Title: Ohio Consumers' Counsel v. Pub. Util. Comm.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Ohio Consumers’ Counsel v. Pub. Util. Comm., 117 Ohio St.3d 289, 2008-Ohio-860.] 
 
 
OHIO CONSUMERS’ COUNSEL, APPELLANT, v. PUBLIC UTILITIES  
COMMISSION OF OHIO ET AL., APPELLEES. 
[Cite as Ohio Consumers’ Counsel v. Pub. Util. Comm.,  
117 Ohio St.3d 289, 2008-Ohio-860.] 
Utilities – Telephone service – Alternative regulation – R.C. 4927.02, 4927 .03, 
and 4927.04 – Requirements for establishing eligibility for alternative 
regulation – Ohio Adm.Code 4901:1-4-10(C)(4) – Adequacy of 
commission’s test for eligibility in implementing statutory requirements – 
Bundled offerings may be considered in determining whether applicant is 
“subject to competition” when applicant offers only stand-alone service – 
“Qualified alternative providers” may include providers who serve only 
portion of exchange – Commission’s reliance on “presence” of alternative 
providers to test competitive market not unreasonable – Access-line loss is 
reasonable indicator that applicant is “subject to competition” and that 
customers have “reasonably available alternatives” – Lack of “barriers 
to entry” may be shown by evidence of lack of significant barriers – 
Commission’s rules impose reasonable requirements for showing of 
requisite public interest. 
(No. 2007-0570 — Submitted December 12, 2007 — Decided March 6, 2008.) 
APPEAL from the Public Utilities Commission of Ohio, No. 06-1002-TP-BLS. 
__________________ 
 
O’CONNOR, J. 
{¶ 1} This is an appeal as of right by appellant, Ohio Consumers’ 
Counsel (“OCC”), from an order of the Public Utilities Commission of Ohio 
(“commission” or “PUCO”).  The commission approved an application by 
Cincinnati Bell Telephone Company (“CBT”) for alternative regulation of its 
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basic local exchange telephone service in CBT’s Cincinnati and Hamilton 
telephone exchanges.  OCC appealed, arguing that the decision is unlawful due to 
the inadequacy of the commission’s rules and their improper application. 
{¶ 2} We hold that the commission appropriately relied on the relevant 
statutory amendments and created a lawful and reasonable test to effectuate those 
changes.  Likewise, we affirm the commission’s factual determinations in 
approving CBT’s application. 
BACKGROUND 
{¶ 3} On November 4, 2005, Am.Sub.H.B. No. 218 (“H.B. 218”) took 
effect, amending provisions of the state telecommunications law.  Affected 
statutes include R.C. 4905.04, 4927.02, 4927.03, and 4927.04. This appeal deals 
with changes to R.C. 4927.02 and 4927.03, which set forth the requirements for 
exemption from regulation and alternative regulation. 
{¶ 4} The amendments to R.C. 4927.02 provide that it is the policy of 
this state to rely on market forces and their influence in maintaining just and 
reasonable rates, to consider the regulatory treatment of competitive services in 
determining the scope of regulation by the commission, and to refrain from 
unduly favoring or disadvantaging providers of competing regulated services. 
R.C. 4927.02(B) directs that the commission use these policy guidelines to 
implement R.C. 4927.03 and 4927.04 and to reduce or eliminate the regulation of 
telephone companies under those sections. 
{¶ 5} Together with these new policy considerations, the General 
Assembly expanded the services eligible for exemption from regulation or for 
alternative regulation in R.C. 4927.03(A)(1) by including basic local exchange 
service (“BLES”) offered by incumbent local exchange companies (“ILECs”). 
Previously, the statute allowed exemption or alternative regulation for any service 
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other than BLES.1  R.C. 4927.03(A)(1) allows phone companies exemption from 
traditional rate regulation when it is in the public interest and either the utility is 
subject to competition for that service or customers have reasonably available 
alternatives. R.C. 4927.03(A)(1)(a) and (b). In addition, the commission must find 
that there are “no barriers to entry.”  R.C. 4927.03(A)(3).  R.C. 4927.03(C) allows 
the commission to abrogate or modify orders awarding alternative regulation if 
the findings it relied on are no longer valid and if that action is in the public 
interest. 
