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Before the
Federal Communications Commission
Washington, D.C. 20554
) )
Jacqueline Orloff, )
) )
)
Complainant, ) File No. EB-01-MD-009
)
v. )
Vodafone AirTouch Licenses )
LLC, )
d/b/a Verizon Wireless, )
)
and )
New Par, )
)
Defendants. )
MEMORANDUM OPINION AND ORDER
Adopted: May 13, 2002 Released: May 16, 2002
By the Commission:
I. INTRODUCTION
1. In this Memorandum Opinion and Order, we deny the
formal complaint that Jacqueline Orloff (``Orloff'')
filed against Vodafone Airtouch Licenses LLC, d/b/a
Verizon Wireless, and its affiliate, New Par,1 pursuant
to a primary jurisdiction referral and section 208 of the
Communications Act of 1934, as amended (``Act'').2 In
short, Orloff's complaint alleges that Defendants
violated sections 201 and 202 of the Act by offering
discounts and other inducements to certain customers
taking service under Defendants' wireless calling plans
that Defendants did not make available to Orloff. 3 We
find that Orloff has not established that Defendants'
challenged practices were unreasonably discriminatory, in
violation of section 202(a) of the Act, or unjust and
unreasonable, in violation of section 201(b) of the Act.
II. BACKGROUND
A. The Parties
2. Orloff is an individual consumer of cellular telephone
service in the Cleveland, Ohio area.4 At all relevant
times, New Par was licensed and furnished service as a
commercial mobile radio service (``CMRS'') provider in
the Cleveland, Ohio, market.5 New Par is a general
partnership in which Verizon Wireless (VAW) LLC is the
majority partner.6 B. State of Competition in the Cleveland Ohio, CMRS
Market
3. For purposes of adjudicating Orloff's complaint, the
relevant period is January 1, 1999 through February 9,
2001, because it was during this period that Orloff
negotiated, purchased, and received cellular service from
Defendants.7 Moreover, the relevant geographic market is
the Cleveland, Ohio metropolitan statistical area
(``MSA''),8 because that is where Orloff resided and
sought CMRS service from Defendants.9
4. During the relevant period, consumers seeking CMRS
service in the Cleveland, Ohio MSA could choose between
two cellular providers (New Par and GTE Mobilnet), two
personal communications service (``PCS'') providers
(Ameritech and AT&T), and one enhanced specialized mobile
radio (``SMR'') provider (Nextel).10 In addition to
these five facilities-based providers, various resellers
also served the market.11
5. These providers offered to consumers many different
types of service packages, which combined a variety of
features such as unlimited weekend calling, free long
distance, voice mail, text messaging, no activation fees,
extended geographic coverage, and discounted additional
lines.12 In addition, these providers regularly designed
new offerings to attract customers to their service,
including plans with significant bundled minutes and less
restrictive terms and conditions.13 Moreover, the
providers frequently presented special promotions to
consumers, including reduced activation fees and free or
discounted phones and automobile battery chargers.14 The
providers extensively advertised these plans and
promotions, highlighting rates, terms, conditions, and
quality of service.15
C. Defendants' Service Offerings
6. In the Cleveland, Ohio CMRS market, Defendants provided
to consumers various standard rate plans, as well as
regular promotions, which included additional incentives
to purchase their service.16 Many of Defendants' rate
plans and promotions included bundles of airtime minutes
as part of monthly service or extra features at no
additional charge.17
7. Defendants also authorized their personnel to depart
from standard rate plans and promotions by offering added
inducements to attract new customers or retain existing
customers.18 Defendants called these inducements ``sales
concessions'' (for new customers) and ``retention
concessions'' (for existing customers).19 Examples of
these concessions include a one-time monetary credit,
minutes of air time added to a plan's or promotion's
bundle of minutes, the free use of some feature (e.g.,
voice mail or call forwarding) for a period of time, and
equipment or an equipment discount or rebate.20
Concessions resulted in the customer obtaining service at
a price lower than that paid by another customer who
received service under the same rate plan or promotion
but who did not receive a concession.21
8. Defendants empowered their sales agents and customer
care representatives to use their discretion in
determining whether to offer a particular concession to a
particular customer.22 Thus, Defendants decided to grant
a concession (as well as the amount of a concession) to
any particular customer on an ``individualized basis.''23
Defendants' personnel generally did not volunteer to
consumers information about the potential for obtaining
concessions.24 Rather, a consumer generally could learn
about and perhaps obtain a concession only as a result of
negotiating (i.e., haggling) with a representative of
Defendants.25 Defendants did not require their personnel
to maintain records regarding the granting of
concessions.26
9. Defendants also provided ``Association'' and
``Government'' rate plans in 1999, which were available
to members of qualifying associations (e.g., bar
associations, chambers of commerce, boards of realtors)
and governmental entities/employees, respectively.27 On
some occasions, Defendants allowed individuals who were
not members of qualifying associations or governmental
entities nonetheless to receive the Association or
Government rates.28
10. On February 23, 1999, Orloff purchased cellular service
from Defendants under an advertised rate plan.29 Five
months into her two-year contract, Orloff switched to
another of Defendants' advertised rate plans, on which
she remained until she terminated service on February 6,
2001.30 Orloff received sales concessions at the time
she took service under the initial plan, and she received
a retention concession at the time she switched to the
subsequent plan.31 Nevertheless, during the relevant
