Click here for Microsoft Word Version
This document was converted from
WordPerfect or Word to ASCII Text format.
Content from the original version of the document such as
headers, footers, footnotes, endnotes, graphics, and page numbers
will not show up in this text version.
All text attributes such as bold, italic, underlining, etc. from the
original document will not show up in this text version.
Features of the original document layout such as
columns, tables, line and letter spacing, pagination, and margins
will not be preserved in the text version.
If you need the complete document, download the
Word or WordPerfect version or Adobe Acrobat version (above).
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of )
IDB Mobile Communications, Inc.,)
v. ) File No. E-97-48
COMSAT Corporation, )
MEMORANDUM OPINION AND ORDER
Adopted: May 22, 2001 Released: May 24, 2001
By the Commission:
1. In this Memorandum Opinion and Order (``Order''), we deny a
complaint filed by IDB Mobile Communications, Inc. (``IDB'')
against COMSAT Corporation (``COMSAT'') pursuant to section
208 of the Communications Act of 1934, as amended
(``Communications Act'' or ``Act'').1 IDB alleges that COMSAT
violated sections 201(b) and 202(a) of the Communications Act2
by refusing to reduce the price for certain satellite
communications services provided under a four-year contract
between the parties.3 IDB's claims rest on the fact that,
halfway through the contract period, COMSAT began to provide
satellite communications services to another entity at a price
that was lower than the price contained in the IDB/COMSAT
contract. For the reasons described below, we deny IDB's
complaint, because IDB has failed to meet its burden under the
``Sierra-Mobile'' doctrine4 of demonstrating that COMSAT
harmed the public interest by refusing to reduce the contract
price at issue halfway through the contract's term.
A. The Parties
2. This is yet another salvo in the long-running and multi-
forum feud between IDB and COMSAT.5 At all relevant times,
IDB provided many international satellite communications
services, including international maritime satellite services,
international aeronautical satellite services, and
international land mobile satellite services.6 COMSAT was a
corporation created pursuant to the Communications Satellite
Act of 1962 that provided a wide range of international
satellite communications services.7 At all relevant times,
COMSAT provided such services by, inter alia, combining the
capabilities of its land earth stations (``LESs'') in the
United States with satellite capacity purchased from the
International Mobile Satellite Organization (``INMARSAT'').
These services included INMARSAT Standard-A, Standard-B, and
B. A Brief Description of the Relevant INMARSAT Services
3. Fixed-to-mobile INMARSAT Standard-A service is an analog
satellite communication service that is used, inter alia, to
complete transmissions from a fixed land location to a mobile
maritime terminal installed on a ship.9 Fixed-to-mobile
INMARSAT Standard-B and Standard-M services are digital
satellite communications services that are typically used to
complete transmissions from a fixed land location to a mobile
4. At all relevant times, a call from an end user in the United
States to, for example, an end user on an ocean vessel would,
if using fixed-to-mobile INMARSAT Standard-A, Standard-B, or
Standard-M service, typically traverse the following path: (1)
from the caller in the United States to (2) the caller's
interexchange carrier (``IXC'') to (3) a land earth station in
the United States to (4) an INMARSAT satellite to (5) the
INMARSAT mobile terminal on the ocean vessel.11 A call from
an end user located outside the United States to an ocean
vessel could also end up travelling through a LES in the
United States, if the caller's IXC chose to route the call to
such a LES rather than to a LES in another country. A call
that originates outside the country in which the LES used is
located is called ``transit traffic.''12
5. At all relevant times, COMSAT was the only entity authorized
to provide facilities-based INMARSAT Standard-B and Standard-M
digital services for the delivery of U.S.-originated fixed-to-
mobile traffic.13 Thus, if IDB wished to provide such
services to its own end user customers in the United States,
it had to purchase both ground segment (i.e., LES capacity)
and space segment (i.e., satellite capacity) from COMSAT.14
By contrast, at all relevant times, IDB was authorized to
compete with COMSAT in the provision of facilities-based
INMARSAT Standard-A analog service for the delivery of U.S.-
originated fixed-to-mobile traffic.15 Therefore, if IDB
wished to provide this service to its domestic end user
customers, it could do so by purchasing only space segment
from COMSAT and combining that with its own LES operations in
the United States.16
C. The Contractual Relationship Between IDB and COMSAT
6. On May 25, 1990, the parties entered into an agreement
setting forth the terms and conditions under which COMSAT
would provide a wide range of INMARSAT satellite services to
IDB (the ``1990 Agreement'').17 Pursuant to the terms of the
1990 Agreement, COMSAT would provide space segment for
Standard-A service at a rate of $2.75 for the initial 30
seconds and $.548 for each additional six seconds during peak
usage hours, and $1.40 for the initial 30 seconds and $.28 for
each additional six seconds during off-peak hours (i.e., $2.80
per minute).18 The 1990 Agreement also established that COMSAT
would provide Standard-B and Standard-M services ``as soon as
these are available via the INMARSAT system,''19 and that all
new such services would be provided at ``comparable discounts