{¶ 6} In response to H.B. 218, the commission established rules 
governing alternative regulation to cover basic local exchange service. See Ohio 
Adm.Code 4901:1-4-01 et seq.; In the Matter of the Implementation of H.B. 218 
Concerning Alternative Regulation of Basic Local Exchange Service of Incumbent 
Local Exchange Telephone Companies,(Mar. 7, 2006), PUCO No. 05-1305-TP-
ORD, 2006 WL 707476 (“05-1305”).  These rules cover everything from the 
geographic area to be considered for awarding alternative regulation to the 
requirements an applicant must meet to qualify for alternative regulation.  The 
rules became effective on August 7, 2006. 
{¶ 7} In Ohio Adm.Code 4901:1-4-10(C), the commission established 
four competitive-market tests to determine eligibility for alternative regulation. 
An applicant must satisfy at least one of these tests.  The test relevant to this 
appeal is the test set forth in Ohio Adm.Code 4901:1-4-10(C)(4) (“Test 4”).  Test 
4 requires the applicant to demonstrate that in each requested exchange area, the 
applicant has lost at least 15 percent of its total residential access lines since 2002.  
The applicant must also demonstrate the presence of at least five unaffiliated 
facilities-based alternative providers serving the residential market. 
                                                 
1. Basic local exchange service is defined in R.C. 4927.01(A) and includes such features as dial 
tone, access to 9-1-1, access to an operator, listing in a directory, caller-identification-blocking 
service, access to relay service, and access to networks of other companies (i.e., long distance and 
toll providers).   
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{¶ 8} CBT filed an application for alternative regulation, claiming that it 
had lost 18.6 percent of its residential lines in the Cincinnati exchange and 18.4 
percent in Hamilton since 2002 and the presence of the requisite five alternative 
providers.  On November 28, 2006, the commission issued an opinion and order 
(“Nov. 28 Opinion”) approving the application filed by CBT seeking alternative 
regulation in CBT’s Cincinnati and Hamilton exchanges.  It is from this order that 
OCC appeals. 
STANDARD OF REVIEW 
{¶ 9} R.C. 4903.13 provides that a PUCO order shall be reversed, 
vacated, or modified by this court only when, upon consideration of the record, 
the court finds the order to be unlawful or unreasonable.  Under this statutory 
standard, this court will not reverse or modify a PUCO decision as to questions of 
fact when the record contains sufficient probative evidence to show that the 
PUCO’s determination is not manifestly against the weight of the evidence and is 
not so clearly unsupported by the record that it shows misapprehension, mistake, 
or willful disregard of duty.  AT&T Communications of Ohio, Inc. v. Pub. Util. 
Comm. (2000), 88 Ohio St.3d 549, 555, 728 N.E.2d 371. 
{¶ 10} This presents a heavy burden for a party challenging an order, 
because this court consistently defers to the commission's judgment in matters 
that require the commission to apply its special expertise and discretion with 
regard to factual matters.  Cincinnati Bell Tel. Co. v. Pub. Util. Comm. (2001), 92 
Ohio St.3d 177, 180, 749 N.E.2d 262; AT&T Communications of Ohio, Inc. v. 
Pub. Util. Comm. (1990), 51 Ohio St.3d 150, 154, 555 N.E.2d 288;  Cleveland 
Elec. Illum. Co. v. Pub. Util. Comm. (1976), 46 Ohio St.2d 105, 108, 75 O.O.2d 
172, 346 N.E.2d 778. In Stephens v. Pub. Util. Comm., 102 Ohio St.3d 44, 2004-
Ohio-1798, 806 N.E.2d 527, we were presented with a factual finding by the 
commission under R.C. 4927.03(A)(1)(a) that a telephone company was “subject 
to competition” for purposes of eligibility for exemption from traditional 
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regulation.  We stated that if “a finding or decision of the commission is 
supported by sufficient record evidence, as is the case in this appeal, the court will 
not weigh the evidence and substitute its judgment for that of the commission.” 
Id. at ¶16, citing Time Warner AxS v. Pub. Util. Comm. (1996), 75 Ohio St.3d 
229, 233, 661 N.E.2d 1097.  As in the present case, the Stephens case dealt with a 
factual determination under R.C. 4927.03(A)(1), under which the commission 
must determine either that the applicant was subject to competition with respect to 
such service or that customers had reasonably available alternatives. 
