Flat Wireless, LLC v. FCC ( 2019 )

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FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 27, 2019 Decided December 10, 2019
No. 18-1271
FLAT WIRELEss, LLC,
PETITIoNER
V.
FEDERAL CoMN[uI.ITcATIoNs CoMMIssIoN AN]) UNITED
STATES OF AIvIERICA,
RESPONDENTS
CEELc0 PARTNERsHIP, DOING BUSINESS AS VERIz0N
WIRELESS,
INTERVENOR
Consolidated with 18-1273
On Petitions for Review of an Order of
the Federal Communications Commission
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Donald I Evans argued the cause for petitioners. With him
on the briefs was Keenan F. Adamchak.
Ashley S. Boizelle, Deputy General Counsel, Federal
Communications Commission, argued the cause for respondents.
On the brief were Robert B. Nicholson and Robert I Wiggers,
Attorneys, U.S. Department of Justice, Thomas M Johnson Jr.,
General Counsel, David li Gossett, Deputy General Counsel,
RichardK Welch, Assistant General Counsel, and C. Grey Fash
Jr., Counsel. Jacob li Lewis, Associate General Counsel,
Federal Communications Commission, and Matthew J. Dunne,
Counsel, entered appearances.
David L. Haga argued the cause for intervenor-appellee.
With him on the brief was Christopher li IVfiller.
Before: TATEL and GRIFFITH, Circuit Judges, and
SILBERMAN, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
SILBERMAN.
SILBERMAN, Senior Circuit Jitdge:’ Wireless service
providers F Tat Wireless and NTCH, Inc. (apparently its full
name) challenge the FCC’s order approving rates that Verizon
offered to Flat for both voice and data roaming. They insist that
Flat should not pay Verizon much above Verizon’s costs of
NOTE: Portions of this opinion contain sealed information,
which has been redacted.
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providing those services. Flat’s challenge—NTCH’s petition is
not properly before us2—largely runs counter to Commission
rules that deliberately eschew cost-based regulation of roaming
rates. flat nonetheless asserts that its challenge is not to the
rules themselves but to how the FCC applied the rules to
Verizon’s proffered rates. Either way, we reject Flat’s petition.
I.
We have explained previously that a roaming rate is the
charge that wireless provider A pays when its own subscriber
travels beyond the range of that provider’s network and must use
the network of wireless provider B for voice or data services.
See NTCFL Inc. v. FCC, 877 F.3d 408, 410 (D.C. Cir. 2017).
Voice roaming permits subscribers to make calls when outside
their provider’s geographic coverage area; data roaming does the
same for internet access. Id.
The Commission issued rules (paradoxically, the FCC
traditionally calls them orders) in 2007 and 2010 to govern voice
2NTCK was not a party to flat’s complaint against Verizon, so it
is not a “party aggrieved” by the Commission’s order denying that
complaint, which is the subject of these petitions. 28 U.S.C. § 2344;
see Id. § 2342(1); 47 U.S.C. § 402(a); Simmons v. ICC, 716 F.2d 40,
42 (D.C. Cir. 1983). NTCH did file a separate complaint and a request
for discoveiy of Verizon’s costs, both of which were denied by the
Commission’s Enforcement Bureau. The full Commission denied
NTCH’s appeal of the discovery issues in the course of adjudicating
Flat’s complaint, but that decision did not make NTCH a “party” to
the flat case. Nor did the Commission address NTCH’s own
complaint: NTCH never appealed the denial of its complaint by the
Bureau to the full Commission.
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roaming,3 and then followed with a similar rule covering data
roaming in 2011 The Voice Roaming Rules leave it to wireless
.‘
providers to negotiate voice roaming rates, so long as they offer
the service on a just, reasonable, and non-discriminatory basis.”
22 FCC Rcd. at 15817 ¶ 1; see 47 U.S.C. § 20 1—202. The
Commission also provided a non-exhaustive list of factors it
might consider if it were obliged to resolve disputes over voice
roaming. See 25 FCC Rcd. at 4200—01 ¶J 39—40. The Data
Roaming Rule similarly permits individual negotiations,
requiring that providers offer data roaming service on
‘commercially reasonable terms and conditions.” 26 F CC Rcd.
at 5411 ¶ 1.
