Comsat Corp. v. Federal Communications Commission

                  Revised May 22, 2001

         UNITED STATES COURT OF APPEALS
                  FIFTH CIRCUIT

                      ____________

                      No. 00-60044
                      ____________


COMSAT CORPORATION; AT&T CORPORATION,


                          Petitioners,

versus


FEDERAL COMMUNICATIONS COMMISSION; UNITED
STATES OF AMERICA,


                          Respondents.

______________________________________________________

AT&T CORPORATION,


                          Petitioner,
versus

FEDERAL COMMUNICATIONS COMMISSION; UNITED
STATES OF AMERICA,


                          Respondents.



           Petition for Review of a Final Order of
          the Federal Communications Commission

                       May 3, 2001
Before DAVIS, EMILIO M. GARZA, Circuit Judges, and POGUE* , District Judge.

EMILIO M. GARZA, Circuit Judge:

        Comsat and AT&T, along with intervenors MCI WorldCom, Inc., Sprint Corporation, and

Telecommunications Resellers Association, petition for review of Federal-State Joint Board on

Universal Service, CC Docket No. 96-45, Sixteenth Order on Reconsideration, FCC 99-290, 15 FCC

Rcd. 1679 (released Oct. 8, 1999) (“Remand Order”). Finding that Comsat lacks standing, we

dismiss Comsat’s petition for lack of jurisdiction. With respect to the petition of AT&T and the

intervenors, we reverse and remand.

                                                    I

        Pursuant to the Telecommunications Act of 1996, 

Pub. L. No. 104-104, 110

 Stat. 56

(codified as amended in scattered sections of title 47, United States Code) (“the Act”), the Federal

Communications Commission (“the Commission”) issued its 1997 Universal Service Order. See

Federal-State Joint Board on Universal Service, 12 FCC Rcd. 8776 (1997). Numerous parties

challenged that order, and we affirmed it in part and reversed it in part in our decision in Texas Office

of Public Utility Counsel v. FCC, 

183 F.3d 393

 (5th Cir. 1999) (“TOPUC”).

        In TOPUC, we addressed two portions of the 1997 Universal Service Order pertinent to the

petitions now before us. First, Comsat, also a party in TOPUC, attacked the inclusion of international

services revenue in determining a carrier’s universal service fund contribution. Comsat contended

that for carriers like itself, who generate minimal interstate services revenues, the FCC’s rule required

it to pay a universal service contribution that exceeded its interstate services revenues. Comsat

maintained that this outcome violated § 254(d)’s requirement that all universal service support be


        *
                Judge, United States Court of International Trade, sitting by designation.

                                                  -2-
equitable and nondiscriminatory. We agreed and found that the Commission’s interpret ation of §

254(d), in which it found it could impose such costs on carriers, was “arbitrary and capricious and

manifestly contrary to the statute.” Id. at 434-35.

        Second, GTE asserted that requiring incumbent local exchange carriers (“ILECs”)1 to recover

their universal service costs through access charges to interexchange carriers (“IXCs”)2 contravened

the Act’s mandate that all support for universal service be explicit. See TOPUC, 

183 F.3d at 425

.

We agreed and concluded that the plain language of 

47 U.S.C. § 254

(e) did not “permit the FCC to

maintain any implicit subsidies for universal service support.” 

Id.

 We further found that by forcing

ILECs to “recover their universal service contributions through access charges, the FCC’s

interpretation maintain[ed] an implicit subsidy for ILECs.” 

Id.

 Accordingly, we reversed and

remanded to the FCC.