{¶ 11} We note that although we defer to factual findings and conclusions 
of the commission, the court has “complete and independent power of review as 
to all questions of law” in appeals from the commission.  Ohio Edison Co. v. Pub. 
Util. Comm. (1997), 78 Ohio St.3d 466, 469, 678 N.E.2d 922.  Nevertheless, we 
have explained that we may rely on the expertise of a state agency in interpreting 
a law where “highly specialized issues” are involved and “where agency expertise 
would, therefore, be of assistance in discerning the presumed intent of our 
General Assembly.” Consumers’ Counsel v. Pub. Util. Comm. (1979), 58 Ohio 
St.2d 108, 110, 12 O.O.3d 115, 388 N.E.2d 1370. 
ANALYSIS 
Stand-Alone Service 
{¶ 12} OCC argues that the commission’s analysis of what constitutes a 
competitive service under Test 4 is too broad.  Specifically, OCC’s first 
proposition of law asserts that when determining whether an applicant is “subject 
to competition,” the commission should not consider bundled-service offerings, 
but should restrict the field of potential competitors to providers of stand-alone 
basic service.  OCC argues that phone companies offering packages that include 
basic local exchange service were already eligible for alternative regulation before 
the H.B. 218 amendments and that the amendments deal solely with basic stand-
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alone service. OCC asserts that therefore the commission can compare service 
only from a competitor that offers stand-alone basic local exchange service. 
{¶ 13} The commission found that customers receiving basic local 
exchange service as part of a package are still considered basic local exchange 
service customers.  Thus, the providers of those services are potential competing 
providers.  The commission admits that these competing providers might not 
currently offer terms and conditions identical to those offered by a stand-alone 
service, but functionally equivalent or substitute services are readily available at 
competitive rates, terms, and conditions. The commission argues that R.C. 
4927.03(A)(1) does not restrict the analysis of competition and reasonably 
available alternatives to services that are exactly like the applicant’s basic local 
exchange service. 
{¶ 14} The commission relied on the evidence that CBT has lost local 
exchange service customers in the presence of alternative providers and that those 
customers clearly view the other providers’ rates, terms, and conditions to be a 
competitive and reasonably available alternative to CBT’s basic service.  The 
commission suggests that it is reasonable to assume that customers would not 
have switched from CBT’s basic local exchange service had they not considered 
the alternative providers’ rates, terms, and conditions to be competitive. 
{¶ 15} In H.B. 218, the General Assembly amended R.C. 4927.02, which 
sets forth Ohio’s policy for alternative regulation, in concert with R.C. 4927.03, 
which sets forth the requirements for eligibility. R.C. 4927.02(B) directs the 
commission to consider the policy factors in implementing alternative regulation.  
Such factors include reliance on market forces to maintain just and reasonable 
rates and consideration of the regulatory treatment of competing and functionally 
equivalent services when determining how and whether to regulate providers. 
R.C. 4927.02(A)(2) and (6).  The policy of relying on market forces rather than 
January Term, 2008 
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government regulation to keep rates just and reasonable indicates a legislative 
preference for reducing or eliminating regulation of telephone companies. 
{¶ 16} It is in the framework of these changes that we review the relevant 
statutory provisions.  R.C. 4927.03(A)(1)(a) and (b) require that before awarding 
alternative regulation to an applicant, the commission find either that the applicant 
is subject to competition for the service or that there are reasonably available 
alternatives to the service. R.C. 4927.03(A)(2)(c) directs that the commission, in 
making this finding, shall consider whether alternative providers are able to make 
“functionally equivalent or substitute services” readily available on competitive 
terms. 
{¶ 17} The key issue is what constitutes “competition” within the 
meaning of R.C. 4927.02(1)(a)’s requirement that the applicant for alternative 
regulation be “subject to competition.”  If bundled services are providing 
competition to basic service, then the commission must consider those packages 
in determining whether the applicant is subject to competition.  The question 
comes down to which services compete with basic service. 