* * *
Flat filed a complaint against Verizon with the Commission
in 2015 alleging that Verizon’s proffered roaming rates (for both
voice and data) violated the Commission’s rules. Essentially,
F tat argued that Verizon’s rates are unreasonable because its
costs of providing roaming allegedly are far lower than the rates
it charges. The Commission refused to consider Verizon’s costs
in accordance with its regulations and denied Flat’s complaint.
See In the Matter of flat Wireless, LLC v. Ceilco F ‘Ship d/b/ct/
Verizon Wireless, 33 FCC Red. 7972 (2018). The FCC
31n the Matter of Reexamination of Roaming Obligations of
Commercial Mobile Radio Service Providers, 22 FCC Rcd. 15817
(2007); In the Matter of Reexamination of Roaming Obligations of
Commercial Mobile Radio Service Providers and Other Providers of
Mobile Data Services, 25 FCC Rcd. 4181 (2010).
41n the Matter of Reexamination of Roaming Obligations of
Commercial Mobile Radio Service Providers and Other Providers of
Mobile Data Services, 26 FCC Red. 5411(2011).
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reiterated that its rules eschewed direct rate regulation in favor
of individual negotiations to determine market-driven rates. Id.
at 7980. The Commission, in any event, observed that the rates
Verizon offered to Flat were within the range of rates that
Verizon charges others;
Id at 7977, 7979. Indeed, the Commission noted that
those rates were rates that Verizon itself pays
when its own customers roam on other networks. Id at
7976—77. The Commission also repeated its explanation
accompanying the Voice and Data Roaming Rules that relatively
high roaming rates will encourage carriers to build out their own
networks instead of “piggy-backing” on others. Id at 7978 n.63.
Flat now petitions this court for review.
II.
A.
Flat’s primary contention is that the Commission should
have required Verizon to offer roaming rates closer to its
costs—an approach Flat says is consistent with the Voice and
Data Roaming Rules. The Commission, of course, repeats its
rationale for rejecting direct rate regulation and insists that flat’s
appeal to costs amounts to a collateral attack on the Voice and
Data Roaming Rules. At oral argument, however, Flat’s counsel
disclaimed any challenge to the rules themselves, claiming that
flat objected merely to how they were applied given current
market conditions (i.e., that the roaming market allegedly is non
competitive).
It is obvious to us that the Voice and Data Roaming Rules
rejected cost-based regulation and that Flat’s challenge,
notwithstanding its denial, is largely a collateral attack on those
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rules. In the 2007 Voice Roaming Rule, the Commission
expressly “decline[d] to impose a price cap or any otherform of
rate regulation” on voice roaming rates. 22 FCC Rcd. at 15832
¶ 37 (emphasis added); see id at 15824 ¶ 18 (“We decline to
regulate the automatic roaming rates . . . .“). Instead, the
Commission opted to allow rates “to be freely determined
through negotiations between the carriers based on competitive
market forces.” Id at 15824 ¶ 18. The 2010 Voice Roaming
Rule sets out a number of factors the Commission may consider
when resolving disputes over voice roaming rates. 25 FCC Rcd.
at 4200—01 ¶ 39. Though that list is not “exclusive or
exhaustive,” any reference to a carrier’s costs of providing
roaming is conspicuously absent. Id. at 4201 ¶ 40; see also 26
FCC Rcd. at 5452—53 ¶ 86—87 (same for Data Roaming Rule).
The 2010 Voice Roaming Rule explicitly notes that the
price of voice roaming might be “relatively high” compared to
what it would cost a wireless service provider to build out its
own network facilities. 25 FCC Rcd. at 4197 ¶ 32. That
“relatively high” price, the Commission reasoned, is a feature,
not a bug: high foaming rates may help deter service providers
from “piggy-backing” on other networks where they could
otherwise improve their own network facilities. See id; see also
22 FCC Rcd. at 15833 ¶ 40. Flat insists that there is no risk of
piggy-backing in its case, but the point is that the Voice and
Data Roaming Rules contemplate “relatively high” roaming
rates approvingly. That posture is at odds with the cost-plus-
reasonable-rate-of-return approach Flat advocates. The 2011
Data Roaming Rule makes the same point about piggy-backing,
and in it the Commission rejected “a more specific prescriptive
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regulation of rates requested by some commenters.” 26 FCC
Rcd. at 5423 ¶21.
