NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2909-18

VERIZON NEW JERSEY, INC.,

Plaintiff-Appellant/

Cross-Respondent,

v.

BOROUGH OF HOPEWELL,

Defendant-Respondent/

Cross-Appellant.

____________________________

STATE OF NEW JERSEY,

Intervenor.

____________________________

Argued November 1, 2021 – Decided June 14, 2023

Before Judges Accurso, Rose and Enright.

On appeal from the Tax Court of New Jersey, Docket 

No. 012215-2009, whose opinions are reported at 26 

N.J. Tax 400 (Tax 2012) and 31 N.J. Tax 49 (Tax 

2019).

Peter G. Verniero argued the cause for appellant/

cross-respondent (Sills Cummis & Gross PC, and 

McCarter & English, LLP, attorneys; Peter G. 

Verniero and Susan A. Feeney, of counsel and on the 

briefs; Katherine M. Lieb and Farhan Ali, on the 

briefs).
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Joseph C. Tauriello and Gregory B. Pasquale argued 

the cause for respondent/cross-appellant (Joseph C. 

Tauriello and Shain Schaffer PC, attorneys; Sarah E. 

Fitzpatrick, Xiaosong Li, and Gregory B. Pasquale, of 

counsel and on the briefs; Joseph C. Tauriello, on the 

briefs).

Michelline Capistrano Foster, Deputy Attorney 

General, argued the cause for intervenor (Matthew J. 

Platkin, Attorney General, attorney; Melissa H. Raksa, 

Assistant Attorney General, of counsel; Michelline 

Capistrano Foster, on the brief).

Gregory B. Pasquale argued the cause for amicus 

curiae New Jersey State League of Municipalities 

(Shain Schaffer PC, attorneys; Joel L. Shain, of 

counsel and on the brief; Gregory B. Pasquale and 

Sarah E. Fitzpatrick, on the brief).

The opinion of the court was delivered by

ACCURSO, J.A.D.

Verizon New Jersey, Inc., inheritor of New Jersey Bell Telephone 

Company's local exchange service telephone network, has been locked in a 

battle with the Borough of Hopewell for more than a decade over whether 

Verizon has to pay the municipal tax for 2009 on its business personal 

property in the Borough under N.J.S.A. 54:4-1. In two published decisions, 

the Tax Court determined: (1) the statute's 51% market-share calculation must

be performed annually, and an annual market-share calculation, as applied to 
3

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Verizon, does not violate the State and federal equal protection guarantees, 

N.J. Const. art. I, § 1, and U.S. Const. amend. XIV, § 1, the State prohibition 

of special legislation, N.J. Const. art. IV, § 7, ¶ 9, or the Uniformity Clause, 

N.J. Const. art. VIII, § 1, ¶ 1(a), Verizon New Jersey, Inc. v. Hopewell 

Borough, 26 N.J. Tax 400, 414-32 (Tax 2012) (Verizon I), and (2) that Verizon 

is subject to the tax imposed for tax year 2009 because it provided dial tone 

and access to 51% of the Hopewell telephone exchange in 2008, Verizon New 

Jersey, Inc. v. Borough of Hopewell, 31 N.J. Tax 49, 70-76 (Tax 2019) 

(Verizon II). Finding no flaw in either of the Tax Court's thorough and 

thoughtful opinions, we affirm.

The Telephone Companies

A little background — both as to the telecommunications industry and 

New Jersey's approach to taxing it — will make the case easier to understand. 

Before the break-up of AT&T in 1984, it monopolistically "dominated the 

national telecommunications industry," controlling "virtually all long-distance 

telephone service, most local telephone service, and a substantial amount of all 
4

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telephone equipment manufacturing."

1

 AT&T Corp. v. Iowa Utils. Bd., 525 

U.S. 366, 413 (1999) (Breyer, J., concurring in part and dissenting in part). 

The federal consent decree resolving the government's antitrust action against 

the company divested it of its local-exchange carriers, the "Baby Bells,"

"leaving AT&T as a long-distance and equipment company, and limiting the 

divested carriers to the provision of local telephone service." Verizon 

Commc'ns, Inc. v. FCC, 535 U.S. 467, 475 (2002)). 

The decree had the intended effect of rapidly bringing competition to 

AT&T from the likes of MCI and Sprint for long-distance service and likewise 

encouraged competition for telephone equipment. Iowa Utils. Bd., 525 U.S. at 

413. "The decree did nothing, however, to increase competition in the 

persistently monopolistic local markets," Verizon Commc'ns, Inc., 535 U.S. at 

475, as each local retail telephone market generally remained "in the hands of 

a single state-regulated local service supplier, such as NYNEX in New York,"

Iowa Utils. Bd., 525 U.S. at 414 (Breyer, J.), or New Jersey Bell, Verizon's 

1

 The consent decree ending the government's antitrust suit against AT&T was 

entered on August 24, 1982, United States v. Am. Tel. & Tel. Co., 552 F. 

Supp. 131, 196 (D.D.C. 1982), aff'd sub nom. Maryland v. United States, 460 

U.S. 1001 (1983), the court approved the plan of reorganization in 1983,

United States v. W. Elec. Co., 569 F. Supp. 990, 993 (D.D.C. 1983), and 

divestiture occurred on January 1, 1984, id. at 994 n.11.
5

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predecessor, here.2 As Justice Souter succinctly put it: "The upshot of the 

1984 divestiture . . . was a system of regional service monopolies (variously 

called 'Regional Bell Operating Companies,' 'Baby Bells,' or 'Incumbent Local 

Exchange Carriers' (ILECs)), and a separate, competitive market for longdistance service from which the ILECs were excluded." Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 549 (2007).

"Until the 1990's, local phone service was thought to be a natural 

monopoly," Iowa Utils. Bd., 525 U.S. at 371, owing to the high costs of entry 

to an aspiring competitor in a local retail telephone market. "The physical 

incarnation of such a market, a 'local exchange,' is a network connecting 

terminals like telephones, faxes, and modems to other terminals within a 

geographical area like a city." Verizon Commc'ns, 535 U.S. at 489. 

The incumbent local carrier either built or, more likely, inherited "the 

local loops (wires connecting telephones to switches), the switches (equipment 

directing calls to their destinations), and the transport trunks (wires carrying 

2

 Although "[t]he Bell System provide[d] basic telephone service to 80 percent 

of all telephone subscribers in the Continental United States" at the time of the 

breakup, independent telephone companies also existed. W. Electric, 569 F. 

Supp. at 993 n.8. New Jersey was served by two, United Telephone Company 

of New Jersey and Warwick Valley Telephone Company, both of which still 

exist. Verizon I, 26 N.J. Tax at 409 n.2.
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calls between switches) that constitute a local exchange network," Iowa Utils. 

Bd., 525 U.S. at 371, which the Supreme Court once likened to "a 

transportation network for communications signals, radiating like a root 

system from a 'central office' (or several offices for larger areas) to individual 

telephones, faxes, and the like," Verizon Commc'ns, 535 U.S. at 490.

"A newcomer could not compete with the incumbent carrier to provide 

local service without coming close to replicating the incumbent's entire 

existing network, the most costly and difficult part of which would be laying 

down the 'last mile' of feeder wire, the local loop," connecting "the thousands 

(or millions) of terminal points in individual houses and businesses" to the 

aspiring competitor's new network. Ibid.

Enter Congress, which passed the Telecommunications Act of 1996, 

aimed at eliminating "the monopolies enjoyed by the inheritors of AT&T's 

local franchises" by requiring those incumbent local exchange carriers to share 

their networks with new competitors, id. at 476, called, aptly enough,

competitive local exchange carriers or CLECs. Telecommunications Act of 

1996, Pub. L. No. 104-104, 110 Stat. 56 (codified in separate sections within 

15 U.S.C., 18 U.S.C., and 47 U.S.C.). See 47 U.S.C. §§ 251-53, 271. 
7

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The 1996 Telecommunications Act permitted a new requesting carrier to 

gain access to an incumbent's network by purchasing "local telephone services 

at wholesale rates for resale to end users," Iowa Utils. Bd., 525 U.S. at 371, by 

leasing elements of the incumbent's network "'on an unbundled basis' — i.e., a 

la carte —" making "it easier for a competitor to create its own network 

without having to build every element from scratch," and by interconnecting 

its own facilities with the incumbent's network, thus ensuring "customers on a 

competitor's network can call customers on the incumbent's network, and vice 

versa," Talk Am., Inc. v. Mich. Bell Tel. Co., 564 U.S. 50, 54 (2011).

