D.C. Circuit Affirms FCC Order Mandating Data Roaming Obligations for Mobile Service Providers

On Dec. 4, 2012, the U.S. Court of Appeals for the D.C. Circuit issued a decision affirming the Federal Communications Commission’s (FCC) 2011 Data Roaming Order (Data Roaming Order). As we have previously reported, the FCC Order imposed upon mobile-data service providers an obligation to offer roaming agreements to other such providers on “commercially reasonable” terms.

Roaming permits the subscribers of one mobile service provider to use the network of another provider when travelling outside of the service provider’s territory. Although roaming obligations have long applied to voice services, the FCC extended this obligation to mobile-data services based, in large part, on its authority under Title III of the Communications Act (the Act).

Verizon Wireless challenged the Data Roaming Order on several grounds. First, the company argued that the agency did not have sufficient authority under Title III of the Act to mandate such a rule. Second, the company also argued that the rule impermissibly subjects mobile data services, which are classified as “information services” under existing law, to common carrier regulations.

The D.C. Circuit rejected both arguments. With respect to the first argument, the court found that Title III “plainly empowers the [FCC] to promulgate the data roaming rule.” The court ruled that the data roaming mandate falls within the authority conferred by sections 303(b) and (r) of the Communications Act, which authorize the agency to “prescribe the nature of the service to be rendered” by licensees.

The court also rejected Verizon Wireless’ second argument, that the rule contravenes the Act’s prohibition against treating mobile service providers as common carriers. Here the court engaged in an extensive analysis of rulings defining the scope of common carrier obligations, concluding that common carrier duties fall within a range of obligations. Further, when such obligations fall within what the court described as a “gray area” such that “a given regulation might be applied to common carriers, [although] the obligations imposed are not common carriage per se” the court will defer to FCC determinations as to whether a rule does, or does not, confer common carrier status.

The DC Circuit’s decision to reject the “common carrier” argument (on facial grounds, but not “as applied”) is of broader interest because parties have made a similar argument in the ongoing legal challenge to the FCC’s Open Internet Order. But the court’s decision here is not dispositive of that appeal because litigants in that case are also challenging the FCC’s authority to regulate wireline broadband information services in the first place. The Data Roaming Order was upheld based upon the FCC’s authority under Title III to regulate spectrum, which is not the foundation on which the FCC imposed open Internet obligations on wireline broadband service providers.

Finally, the court’s action here may be seen as the basis for further action by the FCC to mandate interoperability standards in the 700 MHz bands (which providers are using to deploy LTE service). In its 700 MHz interoperability proceeding the FCC is considering a requirement for a unified band class across the Lower 700 MHz bands, which would support 4G roaming between carriers operating in the Lower 700 MHz band.

We are advising clients in this area and would be pleased to discuss at your convenience.