., Petition for Emergency Relief and Declaratory Ruling Filed by the BellSouth Corp., 7 FCC Rcd. 1619 (1992) (ruling that the Georgia Public Service Commission was preempted from interfering with BellSouth's provision and marketing of voicemail service under the terms and conditions set forth in its FCC-approved CEI plan).

²²⁸ See Amendment of Section 64.702 of the Commission's Rules and Regulations (Second Computer Inquiry), Memorandum Opinion and Order,  84 FCC 2d 50 at ? 144, (1980).

²²⁹ Computer and Communications Industry Association, 693 F.2d at 213.

²³⁰        See, e.g., Blackseth comments at 1; Dietrich comments at 1; Garretson comments at 3; Hoshauer comments at 1;  Ireland comments at 2; Janes comments at 3; Kear comments at 2 ; LaPointe comments at 2-3; MiATC comments at 1; Nelson comments at 2;  PCEPD comments at 2-4; CDC comments at 1-2; OKDRS comments at 1; NCOD comments at 1-2; SHHH comments at 6; TDI comments at 8; LICIL comments at 3; AIM comments at 1; SHHH reply comments at 16-17; TDI reply comments at 5; Kailes comments at 3; CCDI comments at 2-3; Mulvaney comments at 3; Vickery comments at 3; AIM comments at 1; AFB comments at 9; Born comments at 2; Witkin comments at 1; DeVilbiss comments at 2; AccLiv comments at 3; MoGCD comments at 3; ACB comments at;  CPB/WBGH comments at 6; ILDEAF comments at 3-4; IDHS comments at 3; LDA comments at 2;  CILNM comments at 3-4; Lake County comments at 1; SIL comments at 3-4; NAD comments at 15-16; NCD comments at 10; WI-TAN comments at 4; WID comments at 4; UCPA comments at 11.
²³¹        COR reply comments at i.
²³²        APT reply comments at 4.
²³³        BUTLER comments at 2; CFILC comments at 2; CDR comments at 2; CCDI comments at 1 (noting statute affects 54 million Americans with disabilities); Eleoff comments at 1; Huber comments at 1; Mitchell comments at 1; NC -ATP comments at 1; Radke comments at 1 (fully employed person with quadriplegia who has relied on advanced telecommunications for opportunities to learn, work and participate in the community);   Mutuum comments at 2 ("You might as well call all nourishment except bread and water 'enhancement'."); CNMI comments at 1-2;  Andrews comments at 2.
²³⁴        UCPA comments at 11.

  People with disabilities have been terribly affected by such lack of access; many menus offer no option to connect with a human operator and they remain cut off from communication.  They thus remain in the dark about how to fix their products and how to access other important information from private enterprises. ²³⁶

²³⁵        Dietrich comments at 1; Ireland comments at 2; Janes comments at 3; Kear comments at 2; LaPointe comments at 2-3 ; MiATC comments at 1; OK-DRS comments at 1 ; NCOD comments at 1-2; SHHH comments at 6; TDI comments at 8; LICIL comments at 3; AIM comments at 1; SHHH reply comments at 16-17; TDI reply comments at 5; Lapointe reply comments at 1; Kailes comments at 3; Mulvaney comments at 3; Vickery comments at 3; AIM comments at 1; AFB comments at 9; Born comments at 2; Witkin comments at 1; DeVilbiss comments at 2; AccLiv comments at 3;  ACB comments at 4;  CPB/WBGH comments at 6; ILDEAF comments at 3-4; LDA comments at 2;  CILNM comments at 3-4; Lake County comments at 1; SIL comments at 3-4; NAD comments at 15-16; NCD comments at 10; WI-TAN comments at 4; WID comments at 4.
  ²³⁶     Mulvaney comments at 3

²³⁷        See, e.g., Ireland comments at 2 ("Voice mail and automated voice response systems, so common today, are impossible for many hard of hearing people to understand.  Ears affected by hearing loss, even when properly fitted with hearing aids, cannot process sound as quickly as normal ears; by the time the first word or two are deciphered, the speaker is already on to the next sentence.")
²³⁸        CILMN comments at  3-4.
²³⁹        A number of carriers have made a similar point in comments submitted in other proceedings where they have argued that various messaging services are "integral" to the telecommunications services provided by the carrier, and that services such as voicemail therefore should be treated differently than other information services.  (Petition of Bell Atlantic at 7-8, Petition of NTCA at 6-7, Petition of Primeco at 6-7, Petition of SBC at 7, Petition of TDS at 6, filed in Telecommunication Carriers' Use of Customer Proprietary Network Information and Other Customer Information, CCB Docket 96-115 (CPNI Proceeding)).

²⁴⁰ Southwestern Cable, 392 US at 175-77.

