Title: U.S. WEST COMMUNICATIONS, INC. v. WYOMING PUBLIC SERVICE COMMISSION

State: wyoming

Issuer: Wyoming Supreme Court

Document:

U.S. WEST COMMUNICATIONS, INC. v. WYOMING PUBLIC SERVICE COMMISSION2000 WY 20615 P.3d 722Case Number: 97-146Decided: 12/05/2000Supreme Court of Wyoming

U S 
WEST COMMUNICATIONS, INC., Appellant (Petitioner),

v.

WYOMING PUBLIC SERVICE COMMISSION; STEVE ELLENBECKER, 
DOUG DOUGHTY, and KRISTIN H. LEE, in their official capacities as Commissioners 
of the Wyoming Public Service Commission, Appellees (Respondents), and AT&T 
COMMUNICATIONS OF THE MOUNTAIN STATES; MCI TELECOMMUNICATIONS CORPORATION; and 
McLEOD        TELEMANAGEMENT, 
INC., n/k/a McLEOD USA, Intervening Appellees.

 

                                

Certification from the District 
Court of Laramie County, The Honorable

Edward L. Grant, 
Judge.

 

   Paul J. Hickey, Roger Fransen and 
Mary A. Throne of Hickey, Mackey, Evans & Walker, Cheyenne, Wyoming, 
Representing Appellant.

 

   William U. Hill, Attorney General, 
Michael L. Hubbard, Deputy Attorney General; Carrol Verosky, Assistant Attorney 
General; and Harry Ivey, Assistant Attorney General, Cheyenne, Wyoming, 
Representing Appellees.

 

   Alan B. Minier of Rothgerber, 
Appel, Powers & Johnson, Cheyenne, Wyoming; Michel Singer, Denver, Colorado; 
Elizabeth Zerga of Herschler, Freudenthal, Salzburg, Bonds & Zerga, P. C., 
Cheyenne, Wyoming; and William A. Haas and David R. Conn, Cedar Rapids, Iowa, 
Representing Intervening Appellees.

 

   Before LEHMAN, C.J., and 
THOMAS, MACY*, and GOLDEN, JJ., and SPANGLER, D.J., 
Ret.

  * 
Retired June 2, 2000.

 

 

   
THOMAS, Justice.

[¶1]       Following the filing of the original 
opinion of the Court in this case, U S West Communications, Inc. v. Wyoming 
Public Service Com'n, 988 P.2d 1061 (Wyo. 1999), U S West Communications, Inc. 
(U S West) and two of the intervenors, AT&T Communications of the Mountain 
States and McLeod Telemanagement, Inc., n/k/a McLeod USA (the Intervenors), 
presented petitions for rehearing. U S West challenges the determination that 
its plan to grandfather Centrex Plus service is unreasonably discriminatory, and 
further challenges the Public Service Commission's (Commission) jurisdiction 
over Centrex Plus as a competitive service. The Intervenors, on the other hand, 
question our holding that Centrex Plus is a competitive service. There was no 
challenge to our holding that the Commission was without jurisdiction to 
determine whether there had been a violation of the Federal Communications Act. In the 
Order Granting Petitions for Rehearing, we ordered the parties to address these 
questions:

 

What is the proper interpretation of Wyo. Stat. Ann. 
§ 37-15-103 (a)(iv) (Lexis 1999)1 in light of the language contained 
therein and the underlying purposes of the Wyoming Telecommunications Act of 
1995? How does that interpretation correspond to, and interrelate with, 
telecommunications technologies such as POTS and Centrex?

 

 [¶2]       In addition, the parties on rehearing 
briefed additional issues. In Appellant U S West Communications, Inc.'s Brief on 
Rehearing, these issues were addressed:

 

I. What is the proper interpretation of Wyo. Stat. § 
37-15-103 (a)(iv) in light of the language contained therein and the underlying 
purposes of the Wyoming Telecommunications Act of 1995 and how does that 
interpretation correspond to, and interrelate with, telecommunications 
technologies such as Plain Old Telephone Service (POTS) and Centrex 
Plus?

 

II. Was the court's ruling that allowed the Wyoming 
Public Service Commission to prevent U S WEST Communications, Inc.'s withdrawal 
of its Centrex Plus service by application of Wyo. Stat. § 37-15-404 (a) 
inconsistent with its finding that Centrex Plus is a competitive service that 
can be withdrawn without Commission approval under Wyo. Stat. § 37-15-404 
(c)?