(e.g., 25%) below COMSAT's tariffed rates.''20 This Agreement
went into effect in September 1991, and was to last for five
years thereafter, until September 1996.21
7. Over a year prior to the expiration of the 1990 Agreement,
IDB sought to renegotiate the Agreement's terms.22 COMSAT
agreed to IDB's request and engaged in contract
negotiations.23 As a result, on June 30, 1995, IDB entered
into a new contract (``Contract'') with COMSAT that superceded
the 1990 Agreement.24 The new Contract concerned many, if not
all, of COMSAT's existing INMARSAT satellite services,
including INMARSAT Standard-A, -B, and -M services, as well as
any new INMARSAT service that COMSAT might provide in the
future.25 The new Contract contained lower rates than the
1990 Agreement. For example, one rate for INMARSAT Standard-A
space segment was reduced from $2.80 per minute to $2.55 per
minute.26 Regarding INMARSAT Standard-B and -M services, the
new Contract provided that IDB would purchase satellite and
LES capacity for U.S.-originated fixed-to-mobile traffic at a
rate of $3.30 per minute.27 This Contract price of $3.30 was
more than 25% below COMSAT's tariffed rates for these services
(i.e., $5.55 for Standard-B, $4.95 for Standard-M).28
Moreover, the Contract expressly entitled IDB to any lower
rate that COMSAT might charge other carriers in the future for
INMARSAT Standard-B and -M services for the delivery of U.S.-
originated fixed-to-mobile traffic.29 The Contract did not
mention foreign-originated fixed-to-mobile traffic.30
8. The Contract had a term of approximately four years. Thus,
the Contract did not expire until September 2, 1999.31 As of
the date that the instant complaint was filed (i.e., September
25, 1997), IDB had not purchased from COMSAT any INMARSAT
Standard-B or Standard-M service for the delivery of U.S.-
originated fixed-to-mobile traffic.32
D. IDB's Complaint Against COMSAT
9. In August 1997, COMSAT began charging a foreign carrier,
Cable & Wireless, $2.50 per minute for INMARSAT Standard-B and
Standard-M services for the delivery of foreign-originated
fixed-to-mobile traffic. This was $.80 less than the $3.30
Contract rate for the delivery of U.S.-originated traffic.33
10. On September 25, 1997, approximately halfway through the
Contract's term, IDB filed the instant complaint. The
complaint alleges that COMSAT violated the Communications Act
by refusing to lower immediately the Contract's price for
INMARSAT Standard-B and -M services from $3.30 to $2.50 per
11. In particular, the complaint alleges that section 202(a)34
prohibited COMSAT from continuing to charge IDB the Contract
price of $3.30 per minute for the delivery of U.S.-originated
traffic, because COMSAT was simultaneously charging Cable &
Wireless $2.50 per minute for the delivery of foreign-
originated traffic.35 IDB premises this claim on the
assertion that COMSAT's fixed-to-mobile INMARSAT Standard-B
and Standard-M services are the same for the delivery of U.S.-
originated traffic as they are for the delivery of foreign-
12. IDB also asserts that the Contract price for the delivery of
U.S.-originated traffic via INMARSAT Standard-B and Standard-M
services was unreasonable, in violation of section 201(b) of
the Act,37 because it was unrelated to COMSAT's underlying
costs.38 To support this claim, IDB points out that (i)
INMARSAT's price to COMSAT for satellite capacity was no more
than $1.50 per minute;39 and (ii) COMSAT's price to Cable &
Wireless of $2.50 per minute presumably covered COMSAT's
costs.40 Therefore, IDB argues that the $3.30 rate at which
the Contract offered COMSAT's INMARSAT Standard-B and
Standard-M services for U.S.-originated traffic was ``clearly
related to COMSAT's monopoly status, not to COMSAT's
13. For relief, IDB requests a Commission order requiring COMSAT
to disregard the Contract's price terms and offer IDB the same
price for fixed-to-mobile INMARSAT Standard-M and Standard-B
services that it offers to Cable & Wireless.42 In other
words, IDB is asking the Commission to reform the Contract so
that the price at issue for the delivery of U.S.-originated
traffic matches the price that COMSAT subsequently agreed to
charge Cable & Wireless for the delivery of foreign-originated
III. IDB HAS FAILED TO SATISFY THE HIGH PUBLIC INTEREST STANDARD
UNDER THE SIERRA-MOBILE DOCTRINE FOR THE MODIFICATION OF THE
A. Description of the Sierra-Mobile Doctrine
14. Under the Sierra-Mobile doctrine, the Commission may revise
the terms of a private contract between two carriers
concerning communications services.44 The Commission may do
so, however, only when the contract's terms ``adversely affect
the public interest.''45
15. The threshold for demonstrating sufficient harm to the
public interest to warrant contract reformation under the
Sierra-Mobile doctrine is much higher than the threshold for
demonstrating unreasonable conduct under sections 201(b) and
202(a) of the Act.46 Thus, a carrier cannot obtain the remedy
of contract reformation by showing only that the contract
requires it to pay an unduly high price for communications
services.47 Such private economic harm, standing alone, lacks
the substantial and clear detriment to the public interest
required by the Sierra-Mobile doctrine.48
16. There is a well-established reason why the Sierra-Mobile
standard for contract reformation is high: preserving the
integrity of contracts is vital to the proper functioning of
the carrier-to-carrier communications market.49 Indeed, the
long-term health of the communications market depends on the
certainty and stability that stems from the predictable
performance and enforcement of carrier-to-carrier contracts.
