DC Circuit Questions NARUC Standing to Challenge FCC VoIP Numbering Order

Two federal judges focused on whether a state regulatory group had legal standing to challenge an FCC order that allowed interconnected VoIP providers to acquire phone numbers directly from numbering authorities, rather than through telecom carriers. In oral argument at the U.S. Court of Appeals for the D.C. Circuit Wednesday, Chief Judge Merrick Garland and Judge Judith Rogers asked what harms NARUC's members suffered under the order, which didn't classify VoIP as a Title II telecom service under the Communications Act. NARUC General Counsel Brad Ramsay said state commissions lost VoIP certification authority and oversight over numbering issues, but FCC counsel Matthew Dunne said the order preserved most state numbering rights.

Rogers pursued Ramsay's argument the FCC ignored the statutory definitions of "telecom carrier," and Garland pursued Ramsay's argument the FCC failed to justify its action under Title I ancillary authority. Dunne said the FCC had plenary authority that allowed it to expand numbering eligibility beyond telecom carriers to VoIP providers, and without invoking its ancillary authority.

Judge Karen LeCraft Henderson didn't ask questions. It was Garland's second oral argument since his Supreme Court nomination ended. After the FCC adopted its VoIP numbering order in June 2015 (see 1506180060), NARUC petitioned for court review and filed its brief (see 1604050013), and the FCC and intervenor Vonage responded (see 1605200002 and 1605260058).

Ramsay said "classifications and definitions matter" under the act, but Rogers quickly asked about NARUC's claim it had "self-evident" legal standing, which the FCC and Vonage contested. Ramsay said the FCC order allowed VoIP providers to avoid state certification requirements. Asked by Rogers to elaborate, Ramsay said states had an interest in preventing number exhaustion and managing area-code splits and overlays, and also in ensuring carrier interconnection. Asked by Rogers to point to an "injury in fact," Ramsay said the bypass of state certification was "self-evident," but the harms went further because FCC expansion of numbering rights combined with the failure to classify VoIP as a telecom service continued a pattern of giving VoIP providers Title II benefits without all associated obligations.

Garland questioned whether states were harmed by FCC refusal to classify VoIP when judges could rule on the matter de novo in other litigation. Ramsay said states lost numbering control. When Garland questioned the significance, Ramsay said area-code splits were very important in states and had even prompted death threats. Garland said he took it that NARUC's strongest argument was the loss of numbering control. Rogers noted arguments the states didn't care about the VoIP numbering outcome, just about the rationale. Ramsay disagreed and said states were concerned about the outcome, but he acknowledged the states had sought VoIP telecom classification for years in USF, interconnection and other proceedings.

Ramsay said the FCC relied on its plenary numbering authority under Section 251, but if the agency wouldn't declare VoIP a Title II telecom service, the regulator needed to classify it as a Title I information service or a hybrid service, and it had done neither. He said the FCC didn't justify the VoIP order under Title I ancillary authority and ignored "telecom carrier" statutory definitions. "They made up their own definition," he said, arguing all of Title II was focused on telecom service. Rogers said she understood Ramsay's argument to be that "telecom carriers" were defined as providers of telecom services and that placed a limit on FCC numbering authority. When Garland asked whether number portability rules should be limited to "local exchange carriers," and not the broader class of telecom carriers, Ramsay agreed, though he suggested the FCC had some flexibility to treat others, such as wireless carriers, as LECs for that purpose.

Garland asked Dunne to address the standing issue. Dunne said states play a small role in numbering, including "loose oversight" over area codes, with some say over how numbers are assigned (in blocks of 1,000 or 10,000) and reclaimed. He said the FCC order required VoIP providers seeking direct numbering access to comply with various rules and requirements summarized in paragraph 24 of the order. Those included matters delegated to state authorities and a requirement providers file numbering requests with state commissions at least 30 days before filing them with numbering authorities, which was more notice than some states required, Dunne said. NARUC's alleged interconnection and consumer-protection harms stemming from FCC refusal to classify VoIP were separate from numbering, he said.

When asked by Garland, Dunne said the commission didn't rely on Title I ancillary authority because it wasn't necessary. He noted an ongoing "dialogue" with the D.C. Circuit -- in which the court has curtailed FCC ancillary authority -- and said the statute gave the agency exclusive jurisdiction over numbering. Asked by Rogers about the statutory definitions, Dunne said NARUC hadn't shown that the language limited FCC numbering authority to only telecom carriers. Rogers said she agreed with respect to Section 251(e)(1)'s general mandate, but she noted Section 251(e)(2)'s requirement that the costs of number administration and number portability be borne by "all telecommunications carriers." Dunne said the FCC had authority to expand the pool of providers paying those costs beyond telecom carriers, and had done so to VoIP in 2007.

Elizabeth Austin Bonner, representing Vonage, said states had little control over VoIP. To the extent they had numbering concerns, the FCC solved the problem in paragraph 24 by preserving state authority, she said. Bonner said Vonage accepted its burden to bear VoIP numbering costs.

In rebuttal time, Garland asked Ramsay if paragraph 24 protected states. Ramsay disagreed and said NARUC wasn't an ordinary petitioner because the 1996 Telecom Act charged state commissions with helping to enforce the law. By expanding direct numbering rights without Title II telecom classification, the FCC was reducing the "impetus" for VoIP providers to seek telecom oversight from the states, he said.