{¶ 18} OCC’s argument that only basic service competition may be 
considered fails to recognize the legislative guidance provided by the H.B. 218 
amendments.  In amending R.C. 4927.02, the General Assembly provided the 
commission with new factors to consider when determining whether an applicant 
is “subject to competition,” and those factors include consideration of the larger 
environment of telephone service providers, specifically, “[t]he ability of 
alternative providers to make functionally equivalent or substitute services readily 
available” on competitive terms.  R.C. 4927.03(A)(2)(c). 
{¶ 19} The commission established that bundled services provide 
competition to basic phone service.  The commission determined that customers 
are switching service in the presence of competitors and that it is plausible to 
assume that those customers find the alternative services to be adequate 
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substitutes for CBT’s services.  The court will not reverse or modify a 
commission decision as to questions of fact in cases in which the record contains 
sufficient probative evidence to show that the commission’s decision was not 
manifestly against the weight of the evidence and was not so clearly unsupported 
by the record as to show misapprehension, mistake, or willful disregard of duty.  
Monongahela Power Co. v. Pub. Util. Comm., 104 Ohio St.3d 571, 2004-Ohio-
6896, 820 N.E.2d 921, ¶ 29. OCC shows that the alternative providers’ services 
are different and offered at a variety of prices, but it does not overcome the 
commission’s finding that those services are providing reasonable competitive 
substitutes for basic local exchange service.  We defer to the commission’s 
expertise on this matter.  Accordingly, we reject OCC’s argument. 
Extent of Market Presence 
{¶ 20} In its second proposition, OCC challenges the commission’s 
application of Test 4, which awards alternative regulation if, for each relevant 
exchange area, the applicant shows, inter alia, the presence of at least five 
qualified alternative providers serving the residential market. OCC asserts that the 
commission improperly included providers who serve only a portion of the 
exchange reviewed, which does not properly reflect statutory requirements.  
Failure to serve the entire exchange means that the service is not “readily 
available” within the meaning of R.C. 4927.03(A)(2)(c). 
 
{¶ 21} OCC points out that the commission conceded in its order that 
Time Warner and Current Communications do not serve the entirety of either the 
Cincinnati or Hamilton exchange, stating that Time Warner covers a “majority” of 
the exchange areas and that Current Communications serves in “some areas of the 
Cincinnati exchange.” OCC also argues that the commission ignored OCC’s 
evidence that wireless carriers are not “readily available” “functionally equivalent 
or substitute services,” because they cannot guarantee coverage at all locations 
due to varying and unreliable signal strength. 
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{¶ 22} The commission counters that there is no requirement that all 
alternative providers offer ubiquitous service throughout the exchange.  The 
commission rejected OCC’s argument as a “narrow interpretation” that would 
require the relevant market to be reduced from an exchange to an area as small as 
a city block to ensure that every single customer has access to all alternate 
providers. The commission stated that OCC’s argument would even require the 
commission to test wireless coverage in individual homes. 
{¶ 23} This dispute is rooted in the geographic area the commission 
adopted in its rules as the “relevant market” for purposes of R.C. 
4927.03(A)(2)(b), which requires the commission to consider the “extent to which 
services are available from alternative providers in the relevant market.”  
“Relevant market” was defined in the 05-1305 rulemaking proceeding as a 
telephone exchange, which in turn is defined as “a geographical service area 
established by an [incumbent local exchange provider] and approved by the 
commission, which usually embraces a city, town, or village and a designated 
surrounding or adjacent area.  There are currently seven hundred thirty-eight 
exchanges in the state.” Ohio Adm.Code 4901:1-4-01(M). 
{¶ 24} We affirm the commission’s finding that alternative providers have 
services “readily available” in CBT’s exchanges. The commission established the 
exchange area to judge the overall presence in that area, not a subset of that area.  
The commission found no requirement in the law or in its rules that an alternative 
provider must serve 100 percent of the relevant market.  The commission points 
out that OCC supported using the telephone exchange as the relevant market in 
the 05-1305 rulemaking case.  The area is small enough to share common 
characteristics while still providing years of historical data.  Thus, it is reasonable 
to accept the commission’s determination to judge the area as a whole.2 
                                                 
2.  In so doing, we note that Test 4 also requires a showing of a decrease of at least 15 percent of 
residential access lines since 2002. The adequacy of the test cannot be judged solely on the 
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“Presence” of Alternative Providers 
{¶ 25} OCC’s first proposition questions the legitimacy of Test 4.  It 
argues that by requiring only the “presence” of alternative providers in the 
requested exchange, the test fails to include any consideration of the size of such 
providers or other indicators of market power such as market share or growth, as 
required by R.C. 4927.03(A)(2).  OCC’s concern is that the mere presence of an 
alternative provider in the market does not show that the provider is able to 
contribute to a “healthy and sustainable” competitive market. See R.C. 