As one court aptly stated in an analogous context, ``[i]f the
integrity of contracts is undermined, business would be
transacted without legally enforceable assurances and . . .
the market, the industry and ultimately the consumer would
B. Application of the Sierra-Mobile Doctrine
17. All of IDB's assertions that the Commission should reform
the Contract under the Sierra-Mobile doctrine rest almost
entirely on one fact: two years into the four-year Contract
term, COMSAT began to charge Cable & Wireless a lower price
for INMARSAT Standard-B and -M services for the delivery of
transit traffic than COMSAT charged IDB under the Contract for
those services for the delivery of U.S.-originated traffic.51
As explained above, however, it is well established that,
standing alone, a disparity between a long-term contract price
and a price subsequently offered to someone else fails to
justify the remedy of contract reformation under the Sierra-
Mobile doctrine.52 Though IDB doubtless would have preferred
a lower price for COMSAT's services, such private ``harm''
does not equate to public interest harm.
18. Indeed, one primary purpose of long-term contracts is to
allocate between the parties the risk of future changes in the
market price. The seller accepts certain risk that the market
price will rise, and the buyer accepts certain risk that the
market price will fall.53 IDB's request here is that the
Commission frustrate this purpose and impose essentially a
``heads I win, tails you lose'' regime in IDB's favor - IDB
gets to take advantage of subsequent reductions in the market
rate, while COMSAT remains locked in to the Contract price
even if the market rate later rises.54 We perceive no public
interest in reaching such an unfair and harmful result.
Instead, the parties should generally ``be required to live
with their bargains as time passes and various projections
about the future are proved correct or incorrect.''55
19. In support of its assertion that there is a public interest
component to the alleged harm, IDB argues that the end-user
customers of other IXCs (such as AT&T) to whom COMSAT actually
charged the same Contract price paid their IXCs more than they
should have for calls made via COMSAT's INMARSAT Standard-B
and -M services.56 This argument, however, is conclusory and
unsupported in the record. IDB does not ``offer any evidence
(beyond speculation) that . . . ratepayers . . . were
adversely affected by the existing rates; it did not, for
example, even attempt to show how much if any of the rate
disparity was passed on to [IXC] ratepayers rather than borne
by the [IXC] itself.''57 IDB also does not offer any evidence
that any price reductions to the IXCs would have been passed
through, in whole or in part, to the IXCs' end-user customers.
Thus, IDB's bald argument fails to support a finding of the
requisite harm to the public interest.58 As one court
assessing similar circumstances stated, ``a mere rate
disparity or a benefit to the purchasing utility or its
customers from a rate modification does not suffice, without
more, to satisfy'' the ``stringent Mobile-Sierra public
20. There are other reasons why the remedy of contract
reformation under the Sierra-Mobile doctrine is inappropriate
here. First, the Commission has previously recognized a
disparity between rates for satellite services for the
delivery of U.S.-originated traffic and for the delivery of
transit traffic, but declined to regulate transit traffic.60
Moreover, COMSAT's rate for facilities-based INMARSAT
Standard-B and Standard-M services for the delivery of U.S.-
originated fixed-to-mobile traffic was but one of many
elements of the Contract. For example, the Contract addressed
the provision of a wide range of other satellite services,
such as space segment for INMARSAT Standard-A services.61
Often when parties negotiate a contract that addresses such a
wide range of products or services, there is some give-and-
take between issues. That is, often a party accepts less
advantageous terms for the provision or purchase of one
product or service in exchange for more favorable terms for
the provision or purchase of another product or service. We
hesitate to reform one element of a contract given the
possibility of this type of ``horse trading.''62
21. This does not end our analysis, however. IDB correctly
points out that the public interest might be harmed if we were
to enforce a contract term obtained through abuse of market
power.63 IDB asserts that COMSAT obtained the Contract rates
at issue here through the abuse of market power. IDB bases
that assertion solely on the fact that, at the time the
Contract was negotiated, COMSAT was the only provider of
facilities-based INMARSAT Standard-B and -M services for the
delivery of U.S-originated fixed-to-mobile traffic.64 For the
following reasons, we conclude that IDB has failed to meet its
burden of demonstrating that COMSAT obtained the contested
Contract rates through abuse of market power.
22. In order for an entity to abuse market power, it must first
possess market power. Assessing whether an entity possesses
market power is a difficult task. The essential first step in
that task is precisely defining the particular product or
service market over which the entity allegedly has power.65
According to one classic iteration of this step, ``[t]he outer
boundaries of a product market are determined by the
reasonable interchangeability of use or the cross-elasticity
of demand between the product itself and substitutes for
it.''66 In other words, a properly defined product or service
market includes not only the specific product or service at
issue, but also any reasonable substitutes.67
23. IDB ignores this threshold step in assessing COMSAT's
alleged market power. Although IDB has the burden of showing
an absence of available substitutes for these products, IDB
makes no effort to demonstrate that facilities-based INMARSAT
Standard-B and Standard-M services for the delivery of U.S.-
originated fixed-to-mobile traffic, by themselves, constituted
a distinct product market during the relevant period. In
particular, IDB fails to submit any evidence that there
existed in 1995 no reasonable substitutes for such INMARSAT
Standard-B and Standard-M services.