The 1996 Telecommunications Act "fundamentally restructure[d] local 

telephone markets," Iowa Utils. Bd., 525 U.S. at 371, and new competition 

ushered in new systems and technologies, including voice-over-internet 

protocol (VoIP), which allowed large commercial customers to use telephone 

numbers connected over a network internet cable rather than dial tone and 

access lines, transforming modes of service, Verizon II, 31 N.J. Tax at 59 & 

n.7. Deregulation also changed New Jersey's approach to taxing 

telecommunication companies. 

Taxation of the Telephone Companies
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In the years before the breakup of AT&T, telephone and telegraph 

companies in New Jersey were subject to Chapter 4 of the Franchise and Gross 

Receipts Tax, N.J.S.A. 54:30A-16 to -29, repealed by L.1997, c. 162, § 77 (eff. 

Jan. 1, 1998), a comprehensive annual franchise and excise tax imposed on the 

gross receipts of public utilities "using or occupying public streets, highways, 

roads and other public places," N.J.S.A. 54:30A-18. In 1945, when the 

Legislature passed the Corporation Business Tax Act, N.J.S.A. 54:10A-1 to 

-40, requiring domestic and foreign corporations not otherwise exempt to pay 

an annual state franchise tax "in lieu of all other State, county or local 

taxation" on intangible business personal property, N.J.S.A. 54:10A-2, it 

expressly exempted all corporations subject to the Franchise and Gross 

Receipts Tax's Chapter 4, N.J.S.A. 54:10A-3(a) (excluding from the CBT 

those corporations subject to a tax assessed on the basis of gross receipts).

And in 1966, when the Legislature adopted the Business Personal 

Property Tax Act, L. 1966, c. 136, §§ 1-21 (codified as N.J.S.A. 54:11A-1 to 

-21), repealed by L. 1993, c. 174, § 1, ending the taxation of business personal 

property at the local level, it expressly excluded the "goods and chattels used 

or held for use in business by any . . . corporation subject to taxation under 

chapter 4 of the laws of 1940 [the Franchise and Gross Receipts Tax's Chapter 
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4], as amended." L. 1966, c. 136, § 2(b)(5). Verizon I, 26 N.J. Tax at 410-12 

(explaining the events leading up to the law's passage). The Legislature also

simultaneously amended the local property tax law, N.J.S.A. 54:4-1, to provide 

that personal property taxable locally included "only tangible goods and 

chattels, exclusive of inventories, used in business of telephone, telegraph and 

messenger systems, companies, corporations or associations subject to tax 

under chapter 4, laws of 1940, as amended." L. 1966, c. 138, § 1. 

Thus, instead of subjecting telecommunication companies to state 

franchise and business personal property taxes, the Legislature retained a local 

franchise tax imposed on the business personal property of "[t]he telephone 

and telegraph companies," the companies having "suggested that the taxation 

of their personal property remain on a local basis." N.J. Bell Tel. Co. v. Laurel 

Springs Borough, 1 N.J. Tax 619, 627 (Tax 1980) (quoting State of N.J., 

Report of the Governor's Comm. on Loc. Prop. Tax'n 53 (Dec. 15, 1965)). 

As Judge Menyuk more fully explains in Verizon I, 26 N.J. Tax at 412-

13, the Legislature responded in 1989 to the breakup of AT&T by adding the 

qualifier "local exchange" to "telephone companies" in N.J.S.A. 54:4-1 and by

defining a "local exchange telephone company" to essentially exclude "certain 

interexchange and interstate telecommunications companies." Id. at 412
10 A-2909-18

(quoting S. Revenue, Fin. & Appropriations Comm. Statement to A. 135 (Oct. 

20, 1988)). That is, after AT&T's divestiture, but before deregulation of the 

local markets, the Legislature amended N.J.S.A. 54:4-1 by limiting the 

statute's applicability to local exchange telephone companies, which it defined 

as "a telecommunications carrier providing dial tone and access to 

substantially all of a local telephone exchange." L. 1989, c. 2, § 4. Judge 

Lasser described the effect as "shift[ing] the local personal property tax from 

AT&T to New Jersey Bell which had become the local exchange company." 

N.Y. SMSA Ltd. P'ship v. E. Hanover Twp., 13 N.J. Tax 564, 568 (Tax 1994). 

The Legislature also adopted N.J.S.A. 54:4-2.49a that same year, which 

provides: 

Notwithstanding the provisions of chapter 4 of Title 

54 of the Revised Statutes [the Franchise and Gross 

Receipts Tax], there shall be no payment of the 

personal property taxes required by

telecommunications carriers other than local exchange 

telephone companies that would be paid during the 

year in which this section takes effect, based on the 

prior January 1 assessment date of that property. 

[L. 1989, c. 2, § 6.]

Consequently, the long-distance carriers, AT&T and its competitors, were no 

longer subject to the Franchise and Gross Receipts Tax, or to local taxation of 

business personal property under N.J.S.A. 54:4-1. Instead, they became 
11 A-2909-18

taxable as ordinary corporations under the CBT, rather than as public utilities. 

Verizon I, 26 N.J. Tax at 412-13. Only the incumbent local exchange carriers, 

New Jersey Bell and the State's two independent local exchange carriers,

United Telephone and Warwick Valley, remained subject to the Franchise and 

Gross Receipts Tax. Id. at 413.

Following the restructuring of the local markets in the wake of the 1996 

Telecommunications Act, the Legislature in 1997 passed an act to "revis[e] the 

taxation of gas and electric public utilities and certain telecommunications 

companies . . . in order to preserve certain revenues under transitions to more 

competitive markets in energy and telecommunications." L. 1997, c. 162, §§ 

1-78. The relevant changes to N.J.S.A. 54:4-1 in Section 60, L. 1997, c. 162, 

§ 60 were twofold.

First, the Legislature amended N.J.S.A. 54:4-1 by adding the April 1997 

"as of" date in the following sentence: "Personal property taxable under this 

chapter shall include . . . the tangible goods and chattels, exclusive of 

inventories, used in business of local exchange telephone, telegraph and 

messenger systems, companies, corporations or associations that were subject 

to tax as of April 1, 1997 under L. 1940, c. 4 (C.54:30A-16 et seq.) as 

amended," L. 1997, c. 162, § 60, i.e., New Jersey Bell, then called Bell 
12 A-2909-18

Atlantic – New Jersey, United Telephone, and Warwick Valley.3 Verizon II, 

31 N.J. Tax at 52; Verizon I, 26 N.J. Tax at 413 & n.6.

Second, it amended N.J.S.A. 54:4-1 by redefining a local exchange 

telephone company from its 1989 version — "a telecommunications carrier 

providing dial tone and access to substantially all of a local telephone 

exchange," L. 1989, c. 2, § 4 — to "a telecommunications carrier providing 

dial tone and access to 51% of a local telephone exchange," L. 1997, c. 162, 

§ 60.

The Legislature also made three other pertinent changes in L. 1997, c.

162. It repealed L. 1940, c. 4, that is, the Franchise and Gross Receipts Tax's 

Chapter 4, L. 1997, c. 162, §§ 77-78, and ended the CBT Act's exemption in 

N.J.S.A. 54:10A-3 for the three telephone companies that remained subject to

Chapter 4 at its repeal, L. 1997, c. 162, § 1. And, to address the revenues lost 

by repeal of the Franchise and Gross Receipts Tax, the Legislature created the 

Uniform Transitional Utility Assessment Act, N.J.S.A. 54:30A-114 to -126,

"to provide a complete framework and method for the making of a uniform 

3

 New Jersey Bell changed its name to Bell Atlantic – New Jersey, Inc. in 

1994. Following the merger of Bell Atlantic – New Jersey's parent company 

with GTE Corporation, the company changed its name to Verizon New Jersey, 

Inc. in 2000. United Telephone now operates as CenturyLink. Warwick 

Valley does business as WVT Communications.
13 A-2909-18

transitional utility assessment on telephone companies that were subject to the 

provisions of L. 1940, c. 4 (C.54:30A-16 et seq.) [the Franchise and Gross 

Receipts Tax's Chapter 4] as of April 1, 1997, . . . or their corporate or noncorporate legal successor or assignee." L. 1997, c. 162, § 50(b).

The Dispute

With that backdrop, a few additional facts will help put the dispute 

between Hopewell and Verizon in context. In addition to the poles, cables, 

conduit systems and electronic equipment Verizon maintains in every 

municipality to allow it to provide telephone services, Verizon owns land and 

a building on Broad Street in Hopewell it uses as a switching station. The

business personal property Verizon maintains there, the fiber optic cables, 

electronic equipment, circuits and computers, are also included in the business 

personal property tax assessment at issue here.

Verizon's switching station, however, also houses the business personal 

property of a competitive local exchange carrier, as it is required to do by 

federal law, an arrangement known as "collocation." 47 U.S.C. §§ 251, 259; 

47 C.F.R. § 59.1 (1997). The CLEC's cables, circuits and computers inside 

Verizon's Hopewell switching station are not subject to the tax imposed by 
14 A-2909-18

N.J.S.A. 54:4-1, because the CLEC was not a local exchange telephone 

company that was subject, as of April 1, 1997, to Chapter 4 of the Franchise 

and Gross Receipts Tax. Verizon I, 26 N.J. Tax at 405. 