In Flat’s view, the Commission should nevertheless
consider costs when evaluating roaming rates because the
roaming market is less competitive than it once was. The
problem for Flat is that the Hobbs Act limits direct challenges to
FCC rules to within sixty days after their issuance. See 2$
U.S.C. § 2344, 2342(l); 47 U.S.C. § 402(a). And we have
explained that a challenge to a rule otherwise governed by a
statutory limitations period ordinarily cannot be raised out-of-
time in an adjudication, see Tribune Co. v. FCC, 133 F.3d 61,
68—69 (D.C. Cir. 199$), unless the rule is claimed to conflict
with governing statutes or the Constitution. See Weaver v. Fed
Motor Carrier Safety Admin., 744 F.3d 142, 145 (D.C. Cir.
2014) (collecting cases). That means challenges to procedural
irregularities, underlying facts, or agency responses to
comments in rulemaking must be presented in a timely direct
challenge to such a rule. See NLRB Union v. Fed. Labor
Relations Auth., $34 F.2d 191, 195—97 (D.C. Cit. 1987)
(distinguishing between attacks on a rule’s “substantive
validity” and its “procedural lineage,” Id. at 195); cf US. v.
Nova Scotia food Prods. Corp., 56$ F.2d 240, 250—53 (2d Cir.
1977) (reviewing procedural challenges to a rule not subject to
a statutory limitations period in an enforcement proceeding). If
a party later believes that such a rule’s underlying factual
assumptions are incorrect either because they were originally
incorrect or because the facts have changed, the appropriate
avenue for relief is a petition for rulemaking. See Tribune Co.,
5The “commercially reasonable” standard adopted in the 2011
Data Roaming Rule ensures providers even more freedom than does
the ‘just and reasonable” standard that governs voice roaming. Celico
P ‘shzp v. FCC, 700 F.3d 534, 548 (D.C. Cir. 2012).
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133 F.3d at 68—69. Accordingly, the Commission lawfully
declined to reconsider the wisdom of the Voice and Data
Roaming Rules in the context of Flat’s complaint proceeding.
Putting aside Verizon’s costs, the Commission’s
determination that Verizon’s proffered voice roaming rate is not
unreasonable, still less discriminatory, is well supported.
Verizon offered Flat a rate of I for
voicer ‘.AstheCommissi
ihat rate also
amounts to a t’s current voice
roaming rate And Verizon
itself pay
] Verizon’s ofier i well
wit.n the range ot rates it has negotiated with numerous other
providers.
Flat counters that Verizon’s proffered voice roaming rate is
unreasonably discriminatory in that Verizon failed to justify
charging Flat anything above the very lowest rate that Verizon
offers to others. But the Voice Roaming Rules contemplate
variations in negotiated rates, see, e.g., 22 FCC Rcd. at 15834
¶ 44, and our decisions permit that outcome. Providers are not
required to file tariffs listing their rates for wireless voice
services, and as a result, we have reasoned that providers do not
unreasonably discriminate simply because they charge
customers different prices. See Orloffv. FCC, 352 F.3d 415,
418—20 (D.C. Cir. 2003). Here, the Commission legitimately
relied on the Voice Roaming Rules’ recognition of the benefits
of the free market to explain Verizon’s differential pricing. See
33 FCC Rcd. at 7977. It also noted that Flat has relatively little
to offer Verizon in terms of reciprocal roaming, which further
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explains why Verizon might not offer Flat its Lowest roaming
rates. IcL That justification was adequate.