24. This dearth of record evidence is fatal to IDB's assertion,
because the lack of reasonable substitutes, for market
definition purposes, is far from self-evident. In fact, the
record contains some evidence indicating that facilities-based
INMARSAT Standard-A service for the delivery of U.S.-
originated fixed-to-mobile traffic ¾ which IDB itself provided
¾ was at least one potentially reasonable substitute for
INMARSAT Standard-B and Standard-M services;68 and IDB makes
no claim that the Contract price for INMARSAT Standard-A space
segment was skewed by market power or in any other way
unreasonable. Furthermore, in a related vein, IDB proffers no
evidence to rebut COMSAT's contention that COMSAT's bargaining
power was circumscribed by the possibility that abusively high
prices for facilities-based INMARSAT Standard-B and -M
services would have caused IDB to seek authorization to
provide such services itself, which IDB had already done with
respect to INMARSAT Standard-A services (and which IDB
ultimately did do on the day after it filed this complaint).69
Therefore, the record does not permit us to conclude that
COMSAT had market power in any material market, which, in
turn, precludes us from concluding that COMSAT abused market
power such that we should reform the Contract under the
25. In any event, to the extent that the record speaks at all to
the issue of COMSAT's conduct during the Contract's formation,
it suggests no abuse of any market power. For example, COMSAT
agreed to renegotiate the parties' pre-existing 1990 Agreement
even though over a year remained on the Agreement's term. In
addition, COMSAT agreed in the new Contract to lower rates
than were specified in the 1990 Agreement.71 Moreover, COMSAT
agreed in the new Contract to give IDB any lower rate for
U.S.-originated traffic that COMSAT might give in the future
to some other carrier.72 Furthermore, the Contract's rates
were substantially lower than COMSAT's contemporaneous
tariffed rates.73 Finally, IDB proffered no evidence in the
record that, during the Contract negotiations or shortly
thereafter, IDB ever complained internally, to COMSAT, or to
the Commission that the negotiation process or the Contract's
rates were abusive or unfair. Thus, the record fails to
justify a conclusion that COMSAT obtained the Contract rates
at issue through abuse of market power.
26. In sum, IDB has not submitted sufficient record evidence to
demonstrate that COMSAT harmed the public interest by
refusing, mid-way through the Contract's term, to reduce the
Contract's rates for facilities-based INMARSAT Standard-B and
-M services for the delivery of U.S.-originated fixed-to-
mobile traffic. Accordingly, IDB has failed to establish
entitlement to reformation of the Contract under the Sierra-
Mobile doctrine. Thus, we deny IDB's complaint in its
IV. ORDERING CLAUSE
27. ACCORDINGLY, IT IS ORDERED, pursuant to sections 1, 4(i),
4(j), 201, 202, and 208 of the Communications Act of 1934, as
amended, 47 U.S.C. §§ 151, 154(i), 154(j), 201, 202, 208, that
the above-captioned formal complaint filed by IDB Mobile
Communications, Inc. against COMSAT Corporation IS DENIED IN
ITS ENTIRETY, and this proceeding is TERMINATED WITH
FEDERAL COMMUNICATIONS COMMISSION
Magalie Roman Salas
1 47 U.S.C. § 208.
2 47 U.S.C. §§ 201(b), 202(a).
3 IDB Mobile Communications, Inc. v. COMSAT Corporation,
Formal Complaint, File No. E-97-48 (filed Sept. 25, 1997)
4 See Federal Power Commission v. Sierra Pacific Power
Co., 350 U.S. 348 (1956) (``Sierra''); United Gas Pipe Line Co.
v. Mobile Gas Service Corp., 350 U.S. 332 (1956) (``Mobile'').
The doctrine is also known as the ``Mobile-Sierra'' doctrine.
5 See, e.g., COMSAT Corp. v. Stratos Mobile Networks
(USA), LLC, Memorandum Opinion and Order, 15 FCC Rcd 22338 (Enf.
Bur. 2000), aff'd, COMSAT Corp. v. Stratos Mobile Networks (USA),
LLC, Order on Review, FCC 01-72, 2001 WL 178414 (F.C.C.)
(released Feb. 26, 2001), petition for review pending, COMSAT
Corp. v. FCC, Docket No. 01-1161 (D.C. Cir. filed April 6, 2001);
COMSAT Corp. v. IDB Mobile Communications, Inc., Memorandum
Opinion and Order, 15 FCC Rcd 7906 (Enf. Bur. 2000), Order on
Review, 15 FCC Rcd 14697 (2000), petition for review pending,
COMSAT Corp. v. FCC, Docket No. 00-1383 (D.C. Cir. filed Aug. 24,
6 Complaint at 2-3, ¶ 6; IDB Mobile Communications, Inc.
v. COMSAT Corporation, Answer of COMSAT Corporation, File No. E-
97-48 (filed Nov. 10, 1997) at 17, ¶ 30 (``Answer'').
7 Answer at 1, ¶ 1. See 47 U.S.C. §§ 701, et seq. On
July 31, 2000, COMSAT was granted authority to assign its space
and earth station licenses to Comsat Government Systems, LLC
(CGS-LLC), a wholly owned subsidiary of Lockheed Martin
Corporation, as part of the merger of Lockheed Martin and COMSAT.