Following the legal and business changes we've described, Verizon 

every September filed with Hopewell Borough a Form PT-10, Return of

Tangible Personal Property Used In Business by Local Exchange Telephone 

Companies, reporting the value of its business personal property in the 

Borough as of January 1, which the assessor used to set the assessment for the 

following year in accordance with N.J.S.A. 54:4-2.48. In August 2008, 

however, Verizon wrote to Hopewell's mayor and tax assessor advising it 

would not be filing a return for the 2009 tax year because it no longer provided 

"dial tone and access to at least 51% of the local telephone exchange" within 

the Borough.

Verizon came to that conclusion somewhat fortuitously. Verizon is the 

administrator of the Automatic Location Identification database for New 

Jersey's Enhanced 911 (E911) system. The E911 system automatically reports 

the telephone number and the geographical location of the telephone used to 

place any 911 call made on a wireline phone. N.J.S.A. 52:17C-1(g) (defining 

"Enhanced 9-1-1 service"); see also Wilson ex rel. Manzano v. City of Jersey 
15 A-2909-18

City, 209 N.J. 558, 574-75 (2012) (explaining the history of the public and 

private partnership between government agencies and the telecommunications 

companies supporting the statewide E911 system). 

The E911 database is the source of the information linking a telephone 

number with a specific location. As Judge Brennan noted in Verizon II, the 

local exchange carriers are obligated to timely provide their customer records 

to the E911 database administrator to ensure the accuracy of the database at all 

times. 31 N.J. Tax at 57. "For public safety reasons and privacy concerns, the 

E911 database is strictly confidential, and the information contained within it 

is accessible only to the administrator." Id. at 58; see Section 222 of the 

Communications Act of 1934, 47 U.S.C. § 222. 

It was through its role as administrator of the E911 database that Verizon 

learned in 2008 that Neustar, the North American Numbering Plan 

Administrator, had recently issued a slug of 10,000 telephone numbers with 

the area code 609 and three-digit exchange code 274, one of the exchange

codes associated with the Hopewell rate center in the Hopewell telephone 

exchange.

4

 Neustar issued the block at the behest of a competitive local 

4

 The North American Numbering Plan was devised "by AT&T and Bell 

Laboratories . . . to standardize telephone dialing" in the 1940s and maintained 
16 A-2909-18

exchange carrier providing phone service to Merrill Lynch's Hopewell

Township campus on Scotch Road, a large three-building complex housing 

approximately 5,600 employees, physically located within the geographic 

boundaries of the Pennington Telephone Exchange as represented on Verizon's 

tariff maps and having a Pennington mailing address.

Verizon, knowing the new 609-274-xxxx listings in the E911 database 

were not Verizon listings, and that the block of new numbers was assigned to 

the Hopewell rate center, concluded it no longer provided dial tone and access 

to 51% of the Hopewell exchange. It thus wrote the letter to the Borough 

advising it would not be filing a business personal property tax return for the 

2009 tax year and did not do so.

Hopewell maintained Verizon remained subject to the tax. Using the 

information Verizon provided on its 2008 PT-10 return, the Borough's assessor 

established an assessment for tax year 2009 of $1,897,655 and tax of 

$38,655.23. Verizon paid the tax and appealed the assessment to the Mercer 

____________________

by AT&T until its breakup in 1984 when the FCC outsourced its 

administration to Neustar. New York v. FCC, 267 F.3d 91, 95 (2d Cir. 2001). 

Under the plan, all "telephone numbers are ten digits in length: the first three 

digits are called the numbering plan area ('NPA' or 'area') code, the second 

three are called the central office code, or prefix, and the final four digits are 

the individual line numbers," referenced as NPA-NXX-XXXX. Ibid. 
17 A-2909-18

County Board of Taxation, which affirmed the assessment without prejudice, 

leading to this decade-long appeal resulting in two published opinions of the 

Tax Court issued several years apart.

The Summary Judgment Motions

Verizon initially alleged the assessment was improper because it no 

longer provided dial tone and access to 51% of the Hopewell local telephone 

exchange, and thus was no longer a local exchange telephone company subject 

to the tax. The Borough counterclaimed, contending "the Legislature intended 

the 51% test be applied just once — on April 1, 1997." Verizon I, 26 N.J. Tax 

at 406. As it is undisputed Verizon provided dial tone and access to 

substantially all of the Hopewell telephone exchange in 1997, the Borough 

maintained Verizon remained obligated to file returns and pay the business 

personal property tax annually. 

In response, Verizon amended its complaint to add that even if the 

statute is construed as requiring the 51% test to be applied annually, as it 

believes is required, and that it would not be subject to the tax if it provided 

dial tone and access to less than 51% of a local exchange, N.J.S.A. 54:4-1, as 

applied to it, nevertheless violates: (1) the State and federal equal protection 
18 A-2909-18

guarantees, N.J. Const. art. I, § 1; U.S. Const. amend. XIV, § 1; (2) the State 

prohibition of special legislation, N.J. Const. art. IV, § 7, ¶ 9; and (3) the 

Uniformity Clause, N.J. Const. art. VIII, § 1, ¶ 1(a). Verizon I, 26 N.J. Tax at 

406.

Judge Menyuk addressed those competing claims on cross-motions for

summary judgment in 2012, with the State having intervened pursuant to Rule

4:28-4(d), and the court having granted leave to the New Jersey State League 

of Municipalities to appear as amicus curiae pursuant to Rule 1:13-9(a). 

Verizon I, 26 N.J. Tax at 404. The judge assumed arguendo, for purposes of 

the motion, Verizon no longer met the 51% test. That is, Verizon would not be 

subject to the tax in 2009 if the 51% test was an annual one and would always 

be subject to the tax if the test was applied only on April 1, 1997. 

The Parties' Interpretations of When the 51% Test is to be Applied

Hopewell, supported by the League, argued the Legislature intended the 

statute to be forever revenue generating as it had been for decades, and the 

practical difficulty and burden on the assessor of quantifying Verizon's share 

of the local exchange market made it highly unlikely the Legislature intended 

such a calculation to occur on an annual basis. Id. at 415. Hopewell also 
19 A-2909-18

claimed imposition of a perpetual tax on the incumbent local exchange carrier 

made sense given the federal requirement that Verizon permit its CLEC 

competitors to share its network. Because Verizon was being compensated by 

those competitors while reducing its own provision of dial tone and access to 

the local telephone exchange, Hopewell reasoned Verizon could pass on some

part of the tax in the rates it charged its competitors sharing its facilities. Ibid. 

The League supported Hopewell's arguments, adding that if the 51% test 

was an annual one, payment of the tax "would eventually cease" if Verizon's 

CLEC competitors, which were not subject to the tax, continued to provide 

more of the dial tone and access to the local telephone exchange. Ibid. 

Moreover, even if Verizon was under the 51% threshold, the company's poles 

and lines were still utilizing the public's right-of-way and creating an 

imposition on the Borough and its citizens for which Hopewell was entitled to 

compensation and revenue by virtue of a fee or tax.5 

5

 Judge Menyuk noted the League also relied on a letter from the Office of 

Legislative Services expressing the view that "the purpose of the statutory 

language and legislative intent of the amendments made by Section 60," L.

1997, c. 162, § 60, the 1997 amendments to N.J.S.A. 54:4-1, was only to 

describe 

the then existing ILECs and to grandfather their 

business personal property into the local property tax 
20 A-2909-18

Verizon, for its part, argued the plain language of N.J.S.A. 54:4-1 

defining "a local exchange telephone company as a 'telecommunications 

carrier providing dial tone and access to 51% of a local telephone exchange,'"

clearly augured for an annual assessment of whether an ILEC continued to be a 

local exchange telephone company as defined by the statute. Id. at 417-18

(quoting N.J.S.A. 54:4-1). Verizon claimed it did not use collocation fees as 

reimbursement for the tax assessed under N.J.S.A. 54:4-1, and argued there 

was no basis for the League's contention that the Legislature enacted the 

statute to compensate municipalities for the imposition of telephone poles and 

lines in the public right-of-way. Id. at 428-29.

____________________

base. Any change in their dial tone and access/local 

exchange business after the 1997 grandfathering was 

not meant to change whether their property was in or 

not in the local property tax base. 

[Verizon I, 26 N.J. Tax at 416.]