 

III. Did the court err in finding that U S WEST 
Communications, Inc.'s Centrex Plus service is a competitive service under the 
Wyoming Telecommunications Act of 1995?

 

  In McLeod USA and AT&T Communications 
of the Mountain State's Joint Brief on Rehearing, these issues were 
argued:

 

I. The agency interpretation of Wyo. Stat. 37-15-104 
was correct, "Centrex Plus is a transmission service necessary for the 
connection between the end user's or customer's premises or location and the 
local network switching facility including necessary signaling service to access 
other essential services."

 

II. The Public Service Commission of Wyoming had 
jurisdiction pursuant to W. S. § 37-15-404 (a) and correctly concluded that U S 
West's plan to withdraw Centrex Plus from new customers and competitive 
resellers while grandfathering and permitting renewals for existing Centrex 
customers was unreasonably discriminatory under the Wyoming Telecommunications 
Act of 1995.

 

[¶3]        We adhere to our decision in the first 
opinion that Centrex Plus "is not an essential service as defined by statute 
and, therefore, is not subject to regulation as a noncompetitive service." U S 
West Communications, Inc., 988 P.2d  at 1067. We maintain the reversal of the 
order of the Commission that ruled to the contrary. In this opinion on 
rehearing, however, we also reverse the ruling of the Commission that U S West's 
plan to grandfather Centrex Plus to existing customers while not offering the 
service to new customers, particularly the Intervenors, was unreasonably 
discriminatory and became subject to regulation by the Commission pursuant to 
Wyo. Stat. Ann. § 37-15-404 (a) (Lexis 1999).  That statute provides, in pertinent 
part, "[n]o telecommunications company shall unreasonably discriminate as to 
customers in prices, terms or conditions of service, or in connection to or with 
other telecommunications companies." Wyo. Stat. Ann. § 37-15-404 (a). For the 
reasons set forth below, that aspect of the Commission's order also is reversed, 
and the case is remanded to the Commission for the entry of an order in 
accordance with this opinion.

 

 [¶4]       For the convenience of the reader, we 
reiterate our statement of the facts set forth in the first 
opinion:

 

Centrex Plus (also known as Centron) is an optional 
business service which allows a customer using a number of telephone lines to 
include the lines in a single-switched system. Each individual telephone can 
make and receive calls from other 
telephones within the system, typically by dialing only the last four digits of 
the called number. The service can also make and receive calls from telephones 
outside the system through connection and access to the central office switch. 
Utilizing physical facilities owned by U S West, Centrex Plus includes standard 
features such as call forwarding, call hold, call waiting, conference calling, 
individual line billing, last number redial, speed calling and other features. 
Although the features are similar to a private branch exchange (PBX), a PBX 
differs from Centrex Plus in that the PBX utilizes a switch located on the 
customer's property.  The customer 
owns or leases the switch and, unlike Centrex Plus' direct access to the public 
switched network, the PBX access is through a trunk connection to U S West's 
central office.

 

On February 15, 1996, U S West filed a price schedule 
with the Public Service Commission (the Commission) in which it gave the 
Commission notice that it intended to discontinue offering Centrex Plus to new 
customers as of February 6, 1996. U S West further stated its intention to 
continue Centrex Plus service to existing customers, subject to certain revised 
terms and conditions, through the duration of its longest existing contract for 
the service that ends on April 29, 2005. Pursuant to these plans, U S 
West proposed to move the service to the 
obsolete section of its price schedules.

 

Shortly thereafter, Intervenors filed separate 
objections to U S West's filing, generally contending that the withdrawal of 
Centrex Plus service deterred Intervenors' access to the Wyoming local exchange 
market through the resale of the 
service, thus rendering U S West's plans anti-competitive.  Intervenors also claimed the 
grandfathering of Centrex Plus services solely to its existing customers 
unreasonably discriminated against new customers desiring the service. In 
response to the objections, the 
Commission scheduled an investigation and hearing on May 6, 1996. After the 
contested case hearing, the Commission issued a Notice and Order Setting 
Additional Public Hearing to reopen the record for further legal argument and 
evidence. This order directed U S West to submit evidence showing that Centrex 
Plus is a service subject to competition.

 

U 
S West filed a motion to set aside the notice, alleging any burden of proof 
resided with Intervenors because Centrex Plus was a competitive service by 
statutory definition and had been recognized as such in previous Commission 
rulings. U S West concluded that the withdrawal of the service was, therefore, 
not subject to the Commission's approval. U S West's motion was denied, and no 
party presented additional evidence at the subsequent 
hearing.