Lockheed Martin Corp., COMSAT Government Systems, LLC, and COMSAT
Corp., Applications for Transfer of Control of COMSAT Corporation
and Its Subsidiaries, Licensees of Various Satellite, Earth
Station Private Land Mobile Radio and Experimental Licenses, and
Holders of International Section 214 Authorizations, Order and
Authorization, 15 FCC Rcd 22910 (2000).
8 Answer at 2, ¶ 3. Except where otherwise indicated,
references to ``INMARSAT services'' refer to a combination of
space segment (i.e., satellite capacity) and ground segment
(i.e., LES capacity).
9 See IDB Mobile Communications, Inc. v. COMSAT
Corporation, Letter from Martin F. Cuniff, Counsel for COMSAT
Corporation, to Warren Firschein, Attorney, Market Disputes
Resolution Division, Enforcement Bureau, FCC, File No. E-97-48
(filed February 2, 2001) at 1 (``February 2, 2001 Letter'').
10 See IDB Mobile Communications, Inc. v. COMSAT
Corporation, Letter from Alfred M. Mamlet and Colleen A.
Sechrest, Counsel for IDB Mobile Communications, Inc., to Warren
Firschein, Attorney, Market Disputes Resolution Division,
Enforcement Bureau, FCC, File No. E-97-48 (filed January 16,
2001) (``January 16, 2001 Letter'').
11 Complaint at 4, ¶ 11; Answer at 18, ¶ 35; IDB Mobile
Communications, Inc. v. COMSAT Corporation, IDB Mobile
Communications, Inc. Supplemental Brief, File No. E-97-48 (filed
Jul. 14, 2000) at 4 (``IDB Supplemental Brief'').
12 Answer at 5-6, ¶ 13. Domestic transit traffic is any
international message communication that passes through U.S.
telecommunications facilities but originates and terminates
outside the United States. Normally, only the sender's and
receiver's carriers participate in the transmission and reception
of a message. The process of ``transiting'' occurs when a third
carrier (in this case COMSAT) is needed to serve as an
intermediary because the sender and receiver are geographically
separate, and direct interconnection is technologically
difficult, inferior, or impossible. See Implementation and Scope
of the International Settlements Policy for Parallel
International Communications Routes, Order on Reconsideration, 2
FCC Rcd 1118, 1118, 1124, ¶ 3 n.5 (1987); Establishment of
Regulatory Policies Pursuant to the Communications Act of 1934
With Respect to Use of Communication Facilities in the United
States by Foreign Entities for Communication Traffic Transiting
the United States, Memorandum Opinion and Order, Docket No.
19031, FCC 81-188, 1-2, ¶ 2 (rel. May 5, 1981) (``Transit Traffic
Order''); 47 C.F.R. § 43.61(f) (1991). Unless otherwise
indicated, in this order we use the terms ``transit traffic'' and
``foreign-originated traffic'' interchangeably.
13 Complaint at 3, ¶ 10; Answer at 17, ¶ 34; IDB Mobile
Communications, Inc. v. COMSAT Corporation, IDB Mobile
Communications, Inc. Final Brief, File No. E-97-48 (filed Feb.
18, 1998) at 3 (``IDB Brief''); IDB Mobile Communications, Inc.
v. COMSAT Corporation, Brief of COMSAT Corporation, File No. E-
97-48 (filed Feb. 17, 1998) at 6 (``COMSAT Brief''); IDB
Supplemental Brief at 23.
14 Complaint at Appendix A (Affidavit of Joanne Suppa) at
1, ¶ 3;
15 Complaint at 3, ¶ 10; Answer at 2, ¶ 4; COMSAT Brief at
16 In fact, with regard to Standard-A service to and from
the Atlantic and Pacific Ocean regions, the parties' contract
provided solely for the sale of INMARSAT space segment. January
16, 2001 Letter at Attachment B, Attachment 1 at § 2.1; Answer at
3, ¶ 5; COMSAT Brief at 4; IDB Supplemental Brief at 4.
17 See January 16, 2001 Letter at Exhibit A.
18 Id. at Exhibit A, § 1.8.
19 Id. at Exhibit A, Annex A, § 1.1.
20 Id. at Exhibit A, § 2.3.
21 Id. at Exhibit A, § 1.3. See February 2, 2001 Letter
22 COMSAT Brief at 4, 7, 9; IDB Mobile Communications,
Inc. v. COMSAT Corporation, IDB Mobile Communications, Inc. Final
Reply, File No. E-97-48 (filed Mar. 9, 1998) at 10-11 (``IDB
23 IDB Mobile Communications, Inc. v. COMSAT Corporation,
Reply Brief of COMSAT Corporation, File No. E-97-48 (filed Mar.
9, 1998) at 3 (``COMSAT Reply''); COMSAT Brief at 4, 7, 9; IDB
Reply at 10-11.
24 See COMSAT Brief at 9; January 16, 2001 Letter at
Exhibit B, Preamble.