The judge deemed the letter "not particularly persuasive" as it did not rely on 

any legislative history for its position. Ibid. ("We neither give special 

deference to the OLS opinion, nor do we disregard it. We are mindful that no 

current member of the Legislature has intervened in this matter, and that the 

legal opinion of OLS may not necessarily reflect the views of the entire 

legislative body." (quoting Commc'ns Workers of Am., AFL-CIO v. Christie, 

413 N.J. Super. 229, 250 n.13 (App. Div. 2010))).
21 A-2909-18

The State took no position on the construction of N.J.S.A. 54:4-1 or the 

validity of Verizon's 2009 tax assessment, but maintained if the court agreed 

with Verizon as to the meaning of the statute, it "should defer deciding the 

constitutional issues" the company raised until after Verizon proved it didn't 

meet the 51% test for tax year 2009. Id. at 406. The State reasoned if Verizon 

established it was not subject to the tax, it would not have standing to 

challenge its constitutionality, making it premature, and thus unnecessary, to 

reach Verizon's constitutional challenge on the motion. Id. at 422.

Judge Menyuk agreed with Verizon the plain language of the statute, and 

indeed "the entire design of the local personal property statutes[,] evidences 

that the 51% test is to be performed annually rather than once." Id. at 418. In 

a carefully reasoned opinion, the judge explained N.J.S.A. 54:4-1 "[i]n its first 

sentence . . . subjects property to taxation annually." Ibid. (emphasis in 

original). The judge noted N.J.S.A. 54:4-2.46 likewise provides "[t]he true 

value of tangible personal property used in business subject to taxation shall be 

determined . . . as of January 1 annually . . . , which date shall be the date as of 

which the assessment is made with respect to the taxes payable in the 

succeeding calendar year," and N.J.S.A. 54:4-2.48 requires "the annual filing 

of tax returns on or before September 1 by 'any person owning tangible 
22 A-2909-18

personal property used in business subject to taxation on the preceding 

assessment date.'" Ibid. (first quoting N.J.S.A. 54:4-2.46 (alterations in 

original); and then quoting N.J.S.A. 54:4-2.48). 

In other words, the entire design of the personal 

property tax is based upon an annual determination of 

which companies are subject to tax, the value of their 

personal property and the appropriate assessment. 

There is no indication, either in the statute itself or in 

the legislative history, that the amendment of N.J.S.A. 

54:4-1 by Section 60 [L. 1997, c. 162, § 60] was 

intended to change that statutory design.

[Ibid.]

The judge also found it "significant" that the Legislature amended the 

language of N.J.S.A. 54:4-1 in Section 60 to substitute "51% of a local 

telephone exchange" for the prior phrasing "substantially all of a local 

telephone exchange." Ibid. Judge Menyuk concluded

[t]here was no reason to make that change unless the 

Legislature intended for the personal property tax to 

come to an end at the point when local telephone 

exchange service was competitive to the extent that at 

least half of the service provided with respect to a 

local telephone exchange was being provided by a 

company other than an ILEC. 

[Ibid.]

Relying on "publicly available FCC data" in the record, the judge noted 

that in 1997 when the Legislature adopted the 51% language, "'substantially 
23 A-2909-18

all' of the local exchange service and access was still being provided by the 

ILECs (Baby Bells and other small independent companies) that had 

previously enjoyed a monopoly within their service areas." Ibid. Judge 

Menyuk noted the Board of Public Utilities didn't "even begin to investigate 

whether local exchange competition should be permitted in New Jersey until 

1996, 28 N.J.R. 247(b) (Jan. 16, 1996)," and hadn't proposed regulations 

addressing "local exchange competition prior to the effective date of L. 1997, 

c. 162." Id. at 418-19. 

Because "[t]he same three New Jersey ILECs would have been subject to 

the personal property tax regardless of whether the test was 'substantially all'

or '51%' of the local exchange service in a given municipality," Judge Menyuk 

concluded there would have been no purpose in changing "the language if the 

test was to have been applied only once, in 1997." Id. at 419. The judge found 

the Legislature, by "[l]imiting taxation" to only those companies subject to the 

Franchise and Gross Receipts Tax's Chapter 4 as of April 1, 1997, ensured "no 

new competitors would be subject to the tax" as the Franchise and Gross 

Receipts Tax "was repealed by L. 1997, c. 162, § 77." Ibid. 

In other words, after Verizon or one of the other two 

ILECs became something other than the dominant 

service provider for a local telephone exchange, no 

company would be subject to the local personal 
24 A-2909-18

property tax: the tax would cease to exist with respect 

to personal property used in servicing that local 

exchange.

[Ibid.]

The judge thus concluded the Legislature's employment of the 51% test 

indicated its expectation "the monopolies that had been enjoyed by the three 

ILECs would be phased out through competition," and the personal property 

tax "would suffer a slow death by attrition whenever Verizon or another ILEC 

ceased providing 51% of the dial tone and access of an exchange."

6

 Id. at 419-

20. 

Although finding the plain language of the statute dispositive, making a 

review of the statutory history unnecessary, see Koch v. Dir., Div. of Tax'n, 

157 N.J. 1, 7 (1999), Judge Menyuk found it also supported an annual 

6

 Judge Menyuk acknowledged it was "possible to construe N.J.S.A. 54:4-1"

to provide the possibility that an ILEC failing the 51% test could again become 

subject to the tax if it regained 51% market share in a local exchange, but 

rejected Hopewell's argument that possibility supported its one-time test theory 

on the ground a municipality would never know the ILEC had again become a 

local exchange carrier subject to the tax. Verizon I, 26 N.J. Tax at 420. In 

addition to noting the question of whether an ILEC falling below 51% market 

share could again become subject to the tax was not before her, the judge

expressed confidence the Director of the Division of Taxation had "ample 

statutory authority" to ensure assessors had the information they needed to 

make assessments in the event of "such an eventuality." Ibid. See

N.J.S.A. 54:4-2.45, -2.48, -2.50.
25 A-2909-18

determination that an ILEC remained subject to the personal property tax. 

Verizon I, 26 N.J. Tax at 420-22. Again reminding "the title of L. 1997, c. 162 

indicated that the purpose of the legislation was to 'revise the taxation' of 

electric and gas public utilities and certain telecommunications companies, 

namely the ILECs, 'in order to preserve certain revenues under transitions to 

more competitive markets,'" the judge examined the history of the 1997 

amendments to N.J.S.A. 54:4-1 in L. 1997, c. 162 in detail, finding it 

"instructive" of the Legislature's intent. Id. at 420. 

That history reinforced for the judge "the Legislature did not intend to 

perpetuate the personal property tax on local telephone companies." Id. at 421. 

Instead, Judge Menyuk concluded 

the legislative history confirms the intent gleaned 

from the plain words of the statute, namely that the tax 

was intended to continue through the transitional 

period of deregulation until there was healthy 

competition in a local telephone exchange market, at 

which point no company would be subject to the tax.

[Id. at 421-22.] 

Acknowledging an amendment adding "a section directing the Board of 

Public Utilities to conduct a review of 'all telecommunications taxes, including 

an analysis of alternative taxes, and evaluate their potential for providing 

property tax relief and their impact under the on-going transition to a more 
26 A-2909-18

competitive and technologically diverse market,'" indicated the Legislature 

may have wished to at some point consider the effect of Section 60's changes 

"to the taxation of telecommunications companies on the local property tax 

burden," the judge found "nothing in the legislation that support[ed] the 

contention . . . that the local personal property tax on the three ILECs was 

intended to be permanent." Id. at 421-22 (quoting First Reprint, A. No. 2825, 

§ 76 (with Assembly APR committee amendments adopted June 12, 1997)). 

Convinced "N.J.S.A. 54:4-1 subjects a local telephone exchange 

company to tax on its business personal property located in a municipality 

when it provides dial tone and access to 51% of a local exchange, with the 

51% test to be performed annually as of the assessment date," id. at 407, the 

judge proceeded to consider Verizon's as applied constitutional claims.7

Verizon's Constitutional Claims

7

 Judge Menyuk rejected the State's contention the court could properly avoid 

consideration of Verizon's constitutional claims, finding a genuine controversy 

over "whether Verizon may be constitutionally subjected to the tax, without 

regard to whether it provides dial tone and access to 51% of an exchange," the 

resolution of which in Verizon's favor could avoid a lengthy trial involving 

"quite technical issues." Verizon I, 26 N.J. Tax at 423. See also In re Ass'n of 

Trial Laws. of Am., 228 N.J. Super. 180, 184 (App. Div. 1988) (discussing the 

actual controversy requirement "in the context of a challenge to the 

constitutionality of a statute").
27 A-2909-18

Verizon argued N.J.S.A. 54:4-1 contains two discriminatory 

classifications not serving any legitimate revenue-raising purpose, rendering 

them violative of the state and federal equal protection guarantees: a "time 

classification," which makes the personal property tax applicable only to local 

exchange carriers subject to the Franchise and Gross Receipts Tax at the point 

in time of April 1, 1997; and a "size classification" making the tax applicable 

only to incumbent local exchange carriers providing dial tone and access to 

51% of a local telephone exchange, although other local exchange carriers, 

namely the CLECs, provide the same services in the same exchange. Id. at 

426-28.

