On Dec. 4, 2012, the United States Court of Appeals for the District of Columbia Circuit issued a 30-page order upholding the FCC’s 2011 decision to require data roaming for wireless Internet providers. Verizon Wireless had appealed the order, asserting that because the Communications Act only provided for roaming for common carriers, not for other entities providing wireless Internet service on a non-common carrier basis, the FCC had exceeded its authority. The court rejected Verizon’s argument. In unanimously upholding the FCC the court found that, because wireless Internet providers are “radio” licensees, the Commission has broad discretion under the Communications Act to determine the duties associated with holding a “radio” license. Data roaming is one of those duties.
While voice roaming has been exclusively a common carrier duty, the court said that because roaming itself is not by its nature a common carrier service, the FCC was free to impose a roaming obligation for non-common carrier radio license holders. The underlying FCC decision showed that smaller, often rural, wireless companies could not reach voluntary roaming agreements with the largest carriers, Verizon and AT&T, and this fact may have been a significant factor in the Commission’s and the court’s decision.
Under the FCC’s order, incumbents are required to offer “commercially reasonable” rates – a standard different from the common carrier requirement of “just and reasonable” nondiscriminatory rates. Thus, the court concluded that the FCC had not improperly applied common carrier requirements on non-common carriers. While the court conceded that the difference between common carriers and private carriers is a “grey” area, the court found that the FCC’s data roaming requirements were not tantamount to imposing common carrier requirements on wireless providers.
The case is also significant because the same federal circuit court of appeal will be reviewing the FCC’s network neutrality order in January 2013. Some observers had expected that this data roaming case would provide cues as to the degree of deference that the court might accord to the FCC in the separate net neutrality appeal. Instead, however, the D.C. Circuit’s ruling in the data roaming appeal here emphasized that the radio sections of the Communications Act (frequently referred to as Title III of the Act) provide ample authority for imposing data roaming on wireless carriers. By contrast, the FCC’s net neutrality order is not limited to wireless services, so the firm footing of FCC authority here associated with its power over Title III “radio” licenses does not translate to broadband internet rules that have nothing to do with Title III.
The court, however, did caution the FCC that in resolving pricing disputes, the Commission should not turn “commercially reasonable” into distinct and independent common carrier pricing requirements of “just and reasonable.” If so, Verizon could return to court and challenge the Order on an “as applied” basis — arguing that while the FCC order indicated that the Commission would not treat data roaming as a common carrier requirement, the Commission, in fact was doing just that in the manner that it applied its order.