²⁴¹        BSA reply comments at 3-4; CEMA comments at 9; CTIA reply comments at 10; GTE comments at 3; ITI comments at 9; Microsoft reply comments at 7-8; PCIA reply comments at 4-5; SBC reply comments at 2,4; SBC comments at 3; Sprint reply comments at 3-4; TIA reply comments at 43; USA comments at 4.
²⁴²        Mobile Communications Corp. of America v. FCC, 77 F.3d 1399, 1404-05 (D.C. Cir. 1996 (citiations omitted)), cert. denied Mobile Telecommunication Technologies Corp. v. FCC, 519 U.S. 823 (1996).
²⁴³       47 U.S.C. ? 309(j)(13)(D)(iv).

²⁴⁴        Mobile Communications Corp. of America, 77 F.3d at 1404 (citation omitted).
²⁴⁵        Id at 1405 (citation omitted).
²⁴⁶        Id.

 ²⁴⁷       In United Video, Inc. v. FCC, 890 F.2d 1173, 1183 (D.C. Cir. 1989), the court also sustained our ancillary jurisdiction in the face of an argument akin to expressio unius. At issue was the FCC's syndicated exclusivity rule, which was predicated upon our section 303(r) powers and ancillary jurisdiction.   Petitioners had suggested that any such authority was constrained by the enactment of the 1984 Cable Act. Because the Cable Act did not affirmatively authorize the syndex rules, petitioners argued that they were impermissible.  The court disagreed: "[the syndex rules]  clearly fall within the Act's general authority, the regulation of interstate and foreign communication by wire or radio... [and] were reasonably adopted in furtherance of a valid communications policy goal.  Hence, they fall under the Commission's section 303(r) powers unless they are 'inconsistent with law'." Id.  Thus, even where Congress has enacted legislation addressing a subject, that does not bar the Commission from using its ancillary jurisdiction where reasonably required to further a valid statutory goal - - in this case, the effective implementation of sections 255 and 251(a)(2).

 108.  Our assertion of ancillary jurisdiction is thus discrete and limited.  Consequently, we dismiss the contention that including even a single  information service under our accessibility and usability rules could lead to the full-scale regulation of entities providing information services, such as Internet Service Providers.²⁴⁸   Nor can we credit the argument that extension of these provisions through ancillary jurisdiction will chill innovation, resulting in less accessibility not more.²⁴⁹   We do emphasize, however,  that our decision to apply these accessibility obligations to two discrete information services does not alter the regulatory classification afforded these services.  Nor is it our intent by this action to apply any additional provisions of the Act to providers and manufacturers of voicemail and interactive menu services and equipment.  Thus, as a general matter, we are not altering our past or current treatment of information services.

²⁴⁸        BSA reply comments at 4-5.
²⁴⁹        ITI reply comments at 11-12; Microsoft reply comments at 4-5; Sprint reply comments at 4.

 4. Several parties have urged that we explicitly recognize that our common carrier regulatory jurisdiction cannot be extended to data processing services, as such.³ Since we are not proposing, at this time, to regulate data processing, as such, a discussion of the extent of our jurisdiction with respect thereto is neither relevant nor necessary for purposes of this Decision and the rules promulgated herein. However, we wish to reiterate that:

 ... (If) there should develop significant changes in the structure of the data processing industry, or, if abuses emerge which require the exercise of corrective action by the Commission, we shall not hesitate to re-examine the policies set forth herein. (Tentative Decision, para. 23).

 30.It should be made clear that we are not seeking to regulate data processing as such, nor are we attempting to regulate the substance of any carrier's offerings of data processing. Rather, we are limiting regulation to requirements respecting the framework in which a carrier may publicly offer particular non-regulated services, the nature and characteristics of which require separation before predictable abuses are given opportunity to arise. Additionally, the success of our regulatory scheme is dependent upon a uniform application of our safeguards irrespective of the technical legal status of any carrier or the particular geographic community which it serves.
--In The Matter Of Regulatory And Policy Problems Presented By The Interdependence Of Computer And Communication Services And Facilities, Docket No. 16979, Final Decision and Order, 1971 WL 22948 (FCC), 21 Rad. Reg. 2d (P & F) 1591 (March 18, 1971) (Computer I).

Regulatory Restraint

  Even assuming that the rules in question initially were justified . . . it is plain that that justification has long since evaporated.  The Commission's general rulemaking power is expressly confined to promulgation of regulations that serve the public interest.  . . . Even a statute depending for its validity upon a premise extant at the time of enactment may become invalid if subsequently that predicate disappears.