 

The Commission issued its Memorandum Opinion, 
Findings and Order on September 6, 1996, denying U S West's movement of Centrex 
Plus service to the obsolete section of its price schedules and the grandfathering of the service. The Commission 
concluded that Centrex Plus service is an "essential telecommunications service" 
as defined in Wyo. Stat. Ann. § 37-15-103 (a)(iv), and therefore subject to 
regulation as a noncompetitive local exchange service pursuant to Wyo. Stat. 
Ann. § 37-15-202 (c) and 37-15-404 (c). The Commission further determined the 
proposed withdrawal and grandparenting of Centrex Plus service "unreasonably 
discriminates" in favor of U S West's current subscribers, to the exclusion of 
other prospective customers including other potential telecommunications 
companies. In addition, the Commission found the proposed withdrawal of Centrex 
Plus service violated certain provisions 
of the Federal Telecommunications Act of 1996, specifically, 47 U.S.C. § 251 
(b)(1) and 251 (c)(4).

 

After the Commission's denial of U S West's petition 
for rehearing, U S West then filed a petition for review in the district court. 
The district court, on its own motion, certified the case to this court pursuant 
to W.R.A.P. 12.09.

 

 U S West 
Communications, Inc., 988 P.2d  at 1063-64.

 

 [¶5]       The Court is now persuaded that Centrex 
Plus is not subject to regulation on the grounds that the plan of U S West to 
discontinue offering that service to potential customers while honoring the 
terms of its existing contracts constitutes "unreasonable discrimination" 
contrary to the provisions of Wyo. Stat. Ann. § 37-15-404 (a). That conclusion 
is demanded by the holding in the case that the Centrex Plus service is not 
subject to regulation as a non-competitive service. We cannot discern any 
intention on the part of the legislature to subject a competitive service to 
regulation under the statutory provision foreclosing 
discrimination.

 

[¶6]         In a different context, we have 
spoken to limitations upon the regulatory authority of the Commission in this 
way:

 

"An administrative board has no power or authority 
other than that particularly conferred upon it by statute or by construction 
necessary to accomplish the aims of the statute." Tri-County Electric 
Association, Inc. v. City of Gillette, supra, 525 P.2d [3] at 9 [(Wyo. 
1974)].

 

            
See also 1 A. Priest, Principles of Public Utility Regulation, at 9-10 
(1969).

 

We then look to the statutes to decide whether the 
legislature granted to PSC the authority it purported to exercise in issuing its 
order to Mountain Bell.  Section 
37-2-112, W.S. 1977, grants to PSC the "general and exclusive power to regulate 
and supervise every public utility" within this state in accordance with the 
statutes. Section 37-2-127, W.S. 1977, further provides:

 

"In 
addition to the powers herein specifically granted, the commission shall have 
such implied or incidental powers as may be necessary and proper, effectually to 
carry out, perform and execute all the power so granted."

 

These broad powers can be exercised only over a 
public utility, however. Public Service Commission v. Formal Complaint of WWZ 
Company, supra, [641 P.2d 183 (Wyo. 1982)]; § 37-2-112, W.S. 1977. 
The             
definition of telephone service as a "public utility" 
is:

 

"Any plant, property or facility for the transmission 
to or for the public of telephone messages, for the conveyance or transmission 
to or for the public of telegraph messages, or for the furnishing of facilities 
to or for the public for the transmission of intelligence by electricity; * * 
*." § 37-1-101 (a)(vi)(B), W.S. 1977.

 

The rule of strict construction dictates that any 
jurisdiction in PSC is limited to those functions of Mountain Bell that are "to 
or for the public."

 

The 
conclusion that the legislature did not intend to extend to PSC jurisdiction 
over services that are not furnished to or for the public is consistent with 
generally accepted jurisdictional limits on regulatory bodies. We have espoused 
the general proposition that a utility service may have both public and private 
functions, and while it is subject to regulation in matters of public function, 
it is not when it operates in its private mode. State Board of Equalization v. 
Stanolind Oil and Gas Company, 54 Wyo. 521, 94 P.2d 147 (1939). See also 
Southern Pacific Company v. Arizona Corporation Commission, Ariz., 404 P.2d 692 (1965); 
City of Phoenix v. Kasun, 54 Ariz. 470, 97 P.2d 210 (1939); Associated 
Mechanical Contractors of Arkansas v. Arkansas Louisiana Gas Co., 225 Ark. 424, 
283 S.W.2d 123 (1955); University Hills Beauty Academy, Inc. v. Mountain States 
Telephone and Telegraph Company, 38 Colo. App. 194, 554 P.2d 723 (1976); 
Oklahoma Gas and Electric Company v. Corporation Commission, Okla., 543 P.2d 546 
(1975); 64 Am. Jur.2d Public Utilities § 1, at 550 (1972); 73B C.J.S. Public 
Utilities § 66, at 314-315 (1983).