25 Complaint at 4, ¶ 12; Answer at 3, 18, ¶¶ 5, 36; COMSAT
Brief at 4, 7-8; January 16, 2001 Letter at Exhibit B. Pursuant
to 47 U.S.C. § 211(a), the Contract was filed with the Commission
on August 2, 1995. Answer at 28, ¶ 55a; COMSAT Reply at 5.
26 See January 16, 2001 Letter at Exhibit B, Annex. In
addition, Standard-A space segment during ``peak'' hours was
reduced from approximately $5.48 per minute to a maximum of $5.10
per minute with the possibility of further discounts that would
reduce the per-minute rate to as low as $4.50. January 16, 2001
Letter at Exhibit B, Attachment 1, § 2.2. The Contract also
reduced the rates for, inter alia, High Gain Aeronautical Data
(from $.28 to $.19 per kilobit); Voice Group Call (from
approximately $16.50 to $16.10 per minute); and Low-Power Multi-
Channel Ship Station Service during off-peak hours (from $2.80 to
$2.50 per minute). Compare January 16, 2001 Letter at Exhibit A,
Annex at § 1.8 with January 16, 2001 Letter at Exhibit B, Annex.
27 Complaint at 4, ¶ 12; Answer at 18-19, ¶ 36; January
16, 2001 Letter at Exhibit B, Attachment 1 at § 4.1.
28 IDB Mobile Communications, Inc. v. COMSAT Corporation,
Supplemental Reply Brief of COMSAT Corporation, File No. E-97-48
(filed Jul. 21, 2000) at App. A (``COMSAT Supplemental Reply'').
Moreover, in June 1995, COMSAT's tariffed rate for INMARSAT
Standard-A space segment was $9.30 per minute, whereas the
Contract rate was $5.10. See February 2, 2001 Letter at 3;
January 16, 2001 Letter at Exhibit B, Annex. In October 1996,
COMSAT reduced the tariff rates for Standard-B and Standard-M
services to $4.45 and $4.55 per minute, and permitted eligible
customers to receive further discounts for high volume through a
``customer discount program.'' COMSAT Supplemental Reply at App.
29 January 16, 2001 Letter at Exhibit B, Attachment 1 at §
30 Answer at 3, ¶ 7. See January 16, 2001 Letter at
31 January 16, 2001 Letter at Exhibit B, § 1.1; Answer at
3, ¶ 5; COMSAT Brief at 4.
32 Answer at 2, ¶ 4; COMSAT Brief at 3, 5, 9; IDB Reply at
33 Answer at 21, ¶ 39; IDB Brief at 6, 9; IDB Reply at 5,
7, 9. IDB initially alleged that COMSAT offered these services
to Cable & Wireless at $2.40 per minute. See Complaint at 5, ¶
34 Section 202(a) of the Act makes it unlawful ``for any
common carrier to make any unjust or unreasonable discrimination
in charges . . . for or in connection with like communication
service . . . or to make or give any undue or unreasonable
preference or advantage to any particular person . . . .'' 47
U.S.C. § 202(a).
35 Complaint at 2, ¶ 4; IDB Brief at 4-7; IDB Reply at 2-
36 Complaint at 8-9, ¶¶ 20-22; IDB Brief at 5-6; IDB Reply
at 4-5; IDB Supplemental Brief at 8-10; IDB Mobile
Communications, Inc. v. COMSAT Corporation, IDB Mobile
Communications, Inc. Supplemental Reply Brief, File No. E-97-48
(filed Jul. 21, 2000) at 4-7 (``IDB Supplemental Reply'').
37 Section 201(b) of the Act states, in pertinent part,
that ``[a]ll charges, practices, classifications, and regulations
for and in connection with such communications service, shall be
just and reasonable, and any such charge, practice,
classification, or regulation that is unjust or unreasonable is
hereby declared to be unlawful . . . .'' 47 U.S.C. § 201(b).
38 Complaint at 11-12, ¶¶ 26-28; IDB Brief at 7-8; IDB
Reply at 5-6.
39 Complaint at 11, ¶ 26; IDB Brief at 8. INMARSAT
charges COMSAT, and all other INMARSAT signatories, $1.25 per
minute for INMARSAT Standard-B service and $1.50 per minute for
INMARSAT Standard-M service. IDB Brief at 8.
40 Complaint at 11-12, ¶¶ 26-27; Answer at 27, ¶ 50; IDB
Brief at 8.
41 Complaint at 12, ¶ 28. See IDB Brief at 7-8.
42 Complaint at 15, ¶ 35; IDB Brief at 14-15; IDB Reply at
43 IDB also reserves its right to file a supplemental
complaint for specific damages, should it prevail on the issue of
liability. Complaint at 15, ¶ 35. In light of our denial of
contract reformation, however, IDB has no basis on which to seek
damages because reformation would be a necessary predicate to
44 See, e.g., Western Union Telegraph Co. v. FCC, 815 F.2d
1495, 1501 (D.C. Cir. 1987); ACC Long Distance Corp. v. Yankee
Microwave, Inc., Memorandum Opinion and Order, 10 FCC Rcd 654
45 Sierra, 350 U.S. at 355. See, e.g., Western Union, 815
F.2d at 1501; Yankee Microwave, 10 FCC Rcd at 657, ¶ 17. The
parties agree that the Sierra-Mobile doctrine applies in this
proceeding. See, e.g., Complaint at 13, ¶ 32; Answer at 29, ¶
56; IDB Brief at 11-12; COMSAT Reply at 5.
