Neustar Fires Back at FCC Defense of Order Giving Telcordia LNPA Rights

Neustar said the FCC violated the Telecom Act and its own rules “when it took the unprecedented step of selecting the wholly owned subsidiary of a biased entity as a numbering administrator.” Congress had demanded strict structural impartiality and the commission prohibited any entity “aligned with any particular telecommunications industry segment” from being the local number portability administrator (LNPA), Neustar said in a reply brief Wednesday to the U.S. Court of Appeals for the D.C. Circuit. The court is reviewing incumbent Neustar's challenge to a March FCC order giving Telcordia (iconectiv) conditional rights to become the next LNPA, which oversees the systems that allow consumers to keep their phone numbers when they switch carriers within a local market (Neustar v. FCC, No. 15-1080). The Commission never disputed and even acknowledged that "Telcordia's 100% owner, Ericsson, was aligned with the wireless segment” of the industry, Neustar said. “As Ericsson's wholly owned subsidiary, Telcordia shares the identical disqualifying alignment as a matter of law. The Commission's contrary conclusion was based on a fundamental misapprehension of Delaware corporate law and warrants no deference from this Court,” Neustar said. In its recent brief, the FCC defended its decision as satisfying the impartiality requirement for various reasons, including due to various safeguards imposed by the agency; it also said Neustar's bid was “substantially inferior” to Telcordia's (see 1510290029). Intervenors CTIA, Telcordia and USTelecom seconded FCC arguments and said Neustar's challenge relied on the “false premise” that Telcordia and Ericsson should be treated as one entity, when even Delaware law recognized differences between a corporation and a subsidiary, and regardless, the issue was a question of federal law (see 1511130007). In its reply, Neustar said the FCC and intervenors were wrongly ignoring “the dispositive Delaware authority” on "the critical point that the interests of a parent and a wholly owned subsidiary are indistinguishable under Delaware law.” Neustar said the FCC improperly refused to carefully evaluate the company's impartiality concerns under its own rules and precedent. The commission's “entirely ineffectual” safeguards “do nothing to alter the fact that Telcordia's corporate purpose is to serve Ericsson's economic interests,” said Neustar. It also charged the FCC with violating the Administrative Procedure Act's rulemaking requirements and said the agency “arbitrarily and capriciously miscalculated the costs of the competing bids.”