        In response to TOPUC, the Commission issued the Remand Order. The agency adopted a

bright-line percentage rule for when a carrier’s international revenues would be included in the base

from which the agency calculates the carrier’s universal service contribution. Under the new rule,

if a carrier derives less than 8 percent of its revenue from interstate services, its international revenues

will not be used in calculating the contribution. For those carriers receiving 8 percent or more of their



        1
                A local exchange carrier provides local telephone service within a particular
geographical calling area. ILECs were those local exchange carriers historically granted exclusive
franchises to provide local service. See Assoc. of Communications Enters. v. FCC, 

235 F.3d 662, 664

 (D.C. Cir. 2001); 

47 U.S.C. §153

(26) (defining “local exchange carrier”); 

47 U.S.C. § 153

(47)
(defining “telephone exchange service”).
        2
                  IXCs, long distance carriers, “must obtain access to local telephone customers in order
to sell their services. An IXC connects to its long-distance customers by using either special access
or switched access facilities.” Southwestern Bell Tel. Co. v. FCC, 

168 F.3d 1344, 1347

 (D.C. Cir.
1999).

                                                    -3-
revenues from interstate services, the FCC will include their international revenue in the base for

determining their contributions. The Commission also revised its rule regarding ILEC access charges

by permitting, rather than requiring, ILECs to recover their universal service costs through access

charges to interstate carriers.3

        Comsat and AT&T each filed for review of the Remand Order in the District of Columbia

Circuit Court of Appeals. Their cases were consolidated and they made a motion to transfer the case

to our Circuit, which was granted. MCI WorldCom Inc., Sprint Corp., and Telecommunications

Resellers Association intervened.4 Comsat challenges the Commission’s 8 percent rule. AT&T

challenges the Commission’s decision to permit ILECs to recover universal service fund contributions

through access charges to interstate carriers.

                                                  II

        As a preliminary matter, we must address the Commission’s assertion that Comsat lacks

standing to bring this challenge to the universal service fund 8 percent contribution rule. If Comsat

lacks standing, we lack jurisdiction to consider its challenge. See Steel Co. v. Citizens for a Better

Env’t, 

523 U.S. 83, 94

, 

118 S. Ct. 1003

, 

140 L. Ed. 2d 210

 (1998) (a party’s standi ng must be

addressed first because “[w]ithout jurisdiction the court cannot proceed at all in any cause”) (quoting


        3
               In a subsequent order, the Commission narrowed its permissive rule to apply it only
to non-price cap ILECs and competitive LECs. See In re Access Charge Reform, Price Cap
Performance Review for Local Exchange Carriers, Low Volume Long Distance Users, and Federal-
State Joint Board on Universal Service, Sixth Report and Order in CC Docket No. 96–26 and 94-1,
Report and Order in CC Docket No. 99-249, and Eleventh Report and Order in CC Docket 96-45,
FCC 00-193, 15 FCC Rcd. 12962, app. B at 56, § 69.158 (2000) (requiring price cap ILECs to
recover universal service costs through end user charges, leaving non price cap ILECs and
competitive LECs to recover their costs through access charges to IXCs).
        4
               Hereinafter AT&T, MCI WorldCom, Inc., Sprint Corporation, and the
Telecommunications Resellers Association are collectively referred to as AT&T.

                                                 -4-
Ex parte McCardle, 

7 Wall. 506, 514

, 

19 L. Ed. 264

 (1868)) (opinion of Scalia, J.).

        The “irreducible constitutional minimum of standing” requires three things. See Lujan v.

Defenders of Wildlife, 

504 U.S. 555, 560

, 

112 S. Ct. 2130, 2136

, 

119 L. Ed. 2d 351

 (1992). “First

the plaintiff, must have suffered an ‘injury in fact’—an invasion of a legally protected interest which

is (a) concrete and particularlized, and (b) actual or imminent, not conjectural or hypothetical.

Second, there must be a causal connection between the injury and the conduct complained of—the

injury has to be fairly traceable to the challenged action of the defendant. . . . Third, it must be likely

as opposed to merely speculative that the injury will be redressed by a favorable decision.” 