4927.02(A)(2).  OCC suggests that longevity is a better indicator of market 
power. 
{¶ 26} The commission disagreed, stating in its order that Test 4 reflects a 
more appropriate measure for consideration: the overall state of the competitive 
market as demonstrated by the presence of a significant number of competitive 
providers in the relevant market and by the applicant’s loss of a considerable 
share of its access lines. The commission found that factors like longevity in the 
market, while noteworthy, did not have a direct bearing on the state of the 
competitive market at any given point in time.  The commission found that 
objective criteria, such as the required presence of several facilities-based 
providers, are more significant in demonstrating a healthy, sustainable market.  
The actual presence of facilities-based providers demonstrates a greater 
commitment by those alternative providers to remain in the market as 
competitors. 
{¶ 27} R.C. 4927.03(A)(2)(d) requires the commission to consider 
“[o]ther indicators of market power, which may include market share, growth in 
market share, ease of entry, and the affiliation of providers of services.”  
Ultimately, this is a factual determination.  In essence, OCC is attempting to 
                                                                                                                                     
number of alternative providers.  We reject OCC’s argument that an alternative provider must 
have a ubiquitous presence in the exchange.   
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attack a factual determination by the commission.  But OCC has failed to show 
that the commission’s decision is unsupported by sufficient record evidence, and 
this court will not substitute its judgment for that of the commission.  Stephens v. 
Pub. Util. Comm., 102 Ohio St.3d 44, 2004-Ohio-1798, 806 N.E.2d 527, ¶ 16. 
{¶ 28} Moreover, we defer to the commission’s expertise in deciding the 
most effective means of implementing the legislature’s intent.  Here, the 
commission’s approach to measuring competition recognizes the practical 
realities of the market. For instance, by requiring that alternative providers be 
facilities-based, the commission ensures that alternative providers have 
demonstrated a real, long-term commitment to the relevant market due to 
investment in plant and equipment. 
{¶ 29} Understanding of the current market is crucial to the analysis here.  
Again, we defer to the commission’s expertise in this regard.  The commission 
complied with R.C. 4927.03(A)(2) by devising a test that it reasonably believed 
measures the presence of competition in the relevant market and made a factual 
finding based on the record and its expertise.  We reject OCC’s challenge to the 
commission’s determinations. 
Access-Line Loss 
{¶ 30} In its third proposition, OCC also challenges the relevance of the 
applicant’s access-line losses since 2002 as a prong of Test 4.  The line-loss prong 
of Test 4 requires a showing that the incumbent lost at least 15 percent of its 
residential access lines in an exchange since 2002. 
{¶ 31} OCC questions how the line-loss provision satisfies the statutory 
criteria in R.C. 4927.03(A).  There is no question that CBT lost over 15 percent of 
its access lines since 2002. The only issue is whether that fact establishes that the 
applicant is “subject to competition” or that customers have “reasonably available 
alternatives” as required by R.C. 4927.03(A)(1). 
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{¶ 32} The commission discussed the different factors it weighed when 
fixing on lost access lines as a factor in Test 4.  The commission stated in its order 
that in exercising its judgment and discretion, it determined that “a minimum 15 
percent residential access line loss in a given exchange, considering all the 
possible causes for such loss, accompanied by the presence of at least five 
unaffiliated facilities-based alternative providers serving the residential market in 
that exchange, is sufficient to justify alternative regulation.”  Further, “[t]he line 
loss requirement measures market power, the level of competition that [an 
applicant] faces from alternative providers, and the availability of competing 
alternative services” in each exchange.  Moreover, the commission found that the 
line-loss factor is practical and easily implemented, using readily available data. 
The commission also incorporated OCC’s suggestion to move the time frame to 
count the lines lost from 1996 to 2002, which takes into account the migration of 
lines affiliated with the beginning of the unbundled network element platform 
offerings in Ohio. Finally, the commission concluded that the two factors in Test 
4, when combined, “gauge[] the sustainability of competing residential providers 
in the subject market area.” 
