Cellco Partnership d/b/a Verizon Wireless and Verizon Telephone Companies challenged the results of Federal Communications Commission(FCC)’s review of regulations. They sought review of an order of FCC, which interpreted Section 11 of the Telecommunications Act of 1996 (47 U.S.C.S. 161, “§161”), and which decided to retain two regulatory rules, namely, 47 C.F.R. §43.61(a) and §63.21(i).
§161 provides for the biennial review of telecommunication regulations in every even numbered year and FCC is required to determine whether any regulation is no longer “necessary in the public interest” as the result of meaningful economic competition between providers of telecommunications service. The two regulations whose retention Verizon Wireless challenged involved reporting requirements. First, Part 43 of the Code of Federal Regulations (47 C.F.R §43.61) deals with reporting of international telecommunications traffic, requiring all common carriers providing international service to file annual and quarterly reports with FCC regarding their service. While FCC decided to remove the quarterly reporting requirement in its 2000 Biennial Review, it retained the annual reporting requirement despite comments from wireless communications companies supporting its elimination. Secondly, Part 63 of the Code (47 C.F.R §63.21) requires notification of foreign affiliations to FCC. This provision exempts only the wholly-owned international subsidiaries, and not the carriers that hold a controlling interest in international carrier, from the certificate requirement under 47 USCA §214(a). §214 grants FCC the authority to issue a certificate upon determination as to whether “public convenience and necessity” would be served by a carrier’s acquisition, construction or operation of telecommunications facilities, including international ones.
The Court of Appeals held that FCC reasonably interpreted statutory requirement of retaining only "necessary" regulations as allowing it to retain rules that continued to advance legitimate regulatory interest. It rejected the petitioners’ arguments in support of a narrow reading of “necessary” as meaning absolutely essential or indispensable in the context of FCC’s forbearance authority under the provision. According to the Court, FCC reasonably interpreted §161 to require the reevaluation of the regulations in light of current competitive market conditions to see that the conclusion it reached in adopting the rule remained valid.
In response to Verizon’s challenge of FCC’s timing for the 2000 Biennial Review, the Court held that FCC was not required to “take action” on rules deemed unnecessary before the end of review year, distinguishing from the timing of “making of determinations”, which must occur every even numbered year. In addition, it ruled that FCC's retention of rule requiring cellular telephone service providers to report annually on their international telecommunications traffic was reasonable. It was noted that FCC may reasonably anticipate that the carriers of commercial mobile radio services will cease to hold a de minimis share of the international telecommunications traffic market, thus highlighting FCC’s ongoing need for data it would use to monitor industry trends. Similarly, the Court held that FCC's retention of rule requiring cellular telephone service providers to give prior notice of their foreign affiliations when seeking authorization to operate was reasonable, and not arbitrary or capricious. The petitioners’ relief was denied.