Appeals Court Rejects BellSouth's Challenge to Section 271

(December 23, 1998)  The U.S. Court of Appeals for the District of Columbia ruled against BellSouth's appeal of the FCC's denial of its request to provide long distance telephone service in South Carolina.  The court opinion, released early on Tuesday, December 22, rejected BellSouth's argument that Section 271 of the 1996 Telecom Act is unconstitutional.

Section 271 of the Telecommunications Act of 1996 bars the Regional Bell Operating Companies (RBOCs), such as BellSouth, from providing in region long distance service until they demonstrate that they have opened their local markets to competing providers of telephone exchange service.  The Federal Communications Commission  ruled last December that BellSouth had not done this.   BellSouth, in turn, asserted that Section 271 is an unconstitutional bill of attainder.

BellSouth also argued also that Section 271 violates both the equal protection clause of the Fourteenth Amendment, and the separation of powers doctrine.  The Appeals Court rejected all arguments.  It wrote:

We hold that § 271 does not violate any of the constitutional provisions raised by BellSouth. The section does not violate the bill of attainder clause, because it does not inflict "punishment" on BellSouth. Instead, it is a rational and nonpunitive congressional enactment that serves to open telecommunications markets. Section 271 also does not violate the equal protection clause, because Congress had a rational basis for singling out the BOCs, i.e., the unique nature of their control over their local exchange areas. Finally, § 271 does not violate the separation of powers doctrine, because Congress did not substitute its judgment for that of a court; rather it simply altered the prospective effects of a consent decree, which it was surely free to do.

We also find that the FCC was correct in concluding that BellSouth is foreclosed from petitioning to provide service under §271(c)(1)(B), because BellSouth has failed to demonstrate that no "qualifying requests" for access and interconnection have been made. Moreover, given our finding that BellSouth is foreclosed from providing service under § 271(c)(1)(B), we can find no reason to address the competitive checklist issues.   (See, pages 3-4.)

The three judge panel ruled unanimously.  However, Judge David Sentelle wrote a concurring opinion in which he stated that Section 271 is an unconstitutional bill of attainder.  He added that this matter had already been decided in an earlier appeal brought by BellSouth.  Hence, he based his support for denying the appeal on the doctrine of stare decisis.  He wrote:

"For these reasons, were we writing on a clean slate I would vote to hold 47 U.S.C. § 271 unconstitutional as a violation of the Bill of Attainder Clause. But I recognize that we do not write upon a clean slate. BellSouth I announces the law of the Circuit. ... Therefore, again, I join the majority's result, but only for reasons of stare decisis and binding precedent, not because I believe it correct".

Another RBOC, SBC Communications, is the lead plaintiff in another case challenging the constitutionality of Section 271.  Last December trial court judge Joe Kendall agreed with SBC.  However, a three judge panel of the Fifth Circuit reversed on September 4.   That court split 2 to 1, with Judge Jerry Smith writing a vociferous dissent.  (See, opinion of the Appeals Court.)

The matter may also be decided by the U.S. Supreme Court.  SBC has filed a petition for writ of certiorari.   BellSouth issued a statement after yesterday's ruling:

"BellSouth will consider the court's decision more closely before deciding whether or not to seek a Supreme Court review."

"We're disappointed that we lost this decision, especially since the Act singles out only the regional Bell companies for punishment," said William Barfield, BellSouth's associate general counsel. "We've supported the Telecom Act, worked diligently with state commissions and the FCC to open the local market, and we will continue to do so to enter long distance."

The decision was another victory for the FCC.  FCC Chairman William Kennard released the following statement after the ruling:

"Today's decision is a victory for consumers. With its ruling, the Court cleared the way for the Commission to continue to implement the will of Congress and bring the full benefits of competition in the local phone market to all Americans."