 

 Matter 
of Mountain States Tel. and Tel. Co., 745 P.2d 563, 569 (Wyo. 
1987).

 

[¶7]         It is clear that the legislature 
intended to withdraw the Centrex Plus service from the regulatory authority of 
the Commission. A service that is withdrawn from regulatory authority is no 
different, for jurisdictional purposes, from a service that is not furnished to 
or for the public. It follows that our holding that Centrex Plus is a 
competitive service forecloses further regulation by the 
Commission.

 

 [¶8]       This determination is consistent with 
the prior holding that the service is not subject to regulation. If U S West 
were required to subsidize the Intervenors by providing this service, we reach a 
determination that is not consistent with the criticism offered in the previous 
majority opinion that the fiction that Centrex Plus is an essential 
telecommunications service is supported only by the fact that it is an essential 
feature for entry of competitors in the market. The only alternative to avoid 
Commission regulation that would have been available to U S West would be 
breaking its existing contracts with other customers. If the Commission required 
that, it would be engaging in the kind of meddling in contractual affairs that 
we criticized previously in Union Telephone Co., Inc. v. Wyoming Public Service 
Com'n, 910 P.2d 1362, 1365 (Wyo. 1996).

 

 [¶9]       We close with a reminder of the 
legislative purpose of the Wyoming Telecommunications Act of 1995, Wyo. Stat. 
Ann. §§ 37-15-101 through 37-15-501 (Lexis 1999). The statute 
provides:

 

It is the intent of this act to ensure essential 
telecommunications services are universally available to the citizens of this 
state while encouraging the development of new infrastructure, facilities, 
products and services. The provision of telecommunications services has been 
developed and regulated under a 
monopolistic environment. This act recognizes the increasingly competitive 
nature of the telecommunications industry and the benefits of competition. It is 
the intent of this act to provide a transition from rate of return regulation of a 
monopolistic telecommunications industry to competitive markets and to maintain 
affordable essential telecommunications services through the transition period, 
and the provisions of this act shall be construed to achieve those 
goals.

 

Wyo. Stat. Ann. § 37-15-102. 
Enforcement of this particular order by the Commission would not encourage 
"development of new infrastructure, facilities, products and services." Wyo. 
Stat. Ann. § 37-15-102. The Centrex Plus service has been removed from any 
"monopolistic environment," and the contradiction which would be posed by 
permitting regulation instead would have a deleterious effect upon 
competition.

 

 [¶10]    
The order of the Commission is reversed and remanded with instructions to 
enter an order consistent with this opinion.

     

 

   
LEHMAN, Chief Justice, dissenting.

[¶11]    
After long reflection and struggle with the issues raised in this case, I 
have reached the conclusion that our original decision was incorrect; therefore, 
I must respectfully dissent. The Wyoming Telecommunications Act of 1995 (the 
Act) was intended to provide a transition from a monopolistic regulatory 
environment to a competitive market while maintaining affordable, universal 
telecommunications services for the citizens of Wyoming. Wyo. Stat. Ann. § 
37-15-102 (LEXIS 1999). I fear that the result of the majority decision will be 
to  impede the development of a competitive 
market in telecommunications, ultimately depriving Wyoming consumers of the 
benefits and expanded choices associated with that 
competition.

 

 [¶12]    
My main point of departure is from the conclusion that Centrex Plus 
service is not subject to regulation as a non-competitive service. Slip op. at 
5. To the contrary, I think it is clear under the Act that Centrex Plus is a 
non-competitive service subject to regulation by the Commission. By statute, 
local exchange services provided by a local exchange company are considered 
non-competitive services subject to regulation by the Commission. Wyo. Stat. 
Ann. § 37-15-202 (c) (LEXIS 1999). "Local exchange service" is defined as "the 
provision of essential telecommunications service within a local exchange 
area[.]" Wyo. Stat. Ann. § 37-15-103 (a)(viii) (LEXIS 
1999).