The Commission’s determination that Verizon’ s data
roaming rates are commercially i onable is also well
supported. Verizon offered Flat a rate
To all of this, Flat responds that Verizon’s rates are
unreasonable because they exceed what Verizon allegedly
charges for voice and data services to customers in one of
Verizon’s retail plans and to certain wireless service resellers
with whom Verizon contracts. But, as the Commission pointed
out, Flat’s calcctlation of the rates” offered in the retail plan was
faulty, ‘i the rate i”’ Flat relied1
.i i-u. icd. at i agree with the
mmission that Flat’s “cherry-picked” comparisons do not
6As the Commission put it, “IxRTT and EVDO are wireless
network technologies, and EVDO enables data transmission over
wireless networks at a faster rate than 1xRTT.” 33 FCC Rcd. at 7975
n.29.
73y implication, this evidence also contradicts Flat’s contention
that Verizon’s proffered rates were tantamount to a refusal to offer a
data roaming arrangement. See 26 FCC Red. at 5453 ¶ 86.
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undercut the reasonableness of Verizon’s proffered roaming
rates. 33 FCC Rcd. at 7980; see Id. at 7980—81.
B.
flat does make an additional argument that challenges the
Commission’s application of the Voice and Data Roaming
Rules rather than the rules themselves. It asserts that
comparisons to Verizon’s agreements with other carriers are
useless because Verizon exercises market power. ft is claimed
that only Sprint represents a possible roaming alternative for
companies like Flat that use CDMA technology, and Sprint’s
network is not anywhere near as extensive as Verizon’s. Since
Verizon’s network is huge and indispensable for CDMA
roaming, so the argument goes, the fact that Verizon’s proffered
roaming rates are comparable to what it charges to other carriers
is not significant. Put differently, Verizon’s alleged monopoly
power hurts all carriers.
If Flat is right, that state of affairs would undercut the
Commission’s reliance on Verizon’s other roaming agreements,
and it would support Flat’s claim cinder the Data Roaming Rule
because, obviously, conduct that unreasonably restrains trade is
not “commercially reasonable.” 26 FCC Rcd. at 5452 ¶ 85. But
we agree with the Commission that Flat has failed to support its
claim. Flat relied primarity on Verizon’s and Sprint’s coverage
maps and a declaration by Flat’s CEO, Kevin Beierschmitt.
Beierschmitt testified that given Verizon’s large national
footprint, “in many parts of the country there is no realistic
alternative to [Verizon] as a roaming partner for Flat’s
customers. There is either [Verizon] or nothing.” Beierschrnitt
discounted the viability of Sprint as an alternative to Verizon in
the Texas roaming market because of alleged gaps in Sprint’s
coverage and dropped calls on its network. General statements
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comparing the strength of Verizon’s coverage to that of Sprint,
however, do not demonstrate that Verizon has market power or
that it has exercised it in a way to eliminate competition.
Importantly, as the Commission concLuded, Flat did not identify
any specific market in which Verizon is its only available
roaming partner. Even Beierschrnitt’ s discussion of Sprint’s
spottiness in Texas does not address the potential for Flat to
roam on other smalLer carriers’ networks. So without more,
Flat’s theory of uniform monopoly pricing on Verizon’s part
remains only an assertion without adequate supporting
evidence.8
In any event, we note that competition in voice and data
roaming markets may be on the rise with the steady spread of
LTE technoLogy. In the past, wireless service providers have
routinely employed either CDMA technology (used by Verizon
and Sprint) or GSM technology (used by AT&T and T-Mobile).
Mobile devices are usually compatible with only one of the two,
and that state of affairs has often restricted roaming (and
competition for roaming) to carriers using like technologies.
But LIE traffic, Verizon explains, generally can be carried
across LTE networks regardless of whether a network otherwise
uses CDMA or GSM technologies. Competition in voice and
data roaming markets thus will increase over time as the old
division between CDMA and GSM technologies becomes
obsolete.
8Flat’s reliance on a declaration by Verizon ‘s economics expert
is not helpful to its case. The expert described circumstances where
monopoly power or the presence of a “must-have input” could render
comparisons to other roaming rates untrustworthy, but concluded that
those concerns were inapplicable here. And contrary to Flat’s
mischaracterization, the expert said nothing about Verizon’ s approach
to pricing.
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C.
We tackjurisdiction to consider Flat’s remaining challenge.
