WASHINGTON-A federal appeals court last week said mandatory resale of commercial mobile radio services can sunset in 2002, dealing a blow to wireless resellers who argued the government could not end mandatory resale.
The decision comes on the heels of the Federal Communications Commission’s decision July 2 to start the so-called sunset clock as of Nov. 25, 1997.
Writing for a three-judge panel for the U.S. Court of Appeals for the Sixth Circuit, Judge R. Guy Cole Jr., said the court did not believe the FCC’s decision to sunset mandatory resale was arbitrary and capricious.
Cellnet, a cellular reseller, had argued the sunset decision lacked an adequate basis for saying the costs of mandatory resale outweighed the benefits. However, the judge wrote Cellnet’s arguments were meritless.
Now that the court has acted, the FCC will rule on related resale issues, said Dan Phythyon, chief of the FCC’s Wireless Telecommunications Bureau.
The Telecommunications Resellers Association had asked the FCC to reconsider its sunset and resale interconnection rules. Earlier this year, the FCC told the U.S. Court of Appeals for the District of Columbia Circuit that it would rule on the resale interconnection reconsideration request by the end of the year. “These matters are next in queue,” said Phythyon. The wireless bureau is still drafting an item for the commissioners to review, added Phythyon.
TRA was not surprised by the Sixth Circuit’s decision. “Challenging the [FCC] on this issue was our obligation, but it is never an easy victory,” said David Gusky, TRA vice president.
TRA is not expected to challenge the decision to the Supreme Court. Even though the court’s decision was a defeat, Gusky said the four-and-a-half year sunset can be viewed as a “bridge to competition.”
Indeed, Gusky does not believe the mandatory resale rules will ever be lifted. “We think the [FCC] will be hard pressed from keeping [wireless carriers] classified as [local exchange carriers].” Once the FCC recognizes that wireless has become a substitute for wireline service, it will require resale. “We are hoping and confident the [resale] obligation will remain in place ad infinitum,” Gusky said.
The wireless industry questions this logic. “I don’t think the resellers have read the Communications Act correctly. The resale obligation in Section 251 [says resale] is only an obligation of an [incumbent] LEC. It is not [an obligation for] someone who is dominant in a market. It is more likely that when you have more carriers, the resale obligation will go away instead of being applied more broadly,” said Michael F. Altschul, vice president and general counsel for the Cellular Telecommunications Industry Association.
In related action, the FCC also released the text of its decision denying PCIA’s request for immediate relief from the mandatory resale requirement.
The release of the text of PCIA’s denial and the appeals court decision give the wireless industry a good picture of what the rules and law are going to be in the resale sector, said Altschul.
