Telcordia, Telco Groups Dispute Neustar Challenge to FCC LNPA Decision

A federal court should deny Neustar’s challenge to an FCC decision giving Telcordia conditional rights to be the next local number portability administrator (LNPA), argued intervenors CTIA, Telcordia and USTelecom. The FCC in March reasonably rejected LNPA incumbent Neustar’s argument that Telcordia wouldn’t be a neutral administrator, the intervenors said in their brief Thursday to the U.S. Court of Appeals for the D.C. Circuit in Neustar v. FCC, No. 15-1080. They said it was undisputed that Telcordia met the first two prongs of a three-prong neutrality test: that it isn't affiliated with a telecom carrier and that it doesn’t receive most its revenue from, or issue most of its debt to, such a carrier. On the third prong, they disputed Neustar's argument that Telcordia would be subject to “undue influence” by an entity with a vested LNPA interest because its parent Ericsson had contacts with Sprint and T-Mobile. The FCC found no evidence of such undue influence, the intervenors said, but as a precaution it imposed “numerous structural safeguards,” including forcing Ericsson to transfer its Telcordia stock to a voting trust and requiring Telcordia to have an independent board. They said Neustar challenged the FCC’s neutrality finding “largely under the false premise” that Telcordia and Ericsson should have been treated as one entity. “Neustar relies primarily on Delaware law, but Delaware law unequivocally recognizes that a ‘corporation is an entity, distinct from its stockholders even if the subsidiary’s stock is wholly owned by one person or one corporation,’” they said, adding that the question nevertheless is a federal one and the FCC reasonably concluded Telcordia and Ericsson are separate entities. The intervenors said Neustar’s procedural arguments were “equally meritless” for various reasons; “Neustar had more than ample notice and opportunity to comment on the FCC’s selection process and decision -- and it fully availed itself of that opportunity.” Finally, they said, the FCC “correctly” accepted Telcordia’s bid over Neustar’s. Telcordia “refuted Neustar’s inflated estimates of the transition costs," they said. Although their brief redacted the bid amounts, Commissioner Ajit Pai said in March that Telcordia bid less than $1 billion for a seven-year contract (less than $143 million per year), when Neustar’s existing contract cost about $460 million for 2014. “That’s substantial savings for the American public,” he said. The Department of Justice and FCC recently filed a brief defending the commission order (see 1510290029).