Wireless Data Roaming Rules Upheld by D.C. Circuit

By J. Bradford Currier, Marc Martin, and Marty Stern

Mobile wireless data providers must offer roaming agreements to competing carriers on “commercially reasonable” terms following the D.C. Circuit Court’s decision to uphold rules first adopted by the Federal Communications Commission in 2011. The FCC’s data roaming requirements were designed to supplement existing roaming obligations on mobile carriers that only applied to voice services by facilitating access to data services when customers travel outside of their providers’ networks. As we reported previously, the data roaming rules were adopted by a closely-divided FCC and were subsequently challenged by Cellco Partnership, more commonly known as Verizon Wireless.

Verizon Wireless challenged the data roaming obligations on three grounds, arguing that: (1) the FCC lacked statutory authority to impose “common carrier” type rules on mobile data providers; (2) new rules were unnecessary because mobile data providers were already entering into voluntary roaming agreements with competing carriers; and (3) roaming obligations would reduce incentives to expand wireless infrastructure if providers must share their networks with competitors.  Verizon Wireless alleged that the roaming requirements would unfairly benefit smaller carriers with limited networks at the expense of larger providers. In response, the FCC stated that the new rules did not impose common carrier type regulations on mobile data providers and the requirements were necessary in order to prevent larger carriers from excluding smaller providers from their networks. 

The D.C. Circuit began by noting that the FCC may not impose common carrier type obligations on providers of “information services,” including mobile data providers. However, the court found that the data roaming rules allow providers to negotiate the terms of their roaming arrangements on an individualized basis and do not require providers to serve other carriers indiscriminately on standardized terms. While the court recognized that the data roaming requirements “plainly bear[] some marks of common carriage,” the court deferred to the FCC’s determination that the new rules did not amount to common carriage regulation because providers can negotiate flexible terms and conditions. The court further concluded that the data roaming rules did not constitute an unconstitutional taking of Verizon Wireless’s data network or represent arbitrary and capricious rulemaking. Although supporters of the roaming rules also suggested that the court’s decision supports the FCC’s net neutrality rules currently subject to a separate appeal, the court in the data roaming case found that the FCC has explicit jurisdiction over wireless carriers under its broad authority over radio communications under Title III of the Communications Act.

Cloud Computing Case Clarifies Applicability of US Privacy Law to Non-U.S. Nationals

By Susan Altman

The Ninth Circuit Court of Appeals, in its October 3, 2011 decision in Suzlon Energy Ltd v. Microsoft Corporation, has taken another step in defining the rights of people to protect their emails from being disclosed in civil court proceedings. The question before the Suzlon court was whether a party can require a U.S. electronic communication service provider to produce emails stored on a U.S. server for the account of a non-U.S. national without regard to the safeguards and restrictions imposed by the Electronic Communications Privacy Act of 1986 (ECPA). The court answered with a clear “no,” stating that the protections of the ECPA against unrestricted disclosure of emails by an electronic communication service provider apply to non-U.S. nationals as well as to U.S. citizens.

The Suzlon case originated out of an Australian civil claim by Indian wind energy company Suzlon against Indian citizen Rajagopalan Sridhar, a former employee accused of committing fraud against the Suzlon empire through a multijurisdictional shipping scam. In the course of the Australian action, Suzlon’s lawyers sought to obtain Sridhar’s emails, which resided in a Microsoft Hotmail email account on a server located in the U.S. Sridhar did not consent to the production of his emails (nor did he consent in a related case where Google was the electronic communication service provider). Microsoft objected to the production of the emails and both the U.S. District Court for the Western District of Washington and the Ninth Circuit agreed that Sridhar was protected by the ECPA. (In an interesting procedural sidenote, the court summarized the arguments presented to the lower court relating to assistance to foreign tribunals and outlined how a U.S. federal court ends up in the position of ruling on what is essentially a discovery issue relating to an Australian case.)

The Suzlon case provides useful guidance to electronic communication service providers offering cloud services in the U.S. Certainly those within the jurisdictional reach of the Ninth Circuit, and most likely service providers throughout the U.S., can operate with the expectation that the ECPA will apply to all customers using a U.S. account. The service providers will not have to distinguish between U.S. citizens and non-U.S. nationals in determining rights to stored emails. Litigants will have to follow the same procedures in filing motions to compel production regardless of citizenship. The decision will not affect issues of national security as it does not address law enforcement action in any way. The Suzlon case doesn’t change the world, but it does add a small measure of clarity.