Case Title: In re New England Tel. & Tel.

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1992-10-01T00:00:00Z

Document:
NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 92-005


 Petition of New England Telephone and        Supreme Court
 Telegraph Co. and Department of Public
 Service to Extend Telecommunications         On Appeal from
 Agreement                                    Public Service Board

                                              October Term, 1992


 Richard A. Cowart, Chair

 Kathleen Davis of Downs Rachlin & Martin, Burlington, for appellant

 Joseph E. Frank of Paul Frank & Collins, Burlington, and Bartlett L.
   Thomas, Boston, Massachusetts, for appellee New England Tel. & Tel. Co.

 Heather R. Wishik, Special Counsel, and James Volz, Director for Public
   Advocacy, Montpelier, for appellee Department of Public Service


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      ALLEN, C.J.   RCI Long Distance New England, Inc. d/b/a Long Distance
 North (LDN) appeals from a Public Service Board order approving an Extended
 Vermont Telecommunications Agreement (EVTA).  LDN argues that the Board did
 not meet the statutory requirements of 30 V.S.A. { 226a(c) and that the
 Board treated the EVTA as an extension when it was actually a modification.
 We affirm.
      New England Telephone and Telegraph Company (NET) and the Vermont
 Department of Public Service (DPS) jointly petitioned the Board for
 contract-based rate regulation under 30 V.S.A. { 226a.  Section 226a
 authorizes contract regulation, in lieu of traditional rate regulation, of
 any company that provides basic exchange telecommunications service in lieu
 of traditional rate regulation.  Contract regulation is established through
 a Board-approved agreement between a company and the DPS.  The Board
 rejected petitioners' Vermont Telecommunications Agreement (VTA), but
 suggested that a modified contract would be acceptable if it adequately
 addressed certain enumerated deficiencies in the VTA.  On December 12, 1988,
 the Board approved petitioners' modified contract (MVTA).
      This appeal arises from the approval by the Board on December 4, 1991
 of a one-year extension of the MVTA.  LDN, a competitor of NET, argues that
 the Board's findings do not support the conclusion that the extended
 contract (EVTA) satisfied the 30 V.S.A. { 226a(c) statutory criteria, and
 therefore, the EVTA should not have been approved.  LDN also argues that the
 extended contract (EVTA) was actually a modification of the MVTA and that
 the Board failed to follow the MVTA's procedure on modifications, which
 would have required an external change in circumstances before the contract
 could have been modified.  Because such an external change in circumstances
 did not exist, LDN argues that the MVTA could not have been modified.
                                     I.
      LDN argues that the Board's findings do not support its conclusion that
 the contract satisfies the criteria of 30 V.S.A. { 226a(c).  Specifically,
 LDN argues that the Board failed to make findings on the criteria set forth
 in the statute. (FN1) Under the statute, as it existed at the time of approval
 of the MVTA, the Board may grant approval of a contract
      only if it finds that a contract in its entirety is just and
      reasonable giving due consideration to the services and price
      levels covered and any risk of cross-subsidization, promotes the
      general good of the state, supports reasonable competition, and
      takes into consideration any state telecommunications plan or
      policy adopted pursuant to section 202d.

 30 V.S.A. { 226a(c) (prior to 1991 amendment).
      Where the findings of an administrative agency "fairly and reasonably"
 support the agency's conclusions of law, this Court will uphold the agency's
 decision.  Caledonian Record Publishing Co. v. Department of Employment and
 Training, 151 Vt. 256, 260, 559 A.2d 678, 681 (1989).  Moreover, decisions
 made within an agency's area of expertise "are presumed correct, valid and
 reasonable," absent a clear showing to the contrary.  Id.  Throughout the
 Board's order, reference is made to its July 12, 1988 order, which rejected
 the VTA, and the subsequent MVTA, which was approved in the Board's December
 30, 1988 order.  Where identical factual considerations governed the
 application of { 226a(c), the Board's reliance on portions of the earlier
 orders was appropriate and removed the necessity of readdressing identical
 issues.
      Under the first statutory criterion, the Board considered the services
 and the price levels and any risk of cross-subsidization.  The Board found
 that the specified service quality levels in the EVTA were identical to
 those set forth in the MVTA.  This finding supports the Board's conclusion
 that the EVTA will maintain the service quality of the MVTA.  The Board also
 found that the proposed rate increase would be "less than the basic exchange
 rates established in 1985, adjusted for inflation through 1991."  This
 finding supports the Board's conclusion that the price levels were
 reasonable because they were lower than they would otherwise have been.
      LDN's argument under this first criterion focuses on the Board's
 alleged lack of findings on the cross-subsidization risk under the EVTA.
 NET's potential for cross-subsidization arises from the fact that NET
 provides monopolized services (local service) and competitive services
 (intrastate services).  As the Board explained in its July 12, 1988 order,
 the risk of cross-subsidization will be adequately controlled where NET has
 no pool of local service revenues available to offset losses due to anti-
 competitive pricing in other services.  Although the Board's finding was
 interspersed in the discussion section of the order, the Board stated:
      [W]e explicitly recognize that the revenue increase will not fully
      compensate the Company for the costs it incurs to meet its
      obligations and that NET still faces a considerable financial
      incentive to improve the efficiency of its own operations.
      Furthermore, the rate level approved here also ensures that NET
      will not have available a pool of monopoly profits to cross-
      subsidize anti-competitive offerings in more highly contested
      markets.  These features are critical components of the current
      VTA, and they are preserved by the extension.

      The Vermont Administrative Procedure Act requires that findings of fact
 and conclusions of law be separately stated.  3 V.S.A. { 812(a).  Where
 findings of fact, however, are "interspersed throughout [the Board's]
 discussion" such that there is "no doubt as to what [the Board] decided and
 how its decision was reached," the Board's order will stand.  Petition of
 Village of Hardwick Electric Department, 143 Vt. 437, 444-45,