Unhappy with the “commercially reasonable” standard for data
roaming rates, Flat asks us to declare unlawful a portion of the
Commission’s 2015 Open Internet Rule9 that left that standard
in place. In that rule, the Commission classified broadband
Internet access service—including mobile data service—as a
Title II service subject to common carriage regulation, which is
more stringent. See 30 FCC Rcd. at 5743—44 ¶ 331. But the
Commission forbore from applying the Title II requirements to
data roaming, leaving the less demanding “commercially
reasonable” standard in place. Id at 5857—58 ¶ 524—526. It is
the latter standard that the FCC applied to the data roaming rates
in this case.’°
Unfortunately for flat, it separately asked the Commission
to reconsider the forbearance portion of the 2015 Open Internet
Rule, and that request was still pending when Flat petitioned this
court for t’eview of the present order denying Flat’s complaint
against Verizon. Our jurisdiction in this case extends only to
“final orders” of the Commission, 28 U.S.C. § 2342(1), and a
pending request for administrative reconsideration renders an
agency action nonfinal and unreviewable with respect to the
91n the Matter ofProtecting and Promoting the Open Internet, 30
FCC Rcd. 5601 (2015).
10Verizon offered the rates in question to Flat before the
Commission reclassified retail broadband Internet access service as a
Title I information service in 2018. See In the Matter of Restoring
Internet freedom, 33 FCC Rcd. 3 11(201 8), vacated in part on other
grounds, Mozilla Corp. v. fCC, 940 F.3d 1 (D.C. Cir. 2019) (per
curl am).
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party who made the request. Te1eSTAR, Inc. v. FCC, $88 F.2d
132, 133 (D.C. Cir. 1989) (per curiam). So Flat’s petition on the
forbearance question appears to have been incurably premature.
flat argues, however, that the 2015 Open Internet Rule and
the denial of flat’s complaint against Verizon are separate
decisions, and that nothing keeps it from pursuing a facial
challenge to the forbearance decision while simultaneously
pursuing adjudicatory relief To be sure, our cases applying the
“incurably premature” doctrine often involve a petitioner who
has sought agency reconsideration and judicial review of the
same underlying order. See, e.g., City ofNew Orleans v. SEC,
137 f.3d 638, 639 (D.C. Cir. 199$) (per curiam); Bellsouth
Corp. v. FCC, 17 F.3d 1487, 1488—89 (D.C. Cir. 1994);
Te1eSTAR, Inc., $88 f.2d at 133; United Transp. Union v. ICC,
871 F.2d 1114, 1116 (D.C. Cir. 1989). But not always. The
petitioners in Petroleum Communications, Inc. v. FCC, 22 f.3d
1164 (D.C. Cir. 1994), challenged a rule recently issued by the
Commission as unlawfully discriminatory—an argument one of
the petitioners had advanced in a separate adjudication still
pending before the agency. Id. at 1169, 1171 n.7. We noted that
it would “seem imprudent, to say the least, to pass on the
discriminatory application issue in this related case when the
allegedly discriminatory decision is nonfinal and may be altered
by the FCC at [the petitioner’s] behest.” Id. at 1171 n.7; see
also A irTouch Paging v. FCC, 234 F.3d 815, 818 (2d Cir. 2000)
(concluding a petition was incurably premature where the
petitioner had requested agency reconsideration of an identical
issue in a separate, still-pending proceeding). Flat’s forbearance
arguments in this proceeding are concededly a challenge to a
portion of the 2015 Open Internet Rule. We conclude the
petition on that issue was incurably premature becacise the 2015
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Open Internet Rule was nonfinal as to Flat and was still subject
to the Commission’s revision.’1
* * *
For the foregoing reasons, NTCH’s petition for review is
dismissed and Flat’s petition for review is denied.
So ordered
‘1Flat also cites our conclusion in AT&T Co. v. FCC, 97$ F.2d
727 (D.C. Cir. 1992), that the Commission cannot rely on the prospect
of future rulemaking to put off determining the merits of a legal claim
brought in an adjudication. See Id. at 731—32. But that proposition
doesn’t bear on the jurisdictional question here: whether an agency
order is “final” with respect to an issue that the petitioner has asked
the agency to reconsider elsewhere.