Common Carrier Offering of Enhanced Services

Computer I

 27. On the other hand, certain of the carrier respondents contend that the Commission does not possess the necessary legal power to prevent communications common carriers from providing data processing services. We recognize that these conflicting contentions raise a question of the nature and extent of our legal power over the provision of data processing services by common carriers, to which we will now address ourselves.
 27a. First, as already noted, there is no specific provision which bars a common carrier from providing non-regulated services and that many carriers do, in fact, provide such services. It does not follow, however, that the Commission may not exercise its jurisdiction over carriers to prescribe appropriate conditions for engaging in nonregulated services or to prohibit the furnishing of such services where such activities burden or impair their common carrier communications obligations.
 28. In this connection, we are aware that the Communications Act grants a broad range of powers to the Commission with respect to carriers subject to its jurisdiction in order to effectuate the policies and objectives of the Act. Thus, the Commission has the power to require a common carrier to furnish interstate communications service 'upon reasonable request therefor,' 47 U.S.C. 201(a); to determine what are just and reasonable common carrier charges, practices, classifications and regulations for and in connection with interstate communication, and to prescribe such rules and regulations as are 'necessary in the public interest' to assure the justness and reasonableness of all such charges, practices, classifications and regulations, 47 U.S.C. 201(b); to prevent unjust discrimination for or in connection with any such interstate service, 47 U.S.C. 202(a); to prescribe just, reasonable and non-discriminatory common carrier charges, practices, classifications and regulations; and to issue appropriate orders with respect thereto, 47 U.S.C. 205(a); to control the acquisition, extension, construction or operation of lines by common carriers and to impose conditions in certificates and authorizations issued to common carriers for such lines as the public convenience and necessity may require, 47 U.S.C. 214(a) and (c); to examine transactions entered into by common carriers which may affect charges or services, 47 U.S.C. 215(a); to classify common carrier radio stations and prescribe the nature of the services to be rendered by each such class, 47 U.S.C. 303(a) and (b); to assess the value of all of the properties of a carrier, 47 U.S.C. 213; to deny common carrier radio applications, after hearing, upon a finding that the public interest, convenience or necessity would not be served by a grant thereof, 47 U.S.C. 309; to modify, after hearing, existing common carrier radio authorizations if public interest, convenience, or necessity would be served thereby, 47 U.S.C. 316; to prescribe the accounting and reporting to be performed by common carriers; 47 U.S.C. 220; and to adopt rules and regulations and issue orders consistent with the Act as may be necessary in the execution of the Commission's functions, 47 U.S.C. 154(i). Moreover, it is well settled that the Commission, in executing its statutory obligations, is required to consider and evaluate all relevant factors, including national policies relating to competition, monopolies or combinations, contracts or agreements in restraint of trade and, in the case of Sections 2, 3 and 7 of the Clayton Act, to enforce those statutes in their application to common carriers subject to the Commission's jurisdiction. 47 U.S.C. 602(d).
 29. From the foregoing, it is clear that we have the power necessary to insure that common carriers provide efficient and economical communications services. Thus, if the provision of data processing services by a common carrier were to have a substantial adverse effect upon the provision of regulated common carrier communication services or otherwise resulted in an impairment or lessening of competition, we could take such corrective action as we found necessary to insure that the required communication services are furnished, 47 U.S.C. 201(a), 214(d). Upon consideration of the totality of these powers and authority, we conclude that we have ample jurisdiction to bar carriers from providing data processing services upon a proper finding that it would prevent them from discharging their common carrier responsibilities in a manner consistent with the standards and objectives of the Communications Act. We, therefore, also have the jurisdiction and authority to surround the provision of these services with such appropriate safeguards as may be necessary to carry out the policies and objectives of the Communications Act.
--In The Matter Of Regulatory And Policy Problems Presented By The Interdependence Of Computer And Communication Services And Facilities, Docket No. 16979, Tentative Decision (April 3, 1970)
 
 

• Jurisdiction of Internet Transmission Facilities

1. Internet Access as Local

In the Access Charge Reform Order, the Commission decided to maintain the existing pricing structure pursuant to which ESPs are treated as end users for the purpose of applying access charges.[15] Thus, the Commission continues to discharge its interstate regulatory obligations by treating ISP-bound traffic as though it were local.