 

 [¶13]    
This brings us to the key statutory provision, the definition of 
"essential telecommunications service," which means a customer's access to 
service that is necessary for the origination or termination, or both, of 
two-way, switched telecommunications for both residential and business service 
within a local exchange area. Essential 
telecommunications services are limited to:

 

(A) Access to interexchange services provided by 
interexchange telecommunications companies;

 

     (B) Single line 
flat-rate or single line measured residence or business 
service;

 

(C) Transmission service and facilities necessary for 
the connection between the end user's or customer's premises or location and the 
local network switching facility including the necessary signaling service used 
by customers to access essential telecommunications 
services;

 

(D) Services necessary to connect 911 emergency 
services to the local network;

 

(E) Switched access, which for the purposes of this 
chapter shall mean the switching and transport necessary to connect an 
interexchange telecommunications company with the local exchange central office 
for the purpose of originating or terminating, or both, the interexchange 
telecommunications company's switched telecommunications 
service[.]

 

Wyo. Stat. Ann. § 37-15-103 
(a)(iv) (LEXIS 1999). Contrary to the conclusions of the original majority 
opinion, I believe that the statute defines what is "necessary for the 
origination or termination, or both, of two-way, switched telecommunications for 
both residential and business service within a local exchange area" through its 
own terms. The following sentence of the statute states that "essential 
telecommunications services" are limited to five distinct telecommunications 
functions listed in subsections (A) through (B). In other words, the statute 
describes what is an essential telecommunications service in the first sentence 
and then goes on to define it through a list of specific telecommunications 
functions. If a telecommunications service accomplishes the functions listed in 
the subsections, then, by definition, it is an "essential telecommunications 
service." In this case, the Commission found that Centrex Plus service provides 
each of the functions listed and, hence, was an "essential telecommunications 
service." Whether a particular service provides those specific functions or not 
is a question of fact to be determined on a case-by-case basis in light of the 
technological characteristics of that service. The Commission's decision that 
Centrex Plus provides each of those functions is not clearly erroneous. 
Therefore, I would affirm the Commission's determination that Centrex Plus is a 
non-competitive, essential telecommunications service subject to 
regulation.

 

[¶14]      It is undisputed that U S West's 
erstwhile competitors AT&T and McLeod have stated that if U S West is 
allowed to withdraw Centrex Plus, they will no longer offer local exchange 
telecommunications services in Wyoming. The result of such an action would be to 
perpetuate U S West's monopoly on those services in this state to the detriment 
of our citizens. In today's high tech economy, the importance of modem, cutting 
edge telecommunications services cannot be overstated. History has shown that 
competition engendered by a market economy is the best mechanism for creating an 
environment for the development and deployment of new technologies. The 
Legislature recognized this when it passed the Wyoming Telecommunications Act of 
1995 with the avowed purpose of encouraging competition in the 
telecommunications market. However, this case and several others that have come 
before us recently have made it clear that the Act, as currently written, is 
inadequate to the task.

 

   
SPANGLER, D.J. (Ret.), dissenting.

 

 [¶15]    
A telecommunications company providing a noncompetitive service cannot 
discontinue the service without approval of the Wyoming Public Service 
Commission. Wyo. Stat. Ann. § 37-15-404 (c) (Lexis 1999). The Commission 
conducted hearings and made a finding of fact that the Centrex Plus service is 
an essential, noncompetitive service, as defined by Wyo. Stat. Ann. § 37-15-103 
(a)(iv)(C) (Lexis 1999). There is substantial evidence in the record to support 
this finding. Therefore, I would affirm the decision of the Commission that it 
has jurisdiction over this service and that Centrex Plus cannot be terminated 
without Commission approval.

 

 

 

FOOTNOTES

1 Wyo. 
Stat. Ann. § 37-15-103 (a)(iv) (Lexis 1999) reads:

 

(iv) 
"Essential telecommunications service" means a customer's access to service that 
is necessary for the origination or termination, or both, of two-way, switched 
telecommunications for both residential and business service within a local 
exchange area.  Essential 
telecommunications services are limited to:

(A) 
Access to interexchange services provided by interexchange telecommunications 
companies;

 

       (B) Single 
line flat-rate or single line measured residence or business 
service;

 

(C) 
Transmission service and facilities necessary for the connection between the end 
user's or customer's premises or location and the local network switching 
facility including the necessary signaling service used by customers to access 
essential telecommunications services;

 

       (D) 
Services necessary to connect 911 emergency services to the local 
network;

 

(E) 
Switched access, which for the purposes of this chapter shall mean the switching 
and transport necessary to connect an interexchange telecommunications company 
with the local exchange central office for the purposes of originating or 
terminating, or both, the interexchange telecommunications company's switched 
telecommunications service.