Judge Menyuk agreed the statute separates local telephone exchange 

companies into two classes: (1) companies (CLECs) that would never be 

subject to the personal property tax under N.J.S.A. 54:4-1 because they were 

not subject to the Franchise and Gross Receipts Tax's Chapter 4 as of April 1, 

1997; and (2) three companies (ILECs), including Verizon, "subject to the tax 

as of the effective date of the amendments, but able to leave the class if there 

is sufficient competition so that the taxpayer no longer serves 51% of the local 

telephone exchange." Id. at 426. But she rejected Verizon's contention the 

classifications violated equal protection guarantees. Id. at 428.
28 A-2909-18

Analyzing the various changes the Legislature made to the way local 

telephone exchange companies were taxed after Congress ended the local 

telephone market monopolies in the 1996 Telecommunications Act, Judge 

Menyuk found 

the Legislature apparently contemplated that 

deregulation would result in the former public utilities 

being on substantially the same tax footing as their 

new competitors, as indicated not only by the eventual 

extinction of the personal property tax on local 

telephone companies . . . but also by the repeal of 

[Chapter 4 of the Franchise and Gross Receipts Tax]

and subjection of the former public utilities to the 

CBT.

[Id. at 427-28.]

The judge concluded the statute's effect of distinguishing between ILECs 

and CLECs thus presented "a real and substantial relationship to a permissible 

legislative purpose." Id. at 430 (citing Taxpayers Ass'n of Weymouth Twp. v. 

Weymouth Twp., 80 N.J. 6, 44 (1976)). That is, in addition to the legislative 

intent "to continue to raise revenue for municipalities from local telephone 

companies," id. at 426, there is a discernible rational basis for the Legislature's 

decision to continue to impose a personal business tax on only "those local 

telephone companies that had, for many years, enjoyed a monopoly over the 

provision of local telephone service in their franchise areas," id. at 428.
29 A-2909-18

Judge Menyuk noted telephone companies had been subject to a personal 

property tax under N.J.S.A. 54:4-1 since 1966, and thus "[c]learly, the purpose 

of [the 1997 amendments] was to do something more than simply raise 

revenue." Id. at 427. As the judge explained:

The Legislature could reasonably assume that the 

three ILECs enjoyed a substantial competitive 

advantage as a result of their former monopolies; that 

they continued to be the dominant users of public 

rights of way and facilities; and that, as a transitional 

measure, it was reasonable to continue to impose the 

tax on only those companies until such time as they no 

longer enjoyed a competitive advantage, as evidenced 

by the fact that they were no longer providing 51% of 

the dial tone and access to an exchange.

[Id. at 428.]

In contrast, Judge Menyuk pointed out there would be 

no rational basis for a distinction between the three 

ILECs and their competitors if N.J.S.A. 54:4-1 is

construed to require a one time "51% test," so that the 

three companies would perpetually be subject to tax, 

even if they eventually held only a small share of the 

market, and their successful competitors would never 

be subject to tax. Such a construction would limit 

potential revenue rather than raise it; new dominant 

competitors would make greater use of public rights of 

way and facilities than the former monopolies; and, a 

perpetual tax would not serve the purpose of providing 

a transition to deregulated, competitive local 

telephone exchange service.

[Ibid.]
30 A-2909-18

The judge also rejected Verizon's claim that N.J.S.A. 54:4-1 is 

unconstitutional special legislation because it created a closed class of 

taxpayers (ILECs) while impermissibly excluding similar companies (CLECs) 

that belonged in the class. Id. at 430. Applying the three-part Vreeland8test,

Judge Menyuk found the "purpose and object" of the 1997 amendments to 

N.J.S.A. 54:4-1 "was to continue the revenue from the personal property tax 

during the transition to a deregulated market." Ibid. She found the statute 

accomplished its "purpose by continuing the tax on the companies that 

formerly enjoyed a monopoly in the provision of local telephone exchange 

services until such time as they were no longer the dominant provider of such 

service, as measured by the 51% test." Ibid. Applying that purpose, the court 

found it clear "no other provider of local telephone exchange services was 

irrationally excluded from the tax." Ibid.

8

 Vreeland v. Byrne, 72 N.J. 292, 300-01 (1977). The Vreeland Court 

described the test this way:

[T]he method of analysis is this: we first discern the 

purpose and object of the enactment. We then 

undertake to apply it to the factual situation presented.

Finally we decide whether, as so applied, the resulting 

classification can be said to rest upon any rational or 

reasonable basis relevant to the purpose and object of 

the act.
31 A-2909-18

Finally, the judge rejected Verizon's claim that N.J.S.A. 54:4-1 violates 

the Uniformity Clause because it improperly relies on status as a taxpayer 

subject to the Franchise and Gross Receipts Tax's Chapter 4 on April 1, 1997, 

and not on any characteristic of the property or the use to which it is put. Id. at 

431. Judge Menyuk rejected the premise of that argument as unsound, because 

the cases construing the Uniformity Clause require "only that the Legislature's 

classifications are reasonable." Ibid. 

Noting the Supreme Court's unequivocal holding that "[t]he Legislature 

is free to tax personal property in any way so long as the classification is 

reasonable and the property is assessed under general laws and by uniform 

rules," the judge reiterated her view that this classification based on the status 

of the taxpayer "is rational, where that taxpayer continues to enjoy a 

competitive advantage by virtue of its former monopoly . . . provided that the 

tax to which the property is subjected is a transitional one that will end at the 

point that the competitive advantage is ended." Id. at 431-32 (quoting Gen. 

Motors Corp. v. City of Linden, 150 N.J. 522, 526 (1997)).

Based on her conclusion that N.J.S.A. 54:4-1 requires an annual 

determination "as to whether a local telephone exchange company provides 

dial tone and access to 51% of a telephone exchange" as of the assessment 
32 A-2909-18

date, and that the statute is not unconstitutional as applied to Verizon, Judge 

Menyuk denied the Borough's motion and partially granted and partially 

denied Verizon's cross-motion and further ordered Verizon to present evidence 

and argument "that as of 2008 Verizon was not a 'local exchange telephone 

company' with respect to defendant, as that term is used in N.J.S.A. 54:4-1."

Appeal of the Summary Judgment Motions

The parties appeal Judge Menyuk's rulings on their summary judgment 

motions, with Hopewell contending the court erred in finding N.J.S.A. 54:4-1 

requires the 51% test to be applied annually and Verizon contending the court 

erred in rejecting its as-applied challenge to the statute, each reprising the 

arguments they made to the Tax Court. Verizon further contends N.J.S.A. 

54:4-1 is unconstitutional on its face.

We review the trial court's decision on summary judgment de novo, 

using the same standard the Tax Court applied, Branch v. Cream-O-Land 

Dairy, 244 N.J. 567, 582 (2021); Shechtel v. Dir., Div. of Tax'n, 32 N.J. Tax 

180, 190-91 (App. Div. 2020), certif. denied, 245 N.J. 258 (2021), without 

deference to any interpretive conclusions of statutes we believe mistaken,

Waksal v. Dir., Div. of Tax'n, 215 N.J. 224, 231 (2013).
33 A-2909-18

"The goal in cases of statutory construction is simple. It is the court's 

duty to seek and give effect to the Legislature's intent," Nw. Bergen Cnty. 

Utils. Auth. v. Donovan, 226 N.J. 432, 443-44 (2016), the best indicator of 

which is, ordinarily, the statute's language, DiProspero v. Penn, 183 N.J. 477, 

492 (2005). Although it's well-settled tax laws are "strictly construed against 

the state," Stryker Corp. v. Dir., Div. of Tax'n, 168 N.J. 138, 155 (2001) 

(quoting 3A Norman J. Singer, Sutherland Statutory Construction § 66.01 (5th 

ed. 1992)), they nevertheless "also must be construed reasonably so that the 

Legislature's purpose in enacting the statute is not destroyed," ibid. (citing 

Sutherland, § 66.02). "[B]ecause tax liability is established by way of revenue 

legislation, all the rules of statutory construction are relevant in the 

interpretation of revenue measures." Ibid. (internal quotation marks omitted) 

(quoting Sutherland, § 66.03).