46 See Potomac Electric Power Company v. Federal Energy
Regulatory Commission, 210 F.3d 403, 407-408 (D.C. Cir. 2000);
Papago Tribal Utility Authority v. Federal Energy Regulatory
Commission, 723 F.2d 950, 953-54 (D.C. Cir. 1983) (Scalia, J.);
Kansas Cities v. Federal Energy Regulatory Commission, 723 F.2d
82, 87-88 (D.C. Cir. 1983) (Scalia, J.); Town of Norwood,
Massachusetts v. Federal Energy Regulatory Commission, 587 F.2d
1306, 1313, n.21 (D.C. Cir. 1978); Yankee Microwave, 10 FCC Rcd
at 657, ¶¶ 17-19. We rely herein on court decisions construing
the Natural Gas Act, 15 U.S.C. §§ 717 et seq., and the Federal
Power Act, 16 U.S.C. §§ 792 et seq., because the relevant
provisions of those Acts are virtually identical in language and
purpose to sections 201(b) and 202(a) of the Communications Act.
Compare 15 U.S.C. § 717c (a) and 16 U.S.C. § 824d (a) with 47
U.S.C. § 201(b), and 15 U.S.C. § 717c (b) and 16 U.S.C. § 824d
(b) with 47 U.S.C. § 202(a); see Western Union, supra; Yankee
Microwave, supra (both relying on court decisions construing the
Natural Gas Act and the Federal Power Act in applying the Sierra-
Mobile doctrine to common carriers under the Communications Act).
47 See generally San Diego Gas & Electric Co. v. Federal
Energy Regulatory Commission, 904 F.2d 727 (D.C. Cir. 1990)
(rejecting request for contract reformation because request
stemmed solely from subsequent drop in market price); Yankee
Microwave, 10 FCC Rcd at 656-57, ¶ 16 (holding that the Sierra-
Mobile doctrine applies where ``a buyer subsequently demands
lower rates when the market price falls after the contract has
48 See, e.g., Sierra, 350 U.S. at 354-55 (explaining that
a contract that may be ``unreasonable'' from a contracting
party's perspective may nevertheless not contravene the public
interest); PEPCO v. FERC, 210 F.3d at 409 (explaining that ``the
fact that a contract has become uneconomic to one of the parties
does not necessarily render the contract contrary to the public
interest''); Papago v. FERC, 723 F.2d at 953, n.4 (explaining
that discrimination against the contracting purchaser does not
meet the Sierra-Mobile threshold, absent ``some independent harm
to the public interest''); Yankee Microwave, 10 FCC Rcd at 657,
¶¶ 17-18 (declining to reform contract, because the complainant
``allege[d] only private injury, an injury that resulted solely
from [its] improvident bargain'').
49 See, e.g., Mobile, 350 U.S. at 344 (``By preserving the
integrity of contracts, it permits the stability of supply
arrangements that all agree is essential....'); PEPCO v. FERC,
210 F.3d at 409 (``The court has repeatedly emphasized the
importance of contract stability in a number of cases involving
the Mobile-Sierra doctrine.''); Maine Public Service Co. v.
Federal Energy Regulatory Commission, 964 F.2d 5, 10 (D.C. Cir.
1992) (``This court has determined that contractual rates promote
economic stability.''); San Diego v. FERC, 904 F.2d at 730
(approving the fact that FERC ``placed great weight on the policy
considerations behind contract stability....'').
50 San Diego v. FERC, 904 F.2d at 730 (quoting Public
Service Co. of New Mexico, 43 FERC ¶ 61,469 at 62,153 (June 13,
1988)). We note that the Sierra-Mobile analysis does not apply
to interconnection agreements reached pursuant to sections 251
and 252 of the Act, because the Act itself provides the standard
of review of such agreements. See 47 U.S.C. § 252(e)(2).
51 See, e.g., Complaint at 5, 6, 7, 8, 11-12, ¶¶ 15, 17,
18, 20, 27, 29; IDB Brief at 1, 4, 8-9, 12; IDB Reply at 3, 7, 8-
9, 12; IDB Supplemental Brief at 5, 20. For the purposes of this
discussion, we will assume, without deciding, that INMARSAT
Standard-B and -M services for the delivery of U.S.-originated
fixed-to-mobile traffic are ``like'' such services for the
delivery of transit fixed-to-mobile traffic.
52 See, e.g., PEPCO v. FERC, supra; Maine v. FERC, supra;
San Diego v. FERC, supra; Norwood v. FERC, supra; Boroughs of
Chambersburg v. Federal Energy Regulatory Commission, 580 F.2d
573, 577-78 (D.C. Cir. 1978).
53 See, e.g., San Diego v. FERC, 904 F.2d at 730; Norwood
v. FERC, 587 F.2d at 1312.
54 We note that IDB does not allege that, when the
Contract was executed, COMSAT was offering a lower price for
INMARSAT Standard-B and -M services to anyone else.