Id.

 at 560-

61, 

112 S. Ct. at 2136

 (internal quotations and citations omitted); see Bertulli v. Indep. Assoc. of

Continental Pilots, 

242 F.3d 290, 294-95

 (5th Cir. 2001). Comsat bears the burden of demonstrating

that it has met these requirements. See Lujan, 

504 U.S. at 561

, 

112 S. Ct. at 2136

.

        Comsat currently makes no payment to the universal service fund, nor are its revenues

sufficient to trigger the 8 percent rule. Thus, Comsat’s injury is not that it now makes a universal

service payment nor that it is subject to the 8 percent rule. Instead, Comsat posits that it suffers from

two interrelated injuries. First, it contends that it faces the threat of a massive universal service

payment should its interstate revenues reach the 8 percent threshold. Second, the cost of that

contribution would be so great as to render entry into the interstate services market unprofitable, and,

therefore, the threat of this payment operates as a barrier to Comsat’s entry into that market. In

support of its argument, Comsat maintains that the threat of payment it faces is analogous to the

injury suffered by the New York City Health and Hospitals Corp. (“NYCHHC”) in Clinton v. New

York, 

524 U.S. 417

, 

118 S. Ct. 2091

, 

141 L. Ed. 2d 393

 (1998), which the Supreme Court found

sufficient to confer standing on NYCHHC. We disagree.


                                                   -5-
       In Clinton, the Supreme Court concluded that the NYCHHC had standing to challenge the

constitutionality of the Line Item Veto Act, 

2 U.S.C. §§ 691-692

. NYCHHC challenged the

President’s cancellation of a provision that would have relieved NYCHHC of its contingent liability

to the United States, which remained contingent because of a pending petition for a waiver of the

liability. See Clinton, 

524 U.S. at 422

, 

118 S. Ct. at 2095

. Comsat contends that it too suffers from

a contingent liability, i.e., the possible universal service payment. In making this comparison, Comsat

focuses on NYCHHC’s still pending waiver and the potential for relief this waiver provided apart

from that which would have been afforded by the provision had it not been canceled. This

comparison to NYCHHC is flawed because Comsat assumes that the NYCHHC’s contingent liability

per se was the injury that gave NYCHHC standing. The Supreme Court’s reasoning demonstrates

otherwise. In rejecting the government’s contention that NYCHHC’s injury was too speculative

because the liability might still be waived, the Court compared NYCHHC’s injury to the setting aside

of a favorable verdict and remanding for a new trial. The Court stated: “Even if the outcome of the

second trial is speculative, the reversal, like the President’s cancellation, causes a significant

immediate injury by depriving the defendant of the benefit of a favorable final judgment.” 

Id. at 431

,

118 S. Ct. at 2099. NYCHHC’s injury occurred when the President canceled the provision, depriving

it of immediate relief from liability. The fact that NYCHHC’s liability might later have been relieved

by this waiver did not affect the Court’s conclusion that the cancellation caused NYCHHC to lose

a benefit which it already had in hand. Comsat, in contrast, does not contend that it lost a benefit.

Thus, Clinton is inapposite to the case at bar.

       A threatened injury satisfies the injury in fact requirement so long as that threat is real, rather

than speculative. See Whitmore v. Arkansas, 

495 U.S. 149, 158

, 

110 S. Ct. 1717, 1724-1725

, 109


                                                  -6-
L.Ed.2d 135 (1990) (“A threatened injury must be certainly impending to constitute an injury in

fact.”) (internal quotations and citations omitted); Loa-Herrera v. Trominiski, 

231 F.3d 984, 988

 (5th

Cir. 2000) (“Mere threatened injury is sufficient, and the threat in this case is real.”). Here, in order

for the threat of a universal service payment to be sufficiently concrete, Comsat must be able to

expand into the interstate services market so as to increase its revenue to the requisite 8 percent. See

City of Los Angeles v. Lyons, 

461 U.S. 95, 105

, 

103 S. Ct. 1660, 1667

, 

75 L.Ed. 2d 675

 (1983)