Having reviewed the parties' arguments and those of the State and the 

League of Municipalities, the language of the statute and Judge Menyuk's 

tracing of its history "in the context of the deregulation of public utilities that 

commenced with the breakup of [AT&T] in 1984," Verizon I, 26 N.J. Tax at

407, we are convinced N.J.S.A. 54:4-1 is "susceptible to only one 

interpretation," In re Passaic Cnty. Utils. Auth., 164 N.J. 270, 299 (2000) —
34 A-2909-18

that is the 51% test for whether a telecommunications carrier qualifies as a 

"local exchange telephone company" must be applied annually. We have little 

to add to her careful analysis.

We acknowledge the argument that Verizon's lines and poles are still 

strung through the Borough even if other service providers are using them and 

that telephone companies have been required to pay franchise or license fees 

for those lines since the Legislature first began taxing telephone and 

messenger companies. But those facts cannot trump the plain language of 

N.J.S.A. 54:4-1, nor the Legislature's clear intent by the 1997 amendments to 

continue the local revenues from the personal property tax on those incumbent 

local exchange carriers who formerly enjoyed a monopoly over local telephone 

exchange service only during the transition to a competitive local market, that 

is "until such time as they were no longer the dominant provider of such 

service, as measured by the 51% test." Verizon I, 26 N.J. Tax at 430.

"In attempting to discover legislative intention in any law," Key Agency 

v. Cont'l Cas. Co., 31 N.J. 98, 103 (1959), a reviewing court "take[s] into 

consideration the entire scheme of which a provision is a part." Rozenblit v. 

Lyles, 245 N.J. 105, 122 (2021) (quoting Headen v. Jersey City Bd. of Educ., 

212 N.J. 437, 450-51 (2012)). "In reading '[a]n enactment that is part of a 
35 A-2909-18

larger statutory framework,' we are mindful of that context 'so that a sensible 

meaning may be given to the whole of the legislative scheme.'" Ibid. (quoting 

Manzano, 209 N.J. at 572. 

It's also appropriate "to consider other laws which pertain to a similar 

subject matter and especially those which were enacted during the same 

legislative session as the law in question." Key Agency, 31 N.J. at 103; see

Liapakis v. State Dep't of Treasury, Div. of Tax'n, 363 N.J. Super. 96, 105-06 

(App. Div. 2003) (explaining in the event of a perceived "inconsistency among 

statutes addressing the same subject, we must strive to interpret those statutes 

in harmony with each other"). That rule of statutory construction is 

appropriately "applied even when the statutes were adopted at different times 

and make no reference to each other." Mimkon v. Ford, 66 N.J. 426, 434 

(1975). It "derives from the reasonable presumption that legislators are aware 

of relevant prior legislation." Id. at 433.

Consideration of the plain language of N.J.S.A. 54:4-1 together with the 

statute's legislative history in the context of related provisions, as carefully 

mapped by Judge Menyuk, leads ineluctably to the Tax Court's conclusion that 

the 51% test is an annual determination. As Judge Menyuk explained, "the 

entire design of the personal property tax is based upon an annual 
36 A-2909-18

determination of which companies are subject to tax, the value of their 

personal property and the appropriate assessment." Verizon I, 26 N.J. Tax at 

418. Nothing suggests the Legislature intended to change the statutory design 

by the 1997 amendments and one important fact — the ILECs' share of the 

local market in 1997 — strongly suggests the contrary. Id. at 418-19.

Simply stated, if the Legislature intended to make the 51% test a onetime calculation to occur on April 1, 1997, and not an annual determination, as 

Hopewell and the League maintain, the amendment was completely 

unnecessary as there is no dispute the three incumbent local exchange carriers 

in 1997 were providing "substantially all" of the local exchange service, as 

Judge Menyuk noted. Ibid. Verizon, United Telephone and Warwick Valley, 

the three incumbent local exchange carriers, would've been subject to the "tax 

regardless of whether the test was 'substantially all' or '51%' of the local 

exchange service in a given municipality." Id. at 419. The Legislature, of 

course, "is presumed not to do a vain thing and enact useless legislation." 

Asbury Park Press, Inc. v. City of Asbury Park, 19 N.J. 183, 196 (1955). 

Thus, courts "should not easily conclude that a legislative enactment is 

surplusage" or adopt "a construction which would make a statutory provision 

redundant." In re Att'y Gen.'s "Directive on Exit Polling: Media & Non-
37 A-2909-18

Partisan Pub. Int. Grps.", 402 N.J. Super. 118, 128 (App. Div. 2008). We will 

not do so here.

In addition, courts are under a "duty" to construe a statute "as to render it 

constitutional if it is reasonably susceptible to such interpretation. " Whirlpool 

Props., Inc. v. Dir., Div. of Tax'n, 208 N.J. 141, 172 (2011) (quoting State v. 

Profaci, 56 N.J. 346, 350 (1970)). " [W]hen a statute's constitutionality is 

drawn into question or placed in serious doubt, [courts] should ascertain 

whether a construction of the statute is possible that avoids the constitutional 

problem." Ibid. 

Judge Menyuk found N.J.S.A. 54:4-1 easily survived Verizon's equal 

protection, special legislation and Uniformity Clause challenges — so long as 

the statute was construed as Verizon contended it should be to require an 

annual determination of whether a local telephone exchange company provides 

dial tone and access to 51% of a local telephone exchange as of the assessment 

date. Verizon I, 26 N.J. Tax at 428, 430-32. If, on the other hand, N.J.S.A. 

54:4-1 were construed to require a one-time 51% test, thus making Verizon, 

United Telephone and Warwick Valley subject to the personal property tax 

forever, notwithstanding their competitors, who would never be subject to the 

tax, might enjoy a comparatively greater share of a local market, the statute 
38 A-2909-18

would lack even a rational basis, see Sojourner A. v. N.J. Dep't of Hum. 

Servs., 177 N.J. 318, 330 (2003) (explaining the rational basis test), and would 

thus violate federal and State equal protection guarantees, fail the Vreeland

test for special legislation, and run afoul of the Uniformity Clause. Verizon I, 

26 N.J. Tax at 428, 430-32.

We agree. And the obvious need to construe the statute so as to "avoid[]

the constitutional problem," Whirlpool, 208 N.J. at 172, recommends the 

interpretation consistent with N.J.S.A. 54:4-1's plain language and legislative 

history, that the 51% test be applied annually and not on a one-time basis. 

Because the statute operates constitutionally by subjecting Verizon to tax on 

its business personal property so long as it provides dial tone and access to 

51% of a local exchange as of the annual assessment date, the statute survives 

Verizon's as-applied challenge. 

That finding is likewise dispositive of Verizon's facial challenge to the 

statute. Because "[a] taxing statute is not facially unconstitutional if it 

operates constitutionally in some instances," id. at 175 (quoting GMC, 150 

N.J. at 532), and we agree with Judge Menyuk the constitution is not violated 

by continuing the business personal property tax on those companies that 

formerly enjoyed a monopoly in the provision of local telephone exchange 
39 A-2909-18

services until such time as they are no longer the dominant providers, it 

follows N.J.S.A. 54:4-1 is not facially invalid. 

The Trial

The sole issue for resolution at trial was whether Verizon "provided dial 

tone and access to 51%" of the Hopewell local telephone exchange as of 

January 1, 2008. N.J.S.A. 54:4-1; Verizon II, 31 N.J. Tax at 51. Complicating 

the question is that the statute does not define "local telephone exchange" or 

provide a means for calculating 51% of it.9 There are no regulations 

implementing this aspect of the statute. Verizon II, 31 N.J. Tax at 61 n.8. The 

9

 The statute doesn't define "dial tone" or "access" either, but the parties do 

not differ in their understanding of the plain meaning of those terms. Thus, 

they agree "dial tone" refers to the audible tone sent from an automatic 

switching system to a customer to indicate the equipment is ready to receive 

dial signals, and "access" means the use of the local exchange network over a 

phone line or access line to connect to the Public Switched Telephone 

Network, the global network of circuit-switched public telephone networks. 

Those definitions limit the market being measured to wireline telephones and 

related devices, such as fax machines and dial up modems, accessing the 

Public Switched Telephone Network via an actual copper or fiber optic 

transmission line that travels on telephone poles or underground, colloquially 

referred to as landlines. They necessarily exclude cellular phones or other 

"wireless" devices.
40 A-2909-18

parties and their experts disagree on how to define a local exchange and how 

to calculate market share within one. Id. at 51.

