WIDE VOICE, LLC V. FCC, ET AL, No. 21-71375 (9th Cir. 2023)
Annotate this Case
The Federal Communications Commission (“FCC”) has long monitored local telephone companies’ “access stimulation.” In 2011, the FCC issued rules to address this phenomenon, defining when carriers engage in access stimulation and restricting the rates that they could charge. After local carriers found loopholes in this regulatory system, the FCC revisited and updated these rules, issuing the Updating the Intercarrier Compensation Regime to Eliminate Access Arbitrage (“Access Arbitrage Order”), 34 FCC Rcd. 9035 (2019). Wide Voice, LLC (“Wide Voice”), rearranged its business model and call traffic path in coordination with closely related entities, HD Carrier and Free Conferencing. Wide Voice petitions for review of the FCC’s order, specifically arguing that the FCC unreasonably concluded that it violated Section 201(b) by restructuring its business operations to continue imposing charges that were otherwise prohibited.
The Ninth Circuit denied the petition for review. The panel held that the FCC properly exercised its authority under § 201(b) to hold Wide Voice liable for circumventing its newly adopted rule in the Access Arbitrage Order when the company devised a workaround. Contrary to Wide Voice’s assertions, the FCC need not establish new rules prohibiting the evasion of its existing rules to find a Section 201(b) violation. The panel rejected Wide Voice’s contention that it restructured its business to comply with, rather than evade, the FCC’s new rules. Finally, the panel rejected Wide Voice’s contention that even if the FCC was permitted to find its conduct “unjust and unreasonable,” it did not have fair notice that its practices were unlawful, and therefore the FCC violated its right to due process.
Court Description: Federal Communications Commission The panel denied a petition for review of a Federal Communications Commission (“FCC”) order finding that Wide Voice, LLC violated § 201(b) of the Communications Act of 1934 by restructuring its business operations to continue imposing charges that were otherwise prohibited by the Access Arbitrage Order, 34 FCC Rcd. 9035 (2019). Access stimulation occurs when telephone companies artificially inflate call traffic connected over their local networks to collect higher fees from long distance carriers. The FCC issued rules to address this phenomenon, including the Access Arbitrage Order that refined the definition of access stimulation and declared that imposing costs on long-distance carriers for access stimulation traffic was unjust and unreasonable under § 201(b). Wide Voice contended that it complied with, rather than violated, the Access Arbitrage Order, and that without an * The Honorable Raner C. Collins, United States District Judge for the District of Arizona, sitting by designation. WIDE VOICE, LLC V. FCC 3 explicit rule violation, the FCC did not have the authority to find its conduct “unjust and unreasonable” under § 201(b). The panel held that the FCC properly exercised its authority under § 201(b) to hold Wide Voice liable for circumventing its newly adopted rule in the Access Arbitrage Order when the company devised a work around. Contrary to Wide Voice’s assertions, the FCC need not establish new rules prohibiting the evasion of its existing rules to find a § 201(b) violation. Further, Wide Voice’s contention that courts require a rule violation to find conduct unjust and unreasonable under § 201(b) is unfounded. Finally, the FCC’s construction of § 201(b) was reasonable because it was consistent with the agency’s longstanding precedent. Under Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984), the panel deferred to the agency in holding that the FCC may find a carrier’s practice “unjust and unreasonable” without an explicit rule violation. Wide Voice argued that even if the FCC had the authority to find it liable for a sham arrangement under § 201(b), the FCC’s ruling that Wide Voice restructured its business to evade the Access Arbitrage Order was unfounded, and therefore, arbitrary and capricious. The panel rejected Wide Voice’s specific contentions. First, the panel held that the FCC reasonably determined that Wide Voice, HD Carrier, and Free Conferencing were closely related, non-independent entities. Second, the FCC reasonably determined that Wide Voice, HD Carrier, and Free Conferencing intentionally re-routed traffic to evade the Access Arbitrage Order. The panel rejected Wide Voice’s contention that it restructured its business to comply with, rather than evade, the FCC’s new rules. The panel further held that the FCC reasonably concluded that absent 4 WIDE VOICE, LLC V. FCC Wide Voice’s workaround, Wide Voice, under its previous business model, would have likely triggered the new rules. Finally, the panel rejected Wide Voice’s contention that even if the FCC was permitted to find its conduct “unjust and unreasonable,” it did not have fair notice that its practices were unlawful, and therefore the FCC violated its right to due process. Wide Voice was involved in the rulemaking process that resulted in in the Access Arbitrage Order. The panel held that there was no doubt it had sufficient notice as to what behavior complied with the law. The panel did not see any due process violations.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.