{¶ 33} The General Assembly required the commission to develop rules 
to carry out the amendments.  R.C. 4927.03(D).  The amendments require 
consideration of the regulatory treatment of competing and functionally 
equivalent services in determining the scope of regulation of services subject to 
commission jurisdiction under R.C. 4927.02(A)(6).  The changes also require that 
the commission ensure that it does not unduly favor or advantage any provider or 
unduly disadvantage providers of competing and functionally equivalent services 
under R.C. 4927.02(A)(7).  Therefore, the commission had to interpret the 
statutory criteria and develop a method to evaluate competition beyond its 
regulatory authority. 
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{¶ 34} The commission’s finding that Test 4 adequately judges alternative 
competition by combining the presence of at least five unaffiliated facilities-based 
competitors with a significant loss of access lines is reasonable.  The 
commission’s rules incorporate the market reality that there are some forms of 
competition that the commission has no power to regulate or formally review.  
Accordingly, the commission interpreted the intent of the General Assembly and 
developed a test to determine the level of competition and the availability of 
alternative providers regardless of regulatory oversight.  The court has explained 
that it may rely on the expertise of a state agency in interpreting a law where 
“highly specialized issues” are involved and “where agency expertise would, 
therefore, be of assistance in discerning the presumed intent of our General 
Assembly.” Consumers’ Counsel v. Pub. Util. Comm., 58 Ohio St.2d at 110, 12 
O.O.3d 115, 388 N.E.2d 1370. 
{¶ 35} Moreover, the legislature reserved to the commission the right to 
modify or abrogate the alternative regulatory treatment should any evidence show 
that the findings relied upon are no longer valid.  R.C. 4927.03(C). OCC can 
notify the commission if any conditions change. 
{¶ 36} We affirm the commission’s finding on the adequacy of Test 4 and 
its conclusion that CBT satisfied the line-loss portion of that test. Accordingly, we 
reject OCC’s proposition of law. 
Barriers to Entry 
{¶ 37} OCC’s fourth proposition asserts that CBT failed to show a lack of 
barriers to entry for competitors offering stand-alone basic service and that the 
commission’s rules improperly permit an award of alternative regulation without 
such a showing. R.C. 4927.03(A)(3) provides that no award of alternative 
regulation shall be made under R.C. 4927.03(A)(1) unless the commission finds 
that “there are no barriers to entry.” 
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{¶ 38} The commission established its view on the lack of barriers in the 
05-1305 rulemaking case.  The commission stated that all companies attempting 
entry into a new market are confronted with at least some difficulties.  Therefore 
the issue becomes whether these difficulties can be overcome by competitors or 
whether market conditions present true barriers that prevent or significantly 
impede entry beyond those risks and costs normally associated with market entry. 
{¶ 39} OCC asserts that the commission’s standard for finding no barriers 
is too low.  OCC argues that the commission has improperly interpreted “no 
barriers” to mean “no significant barriers.” 
{¶ 40} Factually, the commission did not find any evidence in the record 
of any barriers to entry present in the requested exchanges that might bar 
providers from entering those markets.  The commission found that the effects of 
the potential barriers pointed out by OCC’s expert in the 05-1305 rulemaking 
case, Dr. Roycroft, are minimized by federal and state laws. In addition, the 
commission found that Dr. Roycroft failed to identify a single barrier to entry 
applying specifically to either of CBT’s two requested exchanges. 
{¶ 41} We find that these issues involve another factual determination by 
the commission.  The commission developed an independent test to assist it in 
making its factual determinations under the statute.  The commission’s rule for 
determining the presence of alternative providers and access lines lost (i.e., 
customers lost) is a reasonable indicator that there are no barriers preventing entry 
in the exchange. 
{¶ 42} OCC’s interpretation of the lack-of-barriers requirement would 
impose an insurmountable burden on applicants for alternative regulation.  No 
market is completely barrier-free.  OCC’s suggested test, in which the 
commission would have to find that the market presents no difficulties or risks for 
new entrants, would place the alternative regulation contemplated by the 
legislature out of reach for most applicants. 