The United States Supreme Court defined a "local exchange" in 2002 as 

"a network connecting terminals like telephones, faxes, and modems to other 

terminals within a geographical area like a city." Verizon Commc'ns, 535 U.S. 

at 489. Verizon's own 1993 tariff10 approved by the Board of Public Utilities

and effective through July 2014, and thus as of the January 1, 2008 assessment 

date, similarly defines an exchange as "a unit established by the Company for 

the administration of communication service in a specified area which usually 

embraces a city, town or village and its environs. It consists of one or more 

central offices which may be located within or without the territorial 

boundaries of the exchange." New Jersey Bell Telephone Company Tariff 

B.P.U.-N.J.-No.2, § 2.1 (5th revised 1993). Verizon's tariff defined "the 

territorial boundaries" of the Hopewell local exchange by reference to a map 

10

 Verizon's internal expert, who formerly headed the group responsible for 

the company's tariff maps, described its tariff as containing "all the services 

that Verizon provides," as well as "the rates that Verizon charges for those 

services, and it explains the terms and conditions under which Verizon offers 

those services."
41 A-2909-18

filed with BPU.11 The parties and their experts agree the Merrill Lynch 

complex in Hopewell Township is physically located outside the territorial 

boundaries of the Hopewell exchange as depicted on Verizon's tariff exchange 

map. Verizon II, 31 N.J. Tax at 60.

Hopewell relies on that traditional definition of a local exchange as one 

having clearly demarcated territorial boundaries. Its expert, Michael Starkey,

a telecommunications consultant previously employed by three different state 

public utility commissions and specializing in telecommunications markets,

prepared several reports admitted in evidence and testified at trial that "[l]ocal 

telephone exchanges are well-defined, geographical areas with known 

boundaries that can be mapped with specificity." Id. at 68. He claimed those 

defined geographical local exchanges "are the building blocks of the local 

telephone marketplace from a network, service and regulatory standpoint." 

Ibid.

11

 Verizon's 1983 tariff section 5.1.7 contained the same map, New Jersey Bell 

Telephone Company Tariff, Verizon N.J. Inc., B.P.U. N.J. No. 2, Second 

Revised Page No. 25, section 5.1.7. Verizon's product guide on file with BPU, 

which superseded Verizon's tariff in 2014, includes the same map depicting the 

Hopewell local exchange. See Verizon II, 31 N.J. Tax at 54 (quoting the 

product guide's statement that "the maps which are part of this section of the 

product guide show the territorial boundaries of each exchange area").
42 A-2909-18

Starkey testified local exchanges are "grouped together" based on 

"communities of interest" to form local service areas,

12 which are further 

aggregated into local access and transport areas (LATAs), and those "LATAs, 

and the local telephone exchanges that comprise them, are an important aspect 

of the U.S. telecommunications regulatory framework."

13

 Indeed, he claimed 

"the geographic nature of the entire local exchange and LATA paradigm is 

woven throughout the telecommunications industry."

12

 Using Verizon's 1993 tariff as an example, Starkey explained the local 

service area for Verizon's Hopewell exchange consisted of the Hopewell

telephone exchange as well as the Belle Mead, Lambertville, Lawrenceville,

Neshanic, Pennington and Princeton exchanges. A Verizon customer located 

in the Hopewell exchange could call anyone in the same service area without a 

toll charge. The local service area thus defined the customer's local calling 

area. See W. Elec., 569 F. Supp. at 995 (defining a local calling area as "those 

areas, typically combining more than one local exchange, within which 

subscribers may place telephone calls without paying an extra charge").

13

 While local exchanges have existed from the start of the public telephone 

system, LATAs came about only after the breakup of AT&T. W. Elec., 569 F. 

Supp. at 993. In addition to dismantling AT&T's Bell telephone system, the 

consent decree also entailed a plan of reorganization for the Baby Bells 

effective January 1, 1984, defining how and where they would operate. Id. at

992, 995 n.11. That reorganization entailed dividing "all Bell territory in the 

continental United States," consisting of 7,000 local exchanges, into LATAs, 

contiguous geographic areas, "generally centering upon a city or other 

identifiable community of interest." Id. at 993-94, 993 n.8 (footnote omitted). 

Because the LATA boundaries would define what would be intra-LATA and 

inter-LATA "traffic after reorganization, establishment of the LATAs [was] a 

necessary predicate to the division of Bell System assets." Id. at 994 n.14. 
43 A-2909-18

Starkey explained, in accordance with the case law, that LATAs defined 

where the regional Bell operating companies, the incumbent local exchange 

carriers, could operate after divestiture and before Congress opened the local 

markets to competition in the 1996 Telecommunications Act. After January 1, 

1984, and continuing through the period they operated as local monopolies,

those local exchange carriers could "engage in exchange telecommunications,"

that is, send calls between telephones within the same LATA or "provide 

exchange access within a LATA," i.e., "link a subscriber's telephone to the 

nearest transmission facility of AT&T" or one of its long-distance competitors

such as MCI or Sprint. W. Elec., 569 F. Supp. at 994.

What those incumbent local carriers, like New Jersey Bell, could not do, 

"because of their local monopoly position," was carry traffic across LATA 

boundaries. Ibid. As Judge Greene, who entered the consent decree, 

explained, "[m]ost simply, a LATA marks the boundaries beyond which a Bell 

Operating Company may not carry telephone calls." Ibid. (footnote omitted).

Starkey testified "AT&T got the long lines, the long-distance market," and 

"[t]he Bell operating companies kept the local exchanges and local toll, but 

only toll within a LATA." He explained because the final decree didn't allow 

the Bell operating companies "to carry traffic over a LATA boundary," and 
44 A-2909-18

"the FCC enforced it," there's been "probably about twenty years of regulation 

that basically is all about enforcing these LATA boundaries."

New Jersey is divided into three LATAs: 224 — North Jersey, 220 —

Atlantic Coastal, and 222 — Delaware Valley.14 W. Elec., 569 F. Supp. at 

1020-21. According to Verizon's 1993 tariff, its 180 local exchange areas are 

divided among the State's three LATAs as follows:

[t]he Atlantic Coastal LATA encompasses eighteen 

(18) exchange areas in the southeastern portion of 

New Jersey; the Delaware Valley LATA encompasses 

fifty-three (53) exchange areas in the southwestern 

and west-central portions of New Jersey; and the 

North Jersey LATA encompasses one hundred and 

nine (109) exchange areas in the northern and eastcentral portions of New Jersey.

Starkey explained with reference to public information maintained by 

the National Exchange Carrier's Association that the Hopewell exchange is in 

Delaware Valley LATA 222, its location identified by exact Vertical and 

Horizontal (V&H) coordinates, that Verizon is the incumbent local exchange 

14

 "The North Jersey LATA runs from Passaic and Bergen counties in the 

north to Toms River in the south." W. Elec., 569 F. Supp. at 1021 n.155. "The 

Delaware Valley LATA includes the counties of Mercer, Burlington, Camden, 

Salem, Gloucester, and Cumberland, and the western portions of Middlesex, 

Monmouth, and Ocean counties." Id. at 1021 n.154. The Atlantic Coastal

LATA "includes the southern half of Ocean County and the counties of 

Atlantic and Cape May." Id. at 1021 n.156.
45 A-2909-18

carrier and that as of January 2008, it assigned to the Hopewell exchange by 

area code and exchange code, otherwise known as NPA/NXX code, all of 

exchange codes 466 and 639 (i.e., 609-466-0000 to 466-9999 and 609-639-

0000 to 639-9999) and 609/333 numbers 0000-0999, 1000-1999, 8000-8999, 

9000-9999.15 In sum, Starkey maintained local telephone exchanges are 

documented geographic areas with well-defined boundaries on which the 

telecommunications industry relies "for numerous network, routing and 

regulatory purposes," and, consistent with that definition, the Hopewell 

exchange in LATA 222 is defined, as Verizon has done for many years, by the 

Hopewell exchange map made a part of its 1993 tariff and 2014 product guide. 

Verizon's "internal" expert, Harold E. West, III, recently retired from the 

company after having started his career at New Jersey Bell before the breakup 

of the Bell system, testified his "definition of local telephone exchange is a 

result of thirty-five years of experience working with local telephone 

exchanges and a synthesis of language contained in [Verizon's] New Jersey 

tariffs." He maintained a "local telephone exchange is the array of customers 

15

 Stated differently, Verizon was assigned full NPA-NXX blocks of 10,000 

telephone numbers for exchange or NXX codes 466 and 639, and 4,000 

telephone numbers for NXX code 333, the other 6,000 telephone numbers 

being assigned or available to other carriers.
46 A-2909-18

that are served by any of the NPA-NXX code combinations that are associated 

with a particular rate center." 

According to West, it is the NPA-NXX code combination that controls 

the assignment of a line to a specific local telephone exchange. He explained 

that although there are often numerous NXX codes within a local exchange, 

"all of the NXX codes are tied into a single rate center." West testified a rate 

center is "a geographically specific point. . . . defined by these vertical and 

horizontal coordinates," based on "a grid system developed by AT&T to 

precisely locate" each one, that is "used to determine mileage between local 

telephone exchanges and to calculate rates for calls made between local 

telephone exchanges."