55 Norwood v. FERC, 587 F.2d at 1312. See PEPCO v. FERC,
210 F.3d at 410.
56 Complaint at 13, ¶ 31; IDB Brief at 12; IDB
Supplemental Brief at 22; IDB Supplemental Reply at 4. IDB does
not make this argument regarding its own end-user customers,
because IDB never purchased INMARSAT Standard-B or -M services
from COMSAT. Answer at 3-4, ¶ 7; COMSAT Brief at 3; IDB Reply at
11; IDB Supplemental Brief at 13; COMSAT Supplemental Brief at 2.
57 PEPCO v. FERC, 210 F.3d at 409.
58 The bald nature of IDB's claim readily distinguishes it
from the circumstances in International Settlement Rates, 12 FCC
Rcd 19806 (1997), aff'd sub nom., Cable & Wireless P.L.C. v.
Federal Communications Commission, 166 F.3d 1224 (D.C. Cir.
1999), where the Commission invoked the Sierra-Mobile doctrine in
revising international settlement rates that were causing
substantial and substantiated harm to all Americans engaged in
59 PEPCO v. FERC, 210 F.3d at 404 (emphasis added).
60 Transit Traffic Order at 6, ¶¶ 15-17.
61 January 16, 2001 Letter at Exhibit B, Annex.
62 See, e.g., COMSAT Brief at 4, 7-9; COMSAT Reply at 3,
63 IDB Brief at 4, 10-12; IDB Reply at 7, 9, 10-11. See
PEPCO v. FERC, 210 F.3d at 410-411; Maine v. FERC, 964 F.2d at
10; Norwood v. FERC, 587 F.2d at 1312-13; Yankee Microwave, 10
FCC Rcd at 657, ¶ 17.
64 Complaint at 3-4, ¶ 10; IDB Brief at 6; IDB Reply at
10-11. IDB Supplemental Brief at 3-4.
65 See, e.g., Brown Shoe Co. v. United States, 370 U.S.
294, 324 (1962); Applications of NYNEX Corp. and Bell Atlantic
Corp. For Consent to Transfer Control of NYNEX Corp. and Its
Subsidiaries, Memorandum Opinion and Order, 12 FCC Rcd 19985,
20014, ¶ 49 (1997) (``NYNEX/Bell Atlantic Merger Order''); Merger
of MCI Communications Corp. and British Telecommunications plc,
Memorandum Opinion and Order, 12 FCC Rcd 15351, 15368, ¶ 35
66 Brown Shoe, 370 U.S. at 325. See, e.g., NYNEX/Bell
Atlantic Merger Order, 12 FCC Rcd at 20014-15, ¶ 50.
67 See, e.g., U.S. v. Continental Can Co., 378 U.S. 441,
449 (1964); NYNEX/Bell Atlantic Merger Order, 12 FCC Rcd at
20014-15, ¶ 50. See generally IIA PHILLIP E. AREEDA ET AL.,
ANTITRUST LAW ¶ 500 et seq. (1980). We recognize that this is an
extremely oversimplified description of a very complex subject,
but it suffices for purposes of this discussion.
68 See February 2, 2001 Letter at 3.
69 Answer at 16, ¶ 27b; COMSAT Brief at 6. See Stratos
Mobile Networks (USA), LLC Application For Authority To Provide
U.S.-Originated Fixed-To-Mobile and Mobile-To-Fixed INMARSAT-B
and -M Services Via U.S. Land Earth Stations, Memorandum Opinion
and Order and Authorization, 14 FCC Rcd 15933 (Int. Bur. 1999).
70 Because the record has the shortcomings described
above, we need not reach the question whether merely the
possession of market power, even absent ``abuse'' of such power,
should be considered in a Sierra-Mobile inquiry. We note,
however, that at least two federal circuit courts have
``expressed skepticism about the relevance of uneven bargaining
power in Mobile-Sierra analysis.'' PEPCO v. FERC, 210 F.3d at
411 n.3 (noting the First Circuit's observations in Northeast
Utils. Serv. Co. v. Federal Energy Regulatory Commission, 993
F.2d 937, 961 (1st Cir. 1993)). Cf., Norwood v. FERC, 587 F.2d
at 1312 (suggesting that uneven bargaining power is common and
not sufficient to question what occurred at the contract
formation stage); but cf., Yankee Microwave, 10 FCC Rcd at 660, ¶
71 COMSAT Reply at 3. See ¶ 6, supra.
72 January 16, 2001 Letter at Exhibit B, at Attachment A,
§ 4.1. The fact that the Contract expressly entitles IDB to
subsequent price reductions regarding U.S.-originated traffic,
but says nothing about subsequent price reductions regarding
transit traffic, bolsters our conclusion that it would be
inappropriate to reform the Contract. Had IDB thought to
``protect'' itself from subsequent price reductions regarding
transit traffic, it appears that IDB could have sought a
provision in the Contract to do so.
73 For example, in June 1995, COMSAT's tariffed per-minute
rates for facilities-based INMARSAT Standard-B and M services for
the delivery of U.S.-originated fixed-to-mobile traffic were
$5.55 and $4.95, respectively, whereas the Contract's per-minute
rates for those same services were $3.30. See COMSAT
Supplemental Reply at Exhibit A; January 16, 2001 Letter at
Exhibit B, at Attachment A, § 4.1.