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The Federal Communications Commission has the authority to make New York City residents use 10-digit dialing for local calls, the 2nd U.S. Circuit Court of Appeals has ruled. The ruling means that 10 months from now, absent a stay pending appeal, New Yorkers who want to call their neighbor across the street, even if they share the same area code, will have to dial “one,” the area code, and the seven-digit phone number. The court denied a petition brought by the Public Service Commission of the State of New York to review two orders of the FCC. The first FCC order directed all consumers in areas implementing so-called “overlay area codes” to use 10-digit dialing for local calls. Area code overlay is the introduction of a new area code to serve the same geographic area as an existing code. It is one of three forms of area code relief that may be employed to address a shortage of telephone numbers. In People of the State of New York v. Federal Communications Commission, 99-4205, the Public Service Commission claimed that the FCC did not have the authority to promulgate a rule that delegated to the states the authority to choose which type of area code relief to implement; it also claimed that the FCC lacked the power to require mandatory 10-digit dialing for areas that employed overlay area code relief. The Public Service Commission also challenged a second order denying a waiver from the 10-digit requirement. At issue was the authority of the FCC in light of �251 of the Telecommunications Act of 1996, which was designed, in part, to open up local telephone markets to competition. Part of �251 deals with “numbering administration,” and includes provisions designed to ensure that telephone numbers are available on an equitable basis. That section gives the FCC “exclusive jurisdiction” over numbering plans in the United States. Under �251, the FCC promulgated a rule that, while giving state commissions some authority concerning new area codes, restricted the use of overlay area code relief and required 10-digit dialing. The commission said that one motivating concern was the difficulty that new service providers would encounter trying to enter a market where the mass of customers served by established providers were still able to dial just seven digits. “If most telephone calls would be to customers in the original area code, but only those in the new code must dial 10 digits, there would exist a dialing disparity, which would increase customer confusion,” the FCC said. “Customers would find it less attractive to switch carriers because competing exchange service providers, most of which will be new entrants to the market, would have to assign their customers numbers in the new overlay area code.” Writing for the 2nd Circuit, Judge Fred I. Parker said that even as the FCC delegated some authority over area code relief to state commissions, “it declined to delegate the task of overall number delegation,” believing that a nationwide, uniform system was critical for the efficient delivery of telecommunications services. New York, in its challenge to the FCC’s authority to promulgate the rule, also argued that the rule would impose extra costs on consumers and telephone networks — a contention disputed by the FCC. But Parker said that the FCC did not exceed its authority when it assumed that the congressional delegation to the FCC of “numbering administration” gave it the authority to impose the rule. “Because it was reasonable to interpret ‘numbering administration’ as including all dialing patterns, local and interstate, we conclude that the FCC’s rule should be upheld as a permissible construction of Section 251(e),” Parker said. Having found the FCC had jurisdiction over local dialing plans, the court went on to find that “[c]ontrary to the City of New York’s argument, the FCC’s rulemaking was not arbitrary or capricious.” Parker said “the only reason” the New York Public Service Commission “has any authority to implement overlay area codes in New York City is because the FCC exercised its authority under Section 251(e) to delegate to State commissions the power to implement area code relief.” “We believe that the imposition of 10-digit dialing is a valid condition on this delegation, which allowed New York to implement area code overlay in the first place,” Parker said. And despite the Public Service Commission’s argument that 10-digit dialing is unnecessary in New York City because the city is a focal point of local telephone competition, the court went on to find that the FCC’s refusal to grant a waiver was not an abuse of discretion. David Flanagan, a spokesman for the Public Service Commission, said the commission is weighing its options following the ruling. “We are obviously disappointed in the decision — we have opposed this requirement every step of the way,” Flanagan said. “We don’t think it’s necessary.” Judges Robert D. Sack and Robert Katzmann joined in the decision. Assistant Counsel Carl F. Patka and General Counsel Lawrence G. Malone represented the New York Public Service Commission. General Counsel Christopher J. Wright, along with Deputy Associate General Counsels John E. Ingle and Pamela L. Smith, represented the FCC.

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