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{¶ 43} In establishing the criteria for determining the absence of barriers, 
the commission identified those factors that it believes are significant for the 
purpose of complying with the intent of H.B. 218, while at the same time not 
making the test so demanding that alternative regulation as contemplated by H.B. 
218 would be unattainable.  H.B. 218 provided no definition of “barrier” and no 
criteria for finding a lack of barriers.  The commission pointed out, and we agree, 
that although the legislature provided general guidance for granting alternative 
regulation, “the ultimate decision-making authority regarding that implementation 
was left to the Commission.”  We cannot accept OCC’s contention that Test 4 
fails to properly address the absence of barriers to entry.  And the commission’s 
factual finding that in this case CBT provided sufficient evidence to establish 
those criteria will not be disturbed by this court. 
Public Interest 
{¶ 44} R.C. 4927.03(A)(1) requires that the commission find that 
alternative regulation is in the public interest.  OCC argues that the commission 
granted alternative regulation to CBT without an adequate showing that such 
regulation is in the public interest.  OCC points out that under the statutes prior to 
the recent amendments, applicants for alternative regulation were required to 
make certain “public interest” commitments.  OCC requested that CBT be 
required to make additional commitments and asserts that the commission erred in 
failing to require additional commitments in the rules it promulgated under H.B. 
218. 
{¶ 45} The commission responded that in a competitive environment, 
further commitments are not appropriate, and the market itself will encourage 
innovation and generate consumer benefits.  The commission found that 
competition will provide appropriate incentives to maintain affordability, 
innovation, diversity of choice, and other public benefits. 
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{¶ 46} While the commission reiterated its belief in the importance of 
ensuring that the largest numbers of residents have access to high-quality 
telephone service regardless of income or geographic location, it also recognized 
the legislature’s direction that market forces be allowed to create an environment 
that will promote competitive pricing, thereby maintaining just and reasonable 
rates.  The commitments required of applicants for alternative regulation, set forth 
in Ohio Adm.Code 4901:1-4-06 et seq., represent the commission’s attempt to 
strike a balance between regulation and free-market competition. 
{¶ 47} R.C. 4927.02 requires the commission to consider the regulatory 
environment for competing services and to reduce the regulation of telephone 
companies in the presence of increasing competition.  In establishing its rules, the 
commission looked to the policy of the state set forth in R.C. 4927.02(A) and 
determined that certain measures, such as capping annual rate increases, imposing 
minimum access requirements for low-density areas, and ensuring economic 
assistance to eligible consumers, provided the needed protection to consumers 
without unduly interfering with the market and without disadvantaging local 
exchange carriers.  The commission’s position gives meaning to the H.B. 218 
policy changes in R.C. 4927.02, which identifies the General Assembly’s view of 
the public interest. 
{¶ 48} Moreover, the public-benefit finding is a factual determination 
made by the commission.  Its finding that CBT had met the requirements for a 
showing of public interest is not one that will be disturbed by this court absent a 
demonstration that it is clearly unsupported by the record.  AT&T, 88 Ohio St.3d 
at 555, 728 N.E.2d 371.  OCC has made no such showing. 
{¶ 49} Having considered the arguments and the record carefully, we 
affirm the commission’s finding that CBT’s application is in the public interest 
and reject OCC’s argument. 
CONCLUSION 
January Term, 2008 
17 
{¶ 50} Ultimately, OCC is appealing Test 4, the rule that the commission 
adopted to streamline its review for alternative treatment under the statute.  The 
rule, as applied to the facts in this case, satisfies the statutory factors needed to 
award alternative treatment. The commission made appropriate factual 
determinations.  OCC’s arguments should be rejected and the commission order 
affirmed. 
Decision affirmed. 
 
MOYER, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL, 
LANZINGER, and CUPP, JJ., concur. 
__________________ 
Janine L. Migden-Ostrander, Consumers’ Counsel, and Daniel C. 
Bergmann and Terry L. Etter, Assistant Consumers’ Counsel, for appellant. 
Marc Dann, Attorney General, and Duane W. Luckey, William L. Wright, 
and Stephen A. Reilly, Assistant Attorneys General, for appellee Public Utilities 
Commission. 
Douglas E. Hart, for intervening appellee Cincinnati Bell Telephone Co., 
L.L.C. 
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