Neustar, Inc. v. FCC: 857 F.3d 886 (D.C. Cir. 2017).

• Author: Lee, Jane

In Neustar, Inc. v. FCC, (1) the United States Court of Appeals for the District of Columbia Circuit denied petitions for review of FCC's orders naming another telecommunications provider, Telcordia, to replace Neustar as the local number portability administrator ("LNPA").

The Telecommunications Act of 1996 requires telecommunications providers to provide "portability" of telephone numbers, permitting customers to keep their current phone numbers when they switch carriers. (2) In its 1996 First Report and Further Notice of Proposed Rulemaking, the FCC concluded that it is in the public interest for the number portability databases to be administered by one or more neutral third parties, and thus the LNPA was created. (3)

In 2009, upon the petition of Telcordia to "institute a competitive bid process for the LNPA contract," the FCC began a collaborative public process and released bid documents. (4) After reviewing the bids, the North American Numbering Council recommended Telcordia as the LNPA, which Neustar objected to on procedural grounds concerning the selection process and on substantive grounds regarding costs and bidders' qualifications. (5) Reasoning that the LNPA selection does not require notice-and-comment rulemaking, and that the proceeding is properly viewed as an informal adjudication in its March 2015 Order, the FCC approved the recommendation of Telcordia as the LNPA. (6)

Neustar argued, however, that the selection must be accomplished by a rulemaking to amend the existing rules, mainly to be in accordance with the Administrative Procedure Act ("APA")'s definition of a "rule." (7) A "rule" is defined "broadly to include 'statements of general or particular applicability and future effect' that are designed to 'implement, interpret, or prescribe law or policy," and the Court held that this case does not qualify under the statutory definition of a "rule," so rulemaking procedures are not required. (8)

Neustar argues that the FCC's selection of Telcordia was contrary to law or arbitrary and capricious, based on an improper understanding and application of the neutrality regulations. (9) The FCC responded that although both Neustar and Telcordia are both qualified to serve as the LNPA, a legitimate cost analysis warranted recommendation of Telcordia as the next LNPA. (10)

Neustar argued that Telcordia cannot be neutral because Telcordia's parent company is Ericsson, which is an equipment manufacturer and service provider. (11)...