16

 According to West, "[t]he local telephone exchange 

16

 West explained the Local Exchange Routing Guide (the LERG) is "a 

compendium of all the switch information" for every exchange across the 

country. It provides a list of all the switches, "which carriers operate those 

switches," and the "NPA-NXX . . . down to the thousands block number, they 

load in those switches," as well as "what rate centers are associated with those 

NPA-NXXs." West maintained "[t]he network reflects the information that's 

in the LERG and it's organized that way so that this call instantaneously from 

609-466-1111 will find Jane Q when John Q dials 609-434-1234." West and 

Starkey agree the LERG is the definitive guide for the routing and rating of 

calls.
47 A-2909-18

drives from that rate center,"

17 and thus it's the rate center that defines the local 

exchanges. 

West explained "[a]ll the NXX codes that are assigned to [the Hopewell] 

rate center have customers," and the "array of customers is what comprises the 

Hopewell local telephone exchange." According to West, "the rate center is a 

point, it's a regulatory construct. It's there to calculate distance between these 

two points and to set rates per the tariff. The Hopewell local telephone 

exchange is a physical thing. It's the array of all these customers."

West explained "there were ten different NPA-NXX code combinations

[609-274, -309, -333, -466, -527, -564, -639, -644, -925 and -979] assigned to 

the Hopewell rate center" as of January 1, 2008, "being used by a total of 

17

 West testified the rate centers are not specific to Verizon but define "the 

local and toll relationships" for all carriers because "the rate centers, the local 

telephone exchanges and the relationships between them, which ones are local 

points to one another and which ones are toll points to one another is the same"

for all carriers. He explained that even if a customer's calling plan provided 

unlimited calling for one monthly charge, in essence treating all calls as local, 

carriers are billing one another for "reciprocal compensation" or "switch 

access" based on whether the calls are rated as local calls or local toll calls,

depending on whether they originate and terminate within a local service area

as defined by Verizon's tariff or between local service areas in the same 

LATA, which is wholly dependent on the NPA-NXX code combinations

associated with each rate center. West testified it's the NPA-NXX code 

combinations associated with each rate center that determine the route and 

wholesale billing of every call.
48 A-2909-18

eleven carriers to provide dial tone and access," only three of which, 609-466, 

-639 and -333 were associated with Verizon. He testified that when New 

Jersey Bell was the monopoly carrier, its exchange area maps, showing where 

numbers associated with the particular local telephone exchange were 

assigned, "were tied solely to New Jersey Bell's NPA-NXX numbers" and thus 

could accurately reflect where its customers' assigned numbers were located. 

West testified Verizon's Hopewell exchange area map, however, had not 

been updated since 1974, when AT&T built all the local exchange switches

and assigned the NXX codes, and New Jersey Bell decided whether a 

particular customer located near an exchange area boundary would be served

by the switch in one local exchange or another — often driven by which 

exchange offered the easiest route to string wire to reach the customer. West

maintained that in 1974, and until the advent of local competition, the maps

"were very good representations of the local telephone exchanges," that is "the 

exchange area map boundaries coincided with the true exchange boundaries —

the reach of the NPA-NXXs assigned to the exchange." 

West contended, however, that by 2008, "twelve years into local 

competition," when Neustar was assigning the NPA-NXX codes and CLECs 

had placed some of their own switches, "of course not duplicating Verizon's 
49 A-2909-18

network architecture," Verizon's exchange area map boundaries no longer 

"coincided with the true exchange boundaries — the reach of the NPA-NXXs 

assigned to the exchange." He contended that given the age of Verizon's 

exchange maps and "the increase in competition since deregulation and 

divestiture, an NPA-NXX and rate center-oriented approach is the only way to 

accurately reflect the dynamics of today's telecommunications marketplace."

By way of example, West cited the Johnson & Johnson campus in 

Skillman and the Merrill Lynch complex in Hopewell Township, both of which 

are served by competitors of Verizon. West maintained the Johnson & 

Johnson campus and its associated 1,200 listings, although located within the 

boundaries of Verizon's Hopewell exchange map, was properly excluded from 

the Hopewell exchange because it is assigned a 908-874 NPA-NXX code not 

associated with the Hopewell rate center but with the neighboring Belle Mead 

rate center. Whereas the Merrill Lynch complex in Hopewell Township and its 

associated 10,000 listings, served by AT&T, was properly included in the 

Hopewell exchange, although located outside the boundaries of the exchange 

map, because it was assigned a 609-274 NPA-NXX code associated with the 

Hopewell rate center.
50 A-2909-18

West testified that treating the Merrill Lynch complex as if in the 

Pennington local exchange, as Starkey advocated, resulted in a "tariff 

mismatch" between where the "customer has been placed in this local 

telephone exchange and the rating of the telephone call" from a Verizon 

customer outside the Hopewell local service area, in Ewing, for instance "to 

that AT&T Pennington customer," i.e., Merrill Lynch. West explained if 

Merrill Lynch is considered in the Pennington exchange as Starkey asserted, 

then Verizon should expect to pay AT&T only a reciprocal charge of "a tenth 

of a penny per minute" for the call placed by a Verizon customer in Ewing. 

But because "the network keys off of the 274" exchange code associated with 

the Hopewell exchange, it "recognizes this as a toll call and AT&T bills 

[Verizon] a penny a minute, because the network recognizes it as a toll call not 

a local call, so AT&T bills switch access not reciprocal compensation."

West testified placing Merrill Lynch in the Pennington exchange instead 

of the Hopewell exchange based on Verizon's old tariff map would result in 

"two mismatches going on between how these calls are actually rated, as they 

flow through the network and how they appear in the tariff with respect to their 

local telephone exchange designations." He claimed if one instead "adopt[ed]

a more dynamic definition of local telephone exchange," relying "on the NPA-
51 A-2909-18

NXXs that are assigned to the relevant rate center, you don't run into this 

problem." West explained

the cleanest way to avoid mismatches between tariff 

expectation and the actual way a call is rated, both at 

the retail level and the wholesale level is to use — I 

don't want to say I invented it, but that use the 

definition of local telephone exchange that I advocated 

and explained in my expert report.

On cross-examination, West was forced to admit he could cite no 

authority for his definition of a local telephone exchange, and Verizon's 1993 

tariff did not employ it but instead defined basic exchange service as 

"telecommunication service furnished to individual line business and residence 

customers within a specified geographical area." He was also forced to 

acknowledge a customer living in Trenton or Atlantic City to whom a 

competitor like AT&T had assigned a telephone number from one of the ten 

Hopewell NPA-NXX codes "would be picked up in [his] definition as being 

part of the Hopewell local telephone exchange." 

Using his definition of local exchange as "the array of customers that are 

served by any of the NPA-NXX code combinations . . . associated with a 

particular rate center," West calculated Verizon only provided dial tone and 

access to 47.9% of the Hopewell local telephone exchange as of the January 1, 

2008 assessment date. Relying on Verizon's Access Line Reporting and 
52 A-2909-18

Forecasting System (ALRFS), West testified Verizon had 5,134

18 residential 

lines and 1,534 business lines for a total of 6,668 lines in the Hopewell 

exchange as of the end of 2007.

West used the E911 database to calculate the number of telephone 

listings the CLECs maintained in the Hopewell exchange. He testified 

Verizon's competitors had 728 residential listings and 10,372 business listings, 

including the 10,000 listings assigned to the Merrill Lynch complex, for a total 

of 11,100 E911 listings in the Hopewell exchange as of the end of 2007. 

All the experts agreed there is not a one-to-one relationship between 

business listings and lines in the E911 database as there generally is with 

residential lines. West testified most residential customers have only one or 

perhaps two telephone lines, and those lines are ordered separately with each 

having a listing in the E911 database. He explained "[t]here's no equipment 

for a [home] that would tie those residential lines together, so they very much 

act independently, which means the listings to line relationship is one-to-one." 

West testified the same is not true for "high end business lines."

18

 West included in that number three residential lines serviced by MCI 

because MCI had merged with Verizon in 2006. 
53 A-2909-18

West explained large businesses often have sophisticated equipment on 

the premises, such as a private branch exchange or PBX, to service their

internal communications. Each person who has a telephone will have a listing 

in the E911 database but not a dedicated line to the switch. PBX equipment

allows a business to use fewer phone lines by splitting those lines into multiple 

private extensions, thereby allowing the customer to save a large amount of 

money by reducing the number of access lines it needs to purchase. Because 

there are fewer access lines than listings, West explained one would need "to

convert those listings" to achieve "a meaningful line count." He referred to 

that conversion as a "business line to listing ratio, BLLR." 

In order to convert the CLEC listings in the E911 database to lines, West 

used Verizon's own statewide ratio of business lines to listings of 0.63. West 

multiplied the 10,372 CLEC business listings, including the 10,000 Merrill 

Lynch listings he included in the Hopewell exchange, by Verizon's 0.63 lines 

to listