No. 10-9543 (10th Cir. Aug. 6, 2012)

On August 6, 2012, the United States Court of Appeals for the Tenth Circuit denied Qwest’s request for review of an FCC order which denied Qwest’s petition for regulatory forbearance “from unbundling obligations and dominant-carrier regulations pertaining to Qwest’s provision of mass-market services in the Phoenix [metropolitan statistical area]” under 47 U.S.C. § 160(a), holding that the Commission’s June 2010 Order denying regulatory forbearance to Qwest was “a reasoned and reasonable decision” and “was not ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.’” Qwest Corp. v. FCC, et al., No. 10-9543, slip op. at 23, 28 (10th Cir. Aug. 6, 2012).

The Tenth Circuit held that the Commission complied with the procedural requirements of Section 160(c) concerning petitions for forbearance and “rendered a reasoned decision [in writing] on the merits” within the statutorily prescribed time frame, and clarified that the petitioner, not the Commission, bears the burden of proof to show that a regulatory forbearance is necessary. Qwest Corp., No. 10-9543, slip op. at 24-26.

In addressing the merits of the case, the Tenth Circuit upheld the Commission’s decision to modify its analytical approach to forbearance petitions, finding the Commission’s shift in policy—from its two-prong test, which included the market share and coverage tests, to a market-power analytical framework, which requires delineation of “the relevant product and geographic markets and identif[ication of] market participants,” examination of market-share data, and consideration of “whether the potential for competitive market entry is sufficient to constrain an incumbent carrier’s ability to maintain prices above competitive levels”—was not arbitrary or capricious. Qwest Corp., No. 10-9543, slip op. at 15.

More specifically, the Court held that it was neither improper nor unreasonable for the Commission to exclude cut-the-cord (e.g, wireless voice services) data from being included in the same product market as wireline voice services where the Commission found that wireless voice services did not have a material price-constraining effect on wireline services. Qwest Corp., No. 10-9543, slip op. at 35-37.

Notably, notwithstanding the Commission’s exclusion of mobile wireless services data from the product market in this case, the Commission never made a final determination as to whether or not mobile wireless services currently, or will at some time in the future, belong in the same product market as residential wireline voice services.