[fn15]Access Charge Reform Order, 12 FCC Rcd at 16133-34. On August 19, 1998, the U.S. Court of Appeals for the Eighth Circuit affirmed the Commission's Access Charge Reform Order. Specifically, the court found that the Commission's decision to exempt information services providers from the application of interstate access charges (other than SLCs) was consistent with past precedent, did not unreasonably discriminate in favor of ISPs, did not constitute an unlawful abdication of the Commission's regulatory authority in favor of the states, and did not deprive incumbents of the ability to recover their pertinent costs. Southwestern Bell Telephone Co. v. FCC,

153 F.3d 523, 542 (8th Cir. 1998).

--In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling ¶ 5 (February 26, 1999)
 
 

1. Reciprocal Compensation

   
1. R Comp Even Where Internet = Interstate

Switched network telephone calls to Internet service providers are inherently interstate, which is the decision most consistent with our prior creation of an ESP exemption from interstate access charges -- and with the interstate and international nature of the Internet. But to say this is not to overrule, undermine, or prevent state commission decisions that construe interconnection agreements to require reciprocal compensation for ISP-bound traffic. It was, and remains, reasonable for the states (and federal district courts) to so rule, given our prior decisions -- and the practices of the ILECs themselves -- to treat this traffic as local.

-- In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling, Sep Statement of Commissioner Ness (February 26, 1999)
 
 

As we stated previously, the Commission currently has no rule addressing the specific issue of inter-carrier compensation for ISP-bound traffic. In the absence of a federal rule, state commissions that have had to fulfill their statutory obligation under section 252 to resolve interconnection disputes between incumbent LECs and CLECs have had no choice but to establish an inter-carrier compensation mechanism and to decide whether and under what circumstances to require the payment of reciprocal compensation. Although reciprocal compensation is mandated under section 251(b)(5) only for the transport and termination of local traffic, neither the statute nor our rules prohibit a state commission from concluding in an arbitration that reciprocal compensation is appropriate in certain instances not addressed by section 251(b)(5), so long as there is no conflict with governing federal law. A state commission's decision to impose reciprocal compensation obligations in an arbitration proceeding -- or a subsequent state commission decision that those obligations encompass ISP-bound traffic -- does not conflict with any Commission rule regarding ISP-bound traffic. By the same token, in the absence of governing federal law, state commissions also are free not to require the payment of reciprocal compensation for this traffic and to adopt another compensation mechanism.

27. State commissions considering what effect, if any, this Declaratory Ruling has on their decisions as to whether reciprocal compensation provisions of interconnection agreements apply to ISP-bound traffic might conclude, depending on the bases of those decisions, that it is not necessary to re-visit those determinations. We recognize that our conclusion that ISP-bound traffic is largely interstate might cause some state commissions to re-examine their conclusion that reciprocal compensation is due to the extent that those conclusions are based on a finding that this traffic terminates at an ISP server, but nothing in this Declaratory Ruling precludes state commissions from determining, pursuant to contractual principles or other legal or equitable considerations, that reciprocal compensation is an appropriate interim inter-carrier compensation rule pending completion of the rulemaking we initiate below.

-- In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling ¶ 26 (February 26, 1999)
 
 

In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling (February 26, 1999)

Section 251 (d)(5) of the Communications Act of 1934 as amended
 
 

2. No R Comp IP Rule Prior to 1999 Order

The Commission has no rule governing inter-carrier compensation for ISP-bound traffic. -- --In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling ¶ 9 (February 26, 1999)
 
 

3. R Comp Policy Driven By IP Characteristic

• Internet Access as Interstate

U.S. v. MacEwan, No. 05-1421 (3rd Cir. April 5, 2006) (use of Internet is interstate and therefor satisfies the interstate commerce element of federal law - the Internet is “a channel and instrumentality of interstate commerce”)

"In an Order released October 30, 1998, we concluded an investigation of a new access offering filed by GTE that GTE calls its DSL Solutions-ADSL Service (ADSL service). We found that this offering, which permits Internet Service Providers (ISPs) to provide their end user customers with high-speed access to the Internet, is an interstate service and is properly tariffed at the federal level." -- In Re GTE Telephone Operators GTOC Tariff No. 1 GTE Transmittal No. 1148, Memorandum Opinion And Order, CC Docket No. 98-79 ¶ 2 (February 26, 1999).

Switched network telephone calls to Internet service providers are inherently interstate, which is the decision most consistent with our prior creation of an ESP exemption from interstate access charges -- and with the interstate and international nature of the Internet. --In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling, Sep Statement of Commissioner Ness (February 26, 1999)
 
 

Specifically, based on the long inquiry that has led to our action today, I agree with the majority that LEC-to-LEC Internet-bound traffic is properly classified as jurisdictionally interstate. --In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling, Sep Statement of Commissioner Powell (February 26, 1999)
 
 

Although the Commission has recognized that enhanced service providers (ESPs), including ISPs, use interstate access services,[9] since 1983 it has exempted ESPs from the payment of certain interstate access charges.[10]

[fn9]See, e.g., MTS and WATS Market Structure, CC Docket No. 78-72, Memorandum Opinion and Order, 97 FCC 2d 682, 711 (1983) (MTS/WATS Market Structure Order</