(“Lyons’ standing to seek the injunction requested depended on whether he was likely to suffer future

injury from the use of the chokeholds by police officers.”); Prestage Farms v. Bd. of Supervisors of

Noxubee County, Miss., 

205 F.3d 265, 268

 (5th Cir. 2000) (denying standing where party failed to

show challenged ordinance had a “concrete effect” on its business endeavors). At this time, however,

there are various FCC regulations, unrelated to the challenged rule, that prevent Comsat from

expanding its interstate services. Comsat asserted for the first time at oral argument that it had an

application pending before the FCC to remove these regulations.5 Even assuming arguendo that this

allegation is properly before us, Comsat also admitted that the FCC could remove these in whole or

in part. Obviously, the FCC could also decide not to remove any of these regulatory barriers.

Consequently, the threat of a universal service payment is conjectural because Comsat cannot expand

its interstate services due to those barriers, and the likelihood that it will be able to do so is merely

speculative. Therefore, this alleged injury fails to constitute an injury in fact.

        As for Comsat’s second assertion that this threatened payment bars Comsat from entering the



        5
                Comsat argued for the first time at oral argument that its merger with Lockheed
Martin bore on its standing argument. Arguments presented for the first time at oral argument are
waived. See Whitehead v. Food Max of Miss., Inc., 

163 F.3d 265, 270

 (5th Cir. 1998). Thus, we
do not consider this argument.

                                                   -7-
interstate services market, we need not determine whether this injury would constitute an injury in

fact. Comsat’s inability to enter the interstate market undermines its ability to meet the requirement

that the challenged action be fairly traceable to the alleged injury. Comsat’s inability to enter the

interstate services market results from other regulations, rather than the 8 percent rule; therefore,

Comsat does not have standing on this basis. See Warth v. Seldin, 

422 U.S. 490, 506

, 

112 S. Ct. 2197

, 2209, 

45 L. Ed. 2d 343

 (1975) (finding failure to demonstrate causation where it appeared that

petitioners’ financial situations and particular housing needs suggested that their inability to purchase

homes in the town resulted not from respondents’ actions but from the “economics of the area

housing market”). Accordingly, because neither of the proffered bases for standing succeeds, we

dismiss Comsat’s petition for lack of jurisdiction.

                                                  III

        Before proceeding to the merits of AT&T’s petition, we must address the Commission’s

contention that 

47 U.S.C. § 405

 bars consideration of AT&T’s petition. Under § 405, a party must

afford the Commission an opportunity to pass on the arguments the party presents for judicial review.

See 

47 U.S.C. § 405.6

 The Commission contends that because AT& T failed to present its assertion

(i.e., the agency must eliminate ILEC cost recovery through IXC access charges) to the Commission

prior to filing the instant petition for review, we are barred from hearing AT&T’s petition for review.

We disagree. In the Remand Order, at ¶ 32, the Co mmission stated: “We believe that the Fifth


        6
                

47 U.S.C. § 405

 provides in relevant part that:
        The filing of a petition for reconsideration [by the Commission] shall not be a
        condition precedent to judicial review of any such order, decision, report, or action,
        except where the party seeking review (1) was not a party to the proceedings
        resulting in such order, decision, report, or action or (2) relies on questions of factor
        law upon which the Commission, or designate authority within the Commission has
        been afforded no opportunity to pass.

                                                  -8-
Circuit intended to hold only that section 254(e) barred the FCC from requiring incumbent LECs to

recover universal service contributions through access charges.” See also 

id. at ¶ 33

 (“To comply

with the Fifth Circuit’s order we will expand incumbent LEC’s options for recovering their universal

service contributions.”). In doing so, the Commission discarded the notion that our TOPUC holding

required the elimination of this implicit subsidy. Where the Commission has considered an argument,

§ 405 does not preclude review of a petitioner’s claim. See Time Warner Entertainment, Co., L.P.

v. FCC, 

144 F.3d 75, 80

 (D.C. Cir. 1998) (“So long as the issue is necessarily implicated by the

argument made to the Commission, section 405 does not bar our review.”).

       In reviewing the Commission’s actions on the merits of AT&T’s claims, we apply the two-

step inquiry set forth in Chevron U.S.A. Inc. v. Natural Res. Def. Council, 

467 U.S. 837, 842-843

,

104 S. Ct. 2778, 2781-2783

, 

81 L. Ed. 2d 694

 (1984). In step one, we determine whether “Congress

has directly spoken to the precise question at issue.” 

Id. at 842

, 

104 S. Ct. at 2781

. If Congress has

done so, we must “give effect to [Congress’s] unambiguously expressed intent.” 

Id. at 843

, 

104 S. Ct. at 2781

. If we find that the statute is ambiguous with respect to the question at issue, we proceed

to step two and “the question for [us] is whether the agency’s answer is based upon a permissible

construction.” 

Id. at 843

, 

104 S. Ct. at 2782

. If we reach this second step, we may only reverse the

agency’s decision if we find that the decision was “arbitrary, capricious, or manifestly contrary to the

statute.” 

Id. at 844

, 

104 S. Ct. at 2782

.

       Section 254(e) provides that universal service support “should be explicit.” In TOPUC, we

concluded that “the plain language of § 254(e) does not permit the FCC to maintain any implicit

subsidies.” 

183 F.3d at 425

 (5th Cir. 1999). In this case, in contrast to TOPUC, it is not disputed

that the recovery of universal service costs through access charge to IXCs is an implicit subsidy. The


                                                  -9-
FCC concedes, and we agree, that TOPUC forecloses such an argument. See id.; see also Alenco

Communications, Inc. v. FCC, 

201 F.3d 608

, 623 (5th Cir. 2000) (“We made clear in TOPUC that

the implicit/explicit distinction turns on the distinction between direct subsidies from support funds

and recovery through access charges and rate structures.”). Because Congress has directly spoken

to this issue and the access charge is an implicit subsidy, we review the challenged rule under Chevron

step-one. Thus, what we must resolve is whether the FCC decision to permit ILECs to continue to

recover universal service costs through access charges to interstate carriers violates § 254(e). We

hold that permitting this method of cost recovery countermands Congress’s clear legislative directive,

as we articulated in TOPUC and reaffirmed in Alenco, that universal service support must be explicit.

See TOPUC, 

183 F.3d at 425

; Alenco, 201 F.3d at 623 (finding that § 254(e) “mandat[es] that all

universal service support by explicit” and, thus, DEM weighting had to be eliminated).

       Relying on our decisions in TOPUC and Alenco, AT&T contends that the Commission cannot

permit ILECs to recover their universal service costs via access charges to interstate carriers because

§ 254(e) requires the elimination of all implicit subsidies. In response, the Commission maintains that

our holding in TOPUC was much narrower, precluding the FCC only from requiring ILECs to

recover costs through access charges. See Remand Order, at ¶ 32. Moreover, the Com mission

asserts that this rule harmonizes TOPUC with the Eighth Circuit’s decision in Southwestern Bell Tel.

Co. v. FCC, 

153 F.3d 523

 (8th Cir. 1998). See Remand Order, at ¶ 33.7

       The Commission contends that our holding in TOPUC merely proscribed requiring ILECS


       7
                 The Commission also contends that the rule permitting access charges is transitional
and, therefore, Chevron step-two applies, thereby granting it the discretion to continue the implicit
subsidy during the transition to the explicit subsidy system. The Commission, however, failed to brief
this issue, raising it for the first time at oral argument. Thus, the Commission has waived this
argument. See Zuccarello v. Exxon Corp., 

756 F.2d 402, 407-08

 (5th Cir. 1985).

                                                 -10-
to recover universal service costs through access charges to IXCs. In support of this contention, the

agency points to: (1) the scope of GTE’s argument in TOPUC; and (2) that we declined to grant

standing to MCI as an intervenor. The Commission is correct that GTE at tacked the FCC rule

requiring it to recoup universal service costs from access charges to IXCs on the ground that the

absence of choice in its cost recovery methods would put it at a competitive disadvantage with

potential new competitors. See TOPUC, 

183 F.3d at 425

. Nevertheless, we did not, as t he

Commission suggested at oral argument, reject the recovery of universal service costs through access

charges because it unfairly forced ILECs to use this method of cost recovery. While GTE’s argument

focused on the absence of choice, the distinction the agency draws between “require” and “permit”

is one without a difference. We found that the FCC’s previous rule “continue[d] to require implicit

subsidies,” not that requiring cost recovery through access charges was t he implicit subsidy. 

Id.

(emphasis added). In short, our holding in TOPUC that § 254(e) did not permit the Commission to

require ILECs to recover universal service costs via access charges turned on the recovery method

per se, not whether the Commission permitted or mandated it. Thus, we held that the access charges

constituted an implicit subsidy in violation of the clear congressional directive that support for

universal service be explicit. See id.

       Second, the Commission contends that in declining to consider MCI’s argument in TOPUC,

we limited our holding to invalidating the requirement of access charges to IXCs. Specifically, the

Commission maintains that our description of MCI’s assertions as seeking “the elimination of implicit

subsidies” cabins our holding. The FCC tries to glean too much from our decision declining to grant

MCI intervenor-standing. MCI, rather than filing a petition for review, sought to intervene in order

to challenge the FCC’s plan to reduce access charges by the amount received as explicit universal


                                                -11-
service subsidies. MCI asserted that the access charges should be reduced “to the forward-looking

cost level used by the agency to calculate support for high-costs areas” because the failure to do so

violated the FCC’s “statutory mandate to eliminate implicit subsidies when it implements the new

universal service plan.” TOPUC, 

183 F.3d at 437-38

. We found t hat this challenge differed from

those presented by the petitioners. As such, we declined to grant MCI standing, finding that “‘we

could grant the intervenor the full relief it seeks while rejecting all of the petitioners’ challenges and

vice versa.’” 

Id.

 at 438 (quoting Ill. Bell Tel. Co. v. FCC, 

911 F.2d 776, 786

 (D.C. Cir. 1990)). In

doing so, we simply indicated that, as a result of the difference between MCI’s argument and those

proffered by the petitioners, the possibility existed for denying the petitioners relief but granting it to

MCI. It was not a comment on what we did or did not hold. As a result, our decision in TOPUC not

to address MCI’s argument does not impinge upon our holding that § 254(e) does not permit the

Commission “to maintain any implicit subsidies.” Id. at 425.

        The Co mmission next maintains that it needed to permit ILECs to recoup their universal

service co st via access charges in order to comply with our holding in TOPUC and the Eighth

Circuit’s decision in Southwestern Bell. We disagree. Our sister circuit concluded that the recovery

of contribution costs from IXCs did not constitute an implicit subsidy, but was “a real cost of doing

business.” Southwestern Bell, 

153 F.3d at 554

. This finding cannot be harmonized with our holding

that the recovery of universal service costs through access charges is an implicit subsidy. See

TOPUC, 

183 F.3d at 425

. Furthermore, because the Eighth Circuit reached this conclusion, it did

not pass upon the question of whether § 254(e) allowed the FCC to permit a continuation of implicit

subsidies. Finally, contrary to the Commission’s contention, it could have complied with both

TOPUC and Southwestern Bell by precluding the access charges to IXCs. Thus, we find this


                                                   -12-
argument unavailing.

       In short, we find that our holding in TOPUC makes it clear that the “FCC cannot maintain any

implicit subsidies” whether on a permissive or mandatory basis. We hold that the FCC’s Remand

Order permitting the ILECs to recoup universal services costs through access charges is contrary to

the plain language of § 254(e).