period, customers in the Cleveland, Ohio market who were
on the same rate plan as Orloff received certain sales
and retention concessions that Orloff did not receive.32
D. The Federal District Court Litigation
11. On February 11, 2000, Orloff and three other
individuals filed a putative class action lawsuit against
Defendants in the United States District Court for the
Northern District of Ohio.33 The district court
complaint alleges that Defendants violated section 202(a)
of the Act by charging different prices to similarly-
situated customers for the same service.34 Pursuant to
the referral to the Commission, granted at Defendants'
request prior to the initiation of discovery, the
District Court stayed the underlying lawsuit until the
Commission determines whether Defendants' conduct
violates the Act.35
E. The Instant Proceeding
12. In the Complaint filed with the Commission, Orloff
alleges that Defendants' ``policy and practice of secret,
selective, and standardless discounts which are
negotiated individually with preferred customers''
violates sections 201 and 202 of the Act.36
Specifically, the Complaint avers that Defendants acted
in an unreasonable and discriminatory manner, because
they failed to make available to Orloff (or to advise her
of the existence of) more favorable rate plans and
concessions that Defendants offered to other similarly-
situated customers.37 The Complaint asks the Commission
to declare Defendants' acts unlawful.38 Assuming
favorable rulings from the Commission, the Complaint
further indicates that Orloff will pursue a claim for
damages in the District Court, rather than at the
Commission.39
13. In their Answer, Defendants assert that Orloff has not
demonstrated that a ``nondominant carrier in a
competitive market [is] able to impose unreasonable or
discriminatory pricing.''40 The Answer further argues
that, even assuming Orloff's legal theory regarding
discrimination by a non-dominant carrier is correct,
Orloff has not demonstrated that, as a factual matter,
she is entitled to relief, because she has not
established that any particular customer was charged less
than she was for like service and because she received
concessions from Defendants.41
III. DISCUSSION
A. Defendants' Concessions Were a Reasonable Response
to Competition in the Cleveland, Ohio CMRS Market.
1. Defendants' Concessions Were Not Unreasonably
Discriminatory Under Section 202(a) of the
Act.
a. Legal Standard
14. Section 202(a) of the Act makes it unlawful for any
common carrier to discriminate unjustly or unreasonably
among customers in its provision of ``like communication
service.''42 The Commission and the courts have held that
a three-step inquiry is required to determine whether a
violation of section 202(a) has occurred: (1) whether
the services at issue are ``like''; (2) if they are,
whether there are differences in the terms and conditions
pursuant to which the services are provided; and (3) if
so, whether the differences are reasonable.43 When a
complainant establishes the first two components, the
burden of persuasion shifts to the defendant carrier to
justify the discrimination as reasonable.44
b. Likeness of Service and Difference in
Treatment
15. We conclude that Orloff has satisfied the first two
steps of the section 202(a) inquiry. First, the parties
agree that, for purposes of this proceeding, the
Commission may assume that the ``like'' communication
service at issue is single-line cellular service
purchased by a non-business user.45 Second, we conclude
that Defendants treated Orloff differently than they
treated other customers purchasing like service, given
the parties' stipulations that (1) a customer who
received a concession obtained service at a lower price
than that paid by a customer who received service under
the same rate plan or promotion but who did not receive
that concession;46 and (2) some customers in the
Cleveland, Ohio MSA on the same rate plan as Orloff
received some types of sales and retention concessions
that Orloff did not receive.47 Accordingly, we turn to
the question of whether Defendants have satisfied the
third step of the section 202(a) inquiry - i.e., whether
their different treatment of Orloff was reasonable.
c. Reasonableness of the Different
Treatment
16. Defendants contend that the existence of vigorous
competition in the Cleveland, Ohio CMRS market rendered
individualized concessions and haggling reasonable.48
Defendants characterize their concessions practices as a
means of enabling a non-dominant carrier to keep existing
customers and to obtain new customers by quickly meeting
the offers of competitors.49 According to Defendants,
they made concessions in a nondiscriminatory manner,
because no customers were guaranteed a concession, and
any concessions that Defendants gave resulted from
individual negotiation initiated by the customer (i.e.,
haggling).50 Thus, Defendants maintain that the
determinative factor was whether a customer haggled:
``[A]ll customers . . . could trigger a competitive
response from [Defendants], and would be equally likely
to be offered or not offered a concession.''51
17. Orloff argues that the presence of competition does not
justify Defendants' concessions practices,52 and that
competition is irrelevant when customers do not have
access to sufficient information regarding alternative
offerings.53 Moreover, Orloff asserts that Defendants
granted concessions for any reason or no reason at all,
not because they carefully analyzed economic factors
attendant to particular transactions.54 Thus, Orloff
highlights Defendants' failure to keep any records
allowing a comparison of different customers and the
reasons concessions were, or were not, given.55
18. Defendants have demonstrated that their disparate
treatment of Orloff was reasonable. Although the
Commission declined to forbear from applying sections
201(b) and 202(a) of the Act in the CMRS context,56 it
has considered the existence of robust competition in the
CMRS market when determining whether a violation of those
sections has occurred. For example, in Kiefer v.
PageNet, the Commission held that a fee imposed by a
paging carrier on past due balances for paging service
was not unreasonable under section 201(b) of the Act.57
The Commission rejected the complainant's assertion that
the late fee must be cost-based, noting, among other
things, that the Commission has regulated CMRS ``through
competitive market forces,'' and that the existence of a
competitive market in that case ``did not warrant a
finding that the late fee violate[d] section 201(b).''58
19. Orloff does not dispute that, at the time she took
service from Defendants, consumers in the Cleveland, Ohio
CMRS market had many choices.59 In particular, consumers
could obtain service from five facilities-based providers
and from several resellers.60 Carriers in that market
regularly designed new service offerings to attract
customers to their service and advertised the new
packages and promotions to consumers.61 Consequently,
consumers had ample opportunity to compare various terms
and conditions in order to identify the package best-
suited to their needs.62 In short, we conclude that
vibrant competition characterized the Cleveland, Ohio
CMRS market.63
20. Given the indisputable competition in the Cleveland
CMRS market, we decline to find that Defendants'
concessions practices violated section 202(a) of the Act,
even if those practices allowed some consumers to
negotiate better deals than other consumers. This is
because we find that market forces protect Cleveland
consumers from discrimination from these particular
practices. We find that there is no evidence that any
market failure prevented customers from switching
carriers if they were dissatisfied. Accordingly, we find
it unlikely that a carrier would have an incentive to
engage in unreasonable discrimination where such conduct
would result in a loss of customers.64
21. We are aware of case law holding that a carrier ``will
not be a common carrier where its practice is to make
individualized decisions, in particular cases, on whether
and what terms to deal.''65 This statement, however,
articulates the ``quasi-public character implicit in the
common carrier concept'' - i.e., that the carrier
``undertakes to carry for all people indifferently.''66
Orloff does not allege that Defendants refused to deal
with any segment of the public whose business is of the
``type normally accepted.''67 For example, Orloff does
not contend that Defendants declined to serve any
particular demographic group (e.g., customers who are of
a certain race or income bracket). Indeed, Defendants'
assertion that they are willing to engage in negotiations
initiated by any customer is uncontroverted.68
22. In reaching our conclusion that a policy permitting all
customers to haggle comports with section 202(a)'s
reasonableness requirement, however, we emphasize two
points. First, we are not forbearing from applying
section 202(a) in this case. Section 202 continues to
act as a powerful protection for CMRS consumers, even if
it was not violated in this case. If a CMRS market were
inadequately competitive, or if some other market failure
limited consumers' abilities to use market forces to
protect themselves, Section 202 could be implicated.69
If, for example, a carrier unreasonably discriminated
against rural consumers, who lacked adequate choice of
providers, in favor of urban consumers, we could find a
section 202 violation. It is also important to note that
competition alone does not insulate a CMRS provider from
section 202 liability. Even with adequate competition we
will not hesitate to find that unreasonable
discrimination violates section 202. Second, in a
related vein, our holding of what is reasonable in this
market does not necessarily translate to other markets
marked by less competition.
23. We reject Orloff's contention that, in order to pass
muster under section 202(a), a haggling policy must
result in all customers who haggle being treated exactly
the same.70 By its very nature, a policy permitting
customer negotiation will have outcomes depending, in
part, on the ability of customers to identify the
elements of service they desire and to bargain
effectively for those elements. Although such a policy
may not result in identical deals for all consumers
purchasing cellular service, we are confident that
consumers, given the opportunity to purchase service from
five facilities-based CMRS carriers and numerous CMRS
resellers,71 and given no evidence of other market
failure, will ``shop around,'' if they believe a
particular carrier does not meet their needs. Moreover,
although we agree with Orloff that the information
available to customers about deals other customers
received is not perfect,72 she has not demonstrated that
she was unaware of her ability to haggle or that
Defendants somehow misled her in that regard. Indeed, it
is undisputed that, during the relevant time period, CMRS
providers in the Cleveland, Ohio, CMRS market actively
advertised their plans and promotions in an effort to
attract customers,73 and that Orloff was aware that she
had options beyond obtaining service from Defendants.74
In fact, Orloff availed herself of the benefits of
haggling, receiving numerous concessions from Defendants
on two occasions.75 We have not found in this case that
information asymmetries rendered market forces in
Cleveland unable to protect CMRS consumers.
24. We further disagree with Orloff's assertion that
differences in treatment of consumers purchasing like
service must be cost-justified on a transaction-by-
transaction basis.76 As noted above, the Commission has
regulated CMRS though competitive market forces,
declining to impose specific cost-based regulations on
CMRS providers.77 In any event, we find credible
Defendants' assertion that their concessions practices
stemmed generally from a rough profitability analysis,
i.e., to respond immediately to changes in the
marketplace and to individual customer demand when
existing plans and promotions were inadequate.78
Furthermore, we believe that, as a practical matter, it
would be extraordinarily burdensome to require CMRS
carriers to do what Orloff asks (i.e., to track and offer
to every customer concessions attained through
negotiation). In the absence of evidence of market
failure in the Cleveland, Ohio CMRS market, we decline to
impose such a burden.79
2. Defendants' Concessions Practices Were Not
Unreasonable Under Section 201(b) of the Act.
25. Section 201(b) of the Act requires a common carrier's
charges and practices in connection with communication
service to be ``just and reasonable.''80 Orloff contends
that Defendants' concessions practices constitute an
unjust and unreasonable practice.81 Defendants deny
Orloff's allegations, offering the same defenses to the
section 201(b) claim as they do to the section 202(a)
claim.82
26. We reject Orloff's section 201(b) claim. As noted,
section 201(b) declares unlawful only ``unjust or
unreasonable'' common carrier practices. For the reasons
discussed above, we find Defendants' concessions
practices to be reasonable.83
B. Defendants' Occasional Departure from
Association/Government Rate Plan Criteria is
Tantamount to a Concession and, Therefore, is
Reasonable.
27. Orloff argues that Defendants' occasional practice of
allowing a person to obtain association/governmental
entity rates, even though not a qualifying member,
violates sections 201(b) and 202(a).84 We disagree.
First, the record contains no evidence that this conduct
occurred in the Cleveland, Ohio MSA (as opposed to the
Columbus, Ohio MSA). In any event, even if Orloff could
show that Defendants engaged in this conduct in
Cleveland, we would not find a violation of section
202(a) or 201(b). As Defendants observe,85 allowing a
non-member to obtain an association/governmental entity
rate is merely another way of granting a concession,
which we have already concluded was a reasonable practice
in the competitive Cleveland, Ohio CMRS market.
IV. ORDERING CLAUSES
28. Accordingly, IT IS ORDERED, pursuant to sections 4(i),
4(j), 201(b), 202(a), and 208 of the Communications Act
of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 201(b),
202(a), and 208, that the Complaint filed by Jacqueline
Orloff against Vodafone Airtouch Licenses LLC, d/b/a
Verizon Wireless, and New Par IS DENIED and that this
proceeding IS TERMINATED as of the Release Date of this
Order.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
_________________________
1 Vodafone AirTouch Licenses LLC has been renamed Verizon
Wireless (VAW) LLC. Revised Joint Statement, File No. EB-
01-MD-009 (filed July 3, 2001) (``Revised Joint Statement'')
at 3, ¶ 8. See Respondent's Answer, File No. EB-01-MD-009
(filed May 3, 2001) (``Answer'') at 1 n.1. New Par formerly
operated under the trade name ``Airtouch Cellular,'' and now
transacts business under the trade name ``Verizon
Wireless.'' Answer at 1 n.1. See Revised Joint Statement
at 2, ¶ 2. Although much of the conduct at issue in this
proceeding occurred before the above changes, this Order
refers to the parties individually as ``Verizon Wireless
(VAW) LLC'' and ``New Par,'' respectively, and refers to
these entities collectively as ``Defendants.''
2 47 U.S.C. § 208. The United States District Court for
the Northern District of Ohio granted Defendants' request
for a primary jurisdiction referral on May 30, 2000. See
Jacqueline Orloff, et al. v. Vodafone AirTouch Licenses LLC,
et al., Case No. 1: 00 CV 421, slip op. (N.D. Ohio May 30,
2000) (``District Court Order''), attached as Exhibit A to
Answer. Almost eight months later, on January 24, 2001,
Orloff filed a formal complaint with the Commission
implementing the primary jurisdiction referral. However,
because that complaint failed in numerous and significant
respects to comply with the Commission's rules governing
formal complaints, see 47 C.F.R. §§ 1.720-1.736, Commission
staff dismissed the complaint without prejudice on February
1, 2001. See Letter from Alexander P. Starr, Market
Disputes Resolution Division, Enforcement Bureau, to Randy
J. Hart and Mark Griffin, counsel for Orloff (dated Feb. 1,
2001). Over two months later, Orloff filed a new complaint,
which is the subject of this Order. See Complaint for
Declaratory Judgment Arising out of Class Action Complaint
for Damages, File No. EB-01-MD-009 (filed Apr. 12, 2001)
(``Complaint'').
3 See 47 U.S.C. §§ 201(b), 202(a).
4 Revised Joint Statement at 3, ¶¶ 11-12; Complaint at 2,
¶ 6; Answer, Tab 1 (Respondent's Legal Analysis) at 2.
5 Revised Joint Statement at 2, ¶ 2; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 5, ¶ 9.
6 Revised Joint Statement at 2, ¶¶ 4, 6; at 3, ¶ 8;
Answer, Tab 2 (Respondent's Answer to Specific Allegations)
at 6, ¶ 10. Defendants argue that, because Verizon Wireless
(VAW) LLC is not a licensed CMRS provider or a common
carrier, it is not properly a party defendant. Supplemental
Answer, File No. EB-01-MD-009 (filed May 29, 2001)
(``Supplemental Answer'') at 2; Answer, Tab 1 (Respondent's
Legal Analysis) at 1 n.1; Tab 2 (Respondent's Answer to
Specific Allegations) at 95, ¶ 284. In light of our
conclusion that the Complaint should be denied on the
merits, we need not reach this issue. Cf. 47 U.S.C. §
411(a) (providing that interested non-carriers may be
included as parties along with carrier defendants).
7 See Letter from Tejal Mehta, Market Disputes Resolution
Division, Enforcement Bureau, to Randy J. Hart and Mark
Griffin, counsel for Orloff, and Kathleen M. Trafford and
Kenneth D. Patrich, counsel for Defendants, File No. EB-01-
MD-009 (dated May 29, 2001) at 3 (``May 29, 2001 Staff
Letter''); Letter from Tejal Mehta, Market Disputes
Resolution Division, Enforcement Bureau, to Randy J. Hart
and Mark Griffin, counsel for Orloff, and Kenneth D.
Patrich, L. Charles Keller, J. Wade Lindsey, Kathleen M.
Trafford, and Daniel W. Costello, counsel for Defendants,
File No. EB-01-MD-009 (dated June 8, 2001) at 1 (``June 8,
2001 Staff Letter''); Letter from Tejal Mehta, Market
Disputes Resolution Division, Enforcement Bureau, to Randy
J. Hart and Mark Griffin, counsel for Orloff, and Kathleen
M. Trafford and Kenneth D. Patrich, counsel for Defendants,
File No. EB-01-MD-009 (dated July 16, 2001) at 2 (``July 16,
2001 Staff Letter'').
8 The Commission uses MSAs, which the Office of
Management and Budget defines based on population
statistics, to allocate cellular radio licenses.
9 Revised Joint Statement at 2, ¶ 2; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 5, ¶ 9.
See also May 29, 2001 Staff Letter at 3; June 8, 2001 Staff
Letter at 1; July 16, 2001 Staff Letter at 2.
10 Revised Joint Statement at 4, ¶ 18; Answer, Tab 1
(Respondent's Legal Analysis) at 3. Cellular service, PCS,
and SMR service utilize different spectrum frequency to
provide mobile telephony. The Commission regulates all
three services as CMRS. See 47 C.F.R. § 20.9.
11 Revised Joint Statement at 4, ¶ 19; Answer, Tab 1
(Respondent's Legal Analysis) at 3.
12 Revised Joint Statement at 4, ¶ 20; Answer, Exhibit J
(Wireless Telephone Advertisements from the Cleveland Plain
Dealer); Exhibit L (Affidavit of Corinne Milligan)
(``Milligan Affidavit''), Exhibits 1-65.
13 Revised Joint Statement at 4, ¶ 20; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 67, ¶ 156;
Exhibit J (Wireless Telephone Advertisements from the
Cleveland Plain Dealer); Exhibit L (Milligan Affidavit),
Exhibits 1-65.
14 Revised Joint Statement at 4, ¶ 20; Answer, Tab 1
(Respondent's Legal Analysis) at 21-22; Tab 2 (Respondent's
Answer to Specific Allegations) at 51 and 67, ¶¶ 111, 158;
Exhibit J (Wireless Telephone Advertisements from the
Cleveland Plain Dealer); Exhibit L (Milligan Affidavit),
Exhibits 1-65.
15 Revised Joint Statement at 5, ¶¶ 24, 26; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 57 and 65,
¶¶ 133, 151; Exhibit J (Wireless Telephone Advertisements
from the Cleveland Plain Dealer); Exhibit L (Milligan
Affidavit), Exhibits 1-65.
16 Revised Joint Statement at 5, ¶ 25; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 47 and 60,
¶¶ 107, 142.
17 Revised Joint Statement at 5, ¶ 25; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 47 and 60,
¶¶ 107, 142.
18 Revised Joint Statement at 5-6, ¶ 28; Answer, Tab 1
(Respondent's Legal Analysis) at 4; Tab 2 (Respondent's
Answer to Specific Allegations) at 70, ¶ 165.
19 Revised Joint Statement at 5-6, ¶¶ 28-29; Answer, Tab 1
(Respondent's Legal Analysis) at 3.
20 Revised Joint Statement at 6, ¶ 28; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 60, ¶ 142.
21 Revised Joint Statement at 6, ¶ 28; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 51, ¶ 116.
22 Revised Joint Statement at 6, ¶ 30; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 46, ¶ 104.
23 Revised Joint Statement at 7, ¶ 34; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 52, ¶ 119.
24 Revised Joint Statement at 7, ¶ 34; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 47 and 52,
¶¶ 106, 118.
25 Revised Joint Statement at 7, ¶ 35; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 47 and 52,
¶¶ 106, 118.
26 Complainant's Initial Brief in Support of Declaratory
Judgment that Defendants Have Violated 47 U.S.C. §§ 201 and
202 (filed Aug. 17, 2001) (``Orloff's Initial Brief'') at
22, 29-31; Complainant's Reply Brief in Support of
Declaratory Judgment that Defendants Have Violated 47 U.S.C.
§§ 201 and 202 (filed Sept. 17, 2001) (``Orloff's Reply
Brief'') at 2-3.
27 Revised Joint Statement at 5, ¶ 22; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 57 and 77,
¶¶ 135, 179.
28 Revised Joint Statement at 5, ¶ 22; Answer, Tab 1
(Respondent's Legal Analysis) at 18; Initial Brief of New
Par and Vodafone Airtouch Licenses LLC, d/b/a Verizon
Wireless, File No. EB-01-MD-009 (filed Sept. 7, 2001)
(``Respondent's Initial Brief'') at 31. See Respondents'
Answers to Complainant's July 9, 2001 Discovery Requests
Propounded to Respondent New Par, File No. EB-01-MD-009
(filed July 27, 2001) (``Respondents' Answers to July 9,
2001 Discovery Requests''), Response to Request for
Production of Documents No. 3 at NPV 170-173 (Ohio
Association Program Packet); Response to Interrogatory No.
6.
29 Revised Joint Statement at 3, ¶¶ 10-11, 15; Complaint,
Exhibit B (Orloff Service Agreement); Answer, Tab 1
(Respondent's Legal Analysis) at 2.
30 Revised Joint Statement at 4, ¶¶ 16, 17; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 3-4, ¶ 6.
31 Revised Joint Statement at 3, ¶¶ 15-16; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 3-4 and 44,
¶¶ 6, 95. The sales concessions consisted of a reduced rate
on a new cellular telephone, waiver of the standard
activation charge, one-half credit on the amount of the
monthly access fee for a period of six months, and free
weekend calling for three months. Revised Joint Statement
at 3, ¶ 15; Answer, Tab 2 (Respondent's Answer to Specific
Allegations) at 3-4 and 44, ¶¶ 6, 95. The retention
concession consisted of a billing credit. Revised Joint
Statement at 4, ¶ 16; Answer, Tab 2 (Respondent's Answer to
Specific Allegations) at 3-4 and 44, ¶¶ 6, 95.
32 Revised Joint Statement at 7, ¶ 40.
33 The putative class consists of at least 50,000 Ohio
residents who purchased cellular service from Defendants two
years prior to the filing of the federal district court
complaint and who did not receive concessions. Complaint,
Exhibit A (Jacqueline Orloff, et al. v. Vodafone AirTouch
Licenses LLC, et al., Case No. 1: 00 CV 421, Class Action
Complaint (N.D. Ohio Feb. 11, 2000)). We note that the
Commission cannot adjudicate complaints under section 208 on
a class action basis. See Halprin, Temple, Goodman & Sugrue
v. MCI Telecommunications Corp., Memorandum Opinion and
Order, 13 FCC Rcd 22568, 22581, ¶ 29 (1998) (``class action
lawsuits are neither contemplated by, nor consistent with,
the private remedies created under sections 206 through 209
of the Act'').
34 See District Court Order at 1.
35 District Court Order at 10. The District Court did not
identify specific issues that it would like the Commission
to resolve. See id.
36 Complaint at v.
37 Complaint at 42-50, ¶¶ 225-280. See Orloff's Initial
Brief at 17-34; Orloff's Reply Brief at 3-14.
38 See Complaint at 42-49, ¶¶ 225-272.
39 See Complaint at 49-50, ¶¶ 276, 280.
40 Answer, Tab 1 (Respondent's Legal Analysis) at 5. See
also Answer, Tab 1 (Respondent's Legal Analysis) at 6-13.
41 Answer, Tab 1 (Respondent's Legal Analysis) at 5. See
also Answer, Tab 1 (Respondent's Legal Analysis) at 14-22.
42 47 U.S.C. § 202(a) (``It shall be unlawful for any
common carrier to make any unjust or unreasonable
discrimination in charges, practices, classifications,
regulations, facilities, or services for or in connection
with like communication service . . . .''). Persons engaged
in the provision of CMRS are treated as common carriers
under the Act. See 47 U.S.C. § 332(c)(1)(A).
43 See, e.g., Competitive Telecommunications Ass'n v. FCC,
998 F.2d 1058, 1061 (D.C. Cir. 1993); MCI Telecommunications
Corp. v. FCC, 842 F.2d 1296, 1303 (D.C. Cir 1988); Cellexis
International, Inc. v. Bell Atlantic NYNEX Mobile Systems,
Inc., et al., Memorandum Opinion and Order, FCC 01-368, ¶ 10
(rel. Dec. 19, 2001); Beehive Telephone, Inc. v. Bell
Operating Companies, Memorandum Opinion and Order, 10 FCC
Rcd 10562, 10567, ¶ 27 (1995); Competition in the Interstate
Interexchange Marketplace, Report and Order, 6 FCC Rcd 5880,
5903, ¶ 132 (1991).
44 See National Communications Ass'n, Inc. v. AT&T Corp.,
238 F.3d 124, 129-30 (2nd Cir. 2001);
Implementation of the Telecommunications Act of 1996:
Amendment of Rules Governing Procedures to Be
Followed When Formal Complaints Are Filed Against Common
Carriers, Report and Order, 12 FCC Rcd
22497, 22615, ¶ 291 & n.782 (1997), recon. denied, 16 FCC
Rcd 5681 (2001); PanAmSat Corp. v. Comsat
Corp., Memorandum Opinion and Order, 12 FCC Rcd 6952, 6965,
¶ 34 n.90 (1997).
45 See Orloff's Initial Brief at 18; Defendants' Initial
Brief at 20. Defendants argue that, ``while all wireless
service involves the sale of airtime, such airtime comes in
a wide variety of packages, with airtime bundled in
different ways and coupled with many different types of
features and services.'' Defendants' Initial Brief at 20.
Nevertheless, Defendants state that they are willing to have
the Commission assume in this proceeding that the CMRS
service provided to Orloff was ``like'' the CMRS service
provided to all other non-business customers. Id.
46 Revised Joint Statement at 6, ¶ 28; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 44, ¶ 95.
47 Revised Joint Statement at 7, ¶ 40. Contrary to
Defendants' assertion (see Answer, Tab 1 (Respondent's Legal
Analysis) at 17; Defendants' Initial Brief at 21), the fact
that Orloff received some sales and retention concessions is
not dispositive of the issue of disparate treatment, because
Orloff did not receive other concessions that were provided
to customers obtaining like service.
48 Answer, Tab 1 (Respondent's Legal Analysis) at 6-13,
22; Defendants' Initial Brief at 8-10; Defendants' Reply
Brief at 3.
49 Answer, Tab 1 (Respondent's Legal Analysis) at 21-22;
Defendants' Initial Brief at 2.
50 Defendants' Initial Brief at 22; Defendants' Reply
Brief at 5.
51 Defendants' Reply Brief at 5. See also Defendants'
Initial Brief at 22.
52 Complaint at 27-29, ¶¶ 146-153; Orloff's Initial Brief
at 24-29; Orloff's Reply Brief at 3.
53 Complaint at 14-15, ¶¶ 60-65; Orloff's Initial Brief at
32; Orloff's Reply Brief at 7, 11, and 13.
54 Complaint at 43, ¶ 239; at 45, ¶ 249; at 49, ¶ 272;
Orloff's Initial Brief at 22; Orloff's Reply Brief at 7-8.
55 Complaint at 24, ¶ 122; Orloff's Initial Brief at 22,
29-31; Orloff's Reply Brief at 2-3.
56 See Personal Communications Industry Association's
Petition for Forbearance for Broadband Personal
Communications Services, Memorandum Opinion and Order and
Notice of Proposed Rulemaking, 13 FCC Rcd 16857 (1998).
57 Kiefer v. Paging Network, Inc., d/b/a PageNet,
Memorandum Opinion and Order, 16 FCC Rcd 19129 (2001)
(``Kiefer v. PageNet'').
58 Kiefer v. PageNet, 16 FCC Rcd at 19131, ¶ 5; at 19132,
¶ 7.
59 See Orloff's Initial Brief at 24; Orloff's Reply Brief
at 3.
60 Revised Joint Statement at 4, ¶¶ 18, 19; Answer, Tab 1
(Respondent's Legal Analysis) at 3.
61 Revised Joint Statement at 4-5, ¶¶ 20, 24, 26. We have
observed in the CMRS context that the continued rollout of
differentiated pricing plans indicates a competitive
marketplace. Implementation of Section 6002(b) of the
Omnibus Budget Reconciliation Act of 1993, Annual Report and
Analysis of Competitive Market Conditions with Respect to
Commercial Mobile Services, Sixth Report, 16 FCC Rcd 13350,
13377 (2001) (``Sixth Annual CMRS Competition Report'').
62 Revised Joint Statement at 5, ¶¶ 24, 26; Answer, Tab 2
(Respondent's Answer to Specific Allegations) at 57 and 65,
¶¶ 133, 151; Exhibit J (Wireless Telephone Advertisements
from the Cleveland Plain Dealer).
63 We note that statistics at a national level regarding
cellular service indicate continued downward pricing trends,
steady customer churn rates, and continued expansion of
mobile networks into new and existing markets. These
factors suggest a high level of competition for mobile
telephony users generally. See Sixth Annual CMRS
Competition Report, 16 FCC Rcd at 13370, 13376-8.
64 See Answer, Tab 1 (Respondent's Legal Analysis) at 22;
Defendants' Initial Brief at 13. See also Implementation of
Sections 3(n) and 332 of the Communications Act, Regulatory
Treatment of Mobile Services, Second Report and Order, 9 FCC
Rcd 1411, 1478, ¶ 173 (1994) (noting that non-dominant
carriers are unlikely to behave anti-competitively because
they recognize that such behavior would result in the loss
of customers); Policy and Rules Concerning Rates for
Competitive Carrier Services and Facilities Authorizations
Therefor, First Report and Order, 85 FCC 2d 1, 31, ¶ 88
(1980) (firms lacking market power cannot rationally price
their services in contravention of Sections 201(b) and
202(a) of the Act because they would lose market share).
65 National Ass'n of Regulatory Util. Comm'rs v. FCC, 525
F.2d 630, 641 (D.C. Cir.), cert. denied, 425 U.S. 992 (1976)
(``NARUC I''). See also Southwestern Bell Tel. Co. v. FCC,
19 F.3d 1475, 1481 (D.C. Cir. 1994) (``[i]f the carrier
chooses its clients on an individualized basis and
determines in each particular case `whether and on what
terms to serve' and there is no specific regulatory
compulsion to serve all indifferently, the entity is a
private carrier for that particular service''); National
Ass'n of Regulatory Util. Comm'rs v. FCC, 533 F.2d 601, 608-
09 (D.C. Cir. 1976) (quoting NARUC I); Complaint at 7, ¶ 24
(citing NARUC I, 525 F.2d at 641); Orloff's Initial Brief at
16 (same); Orloff's Reply Brief at 5 (same).
66 NARUC I, 525 F.2d at 641 (citations omitted).
67 NARUC I, 525 F.2d at 641 (citations omitted).
68 See note 51, supra.
69 With respect to CMRS, the Commission generally has
relied on market forces, rather than regulation, except when
there is market failure. See Implementation of Sections
3(N) and 332 of the Communications Act Regulatory Treatment
of Mobile Services, Second Report and Order, 9 FCC Rcd 1411,
1478, ¶ 173 (``in a competitive market, market forces are
generally sufficient to ensure the lawfulness of . . . terms
and conditions of service set by carriers who lack market
power''); at 1478-79, ¶ 175 (forbearing from tariff
requirements for CMRS carriers and noting that section 202
``will provide an important protection in the event there is
a market failure'') (emphasis added).
70 Orloff's Reply Brief at 9-10.
71 See Revised Joint Statement at 4, ¶¶ 18, 19.
72 See Orloff's Initial Brief at 32; Orloff's Reply Brief
at 7, 11.
73 Revised Joint Statement at 5, ¶¶ 24, 26.
74 Revised Joint Statement at 3, ¶ 14.
75 Revised Joint Statement at 3-4, ¶¶ 15-16.
76 Orloff's Initial Brief at 33-34; Orloff's Reply Brief
at 14.
77 See Kiefer v. PageNet, 16 FCC Rcd at 19131, ¶ 5.
78 See Answer, Exhibit C (Affidavit of Seamus Hyland)
(``Hyland Affidavit''), at ¶¶ 35-38; Exhibit L (Milligan
Affidavit), Exhibits 1-65; Respondents' Answers to July 9,
2001 Discovery Requests, Response to Request for Production
of Documents No. 2 at NPV 102-103; Defendants' Initial Brief
at 18; Defendants' Reply Brief at 4.
79 Again, we emphasize that our ruling is confined to the
facts of this case, which involve a highly-competitive CMRS
market occupied by a number of non-dominant carriers.
Consequently, the cases cited by Orloff (see Orloff's
Initial Brief at 27-28; Orloff's Reply Brief at 11) are
distinguishable, because they all involved carriers with
significant market power. See MCI Telecommunications Corp.
v. FCC, 917 F.2d 30, 41 (D.C. Cir. 1990); Southwestern Bell
Telephone Co., Memorandum Opinion and Order on
Reconsideration, 13 FCC Rcd 6964, 6967, ¶ 8 (1998); AT&T
Communications Tariff F.C.C. Nos. 1, 2, 9, Memorandum
Opinion and Order, 6 FCC Rcd 5675, 5675, ¶ 6 (1991).
80 47 U.S.C. § 201(b).
81 Complaint at 49, ¶ 275; Orloff's Initial Brief at 23;
Orloff's Reply Brief at 3.
82 See Answer, Tab 2 (Respondent's Answer to Specific
Allegations) at 2, ¶ 2; Defendants' Initial Brief at 24, 31.
83 Orloff asserts for the first time in her opening brief
that Defendants' public position that they do not grant
concessions is an intentional misrepresentation in violation
of section 201(b). Orloff's Initial Brief at 32. We
decline to address this misrepresentation claim, because
Orloff did not raise it in her complaint. Thus, we find
that the record provides an inadequate basis on which to
properly assess the merits of the argument. See, e.g., AT&T
Corp. v. Jefferson Telephone Co., Memorandum Opinion and
Order, 16 FCC Rcd 16130, 16133 n.18 (2001) (declining to
address an issue raised for the first time in the brief).
84 See Complaint at 46-48, ¶¶ 258, 259, 263, and 267;
Orloff's Initial Brief at 21. Orloff also argues that it is
discriminatory for Defendants to bill customers
participating in Association/Government rate plans directly
for services, rather than billing the affiliated entity.
Complaint at 46-47, ¶¶ 254-259. Because Orloff offers no
legal support for this contention, we dismiss this aspect of
her claim.
85 Answer, Tab 1 (Respondent's Legal Analysis) at 18;
Defendants' Initial Brief at 32.