                                                  IV

       For the foregoing reasons, we DISMISS Comsat’s petition for want of jurisdiction. We

GRANT AT&T’s petition for review and we REVERSE and REMAND to the Commission for

proceedings not inconsistent with this opinion.




                                                  -13-
Pogue, Judge, concurring:



        I agree with the majority that the decisions in Texas Office of Pub. Util. Counsel v. FCC, 

183 F.3d 393

 (5th Cir. 1999) (“TOPUC”), and Alenco Communs., Inc. v. FCC, 

201 F.3d 608

 (5th Cir.

2000), control the outcome in this case. I write separately to express my concerns with the TOPUC

court’s conclusions that access charges are implicit subsidies, and that “the plain language of § 254(e)

does not permit the FCC to maintain any implicit subsidies,” thus preventing the court from

“afford[ing] the FCC any Chevron step-two deference in light of this unambiguous Congressional

intent.” See TOPUC, 

183 F.3d at 425

; see also Chevron U.S.A. Inc. v. Natural Resources Defense

Council, 

467 U.S. 837, 842-43

, 

104 S. Ct. 2778, 2781-82

, 

81 L. Ed. 2d 694

 (1984) (holding that if

“Congress has directly spoken to the precise quest ion at issue,” the court must “give effect to

[Congress’s] unambiguously expressed intent”; if the statute is silent or ambiguous with respect to

the question at issue, the court asks “whether the agency’s answer is based on a permissible

construction of the statute”).

        Section 254(e) provides that “support should be explicit and sufficient to achieve the purposes

of this section.” 

47 U.S.C. § 254

(e) (1986) (emphasis added). It is simply not clear to me that this

language amounts to a “plain, direct statutory command.” TOPUC, 

183 F.3d at 425

. Indeed, it is

accepted that “should” does not convey a command in the same way that “shall be explicit” or “must

be explicit,” as is acknowledged in TOPUC itself in addressing a different part of the statute. See

TOPUC, 

183 F.3d at 418

 (“Generally speaking, courts have read ‘shall’ as a more direct statutory

command than words such as ‘should’ or ‘may.’”) (footnote omitted). Moreover, the statute is silent

insofar as it does not define any of the relevant terms (“explicit,” “implicit,” “support” or “subsidy”),
and the TOPUC court recognized that the statute is ambiguous as to the meaning of “explicit.” See

TOPUC, 

183 F.3d at 425

. It is also relevant that § 254(b) of the statute, which lists “Universal

service principles,” states that support mechanisms “should be specific, predictable and sufficient .

. . to preserve and advance universal service.” 

47 U.S.C. § 254

(b)(5). That § 254(b)(5) does not

suggest that support mechanisms should also be explicit makes it even more difficult for me to agree

that § 254(e) is unambiguous on its face.

        Assuming that the language of § 254(e) is ambiguous, then Chevron step two should apply.

In TOPUC, the FCC advanced an argument that access charges could be maintained because they are

explicit to the carrier, even though implicit to the consumer. See TOPUC, 

183 F.3d at 425

. It is not

evident to me that interpreting the statute to mean “explicit to the carrier” is an unreasonable

interpretation of the language “should be explicit.” The statute does not answer the question of to

whom the support should be explicit, nor does it suggest that support be explicit to all parties. It thus

seems to me that the FCC’s interpretation may well be reasonable, especially where the support

mechanism is otherwise “specific, predictable and sufficient . . . to preserve and advance universal

service,” and, generally, “to achieve the purposes of this section.” 

47 U.S.C. §§ 254

(b)(5), (e).

        Although I respect the controlling effect of TOPUC and Alenco on the disposition of this case,

it is my opinion that the TOPUC court failed to afford the FCC’s interpretation of the statute the

deference required under the Chevron doctrine. For these reasons, I concur.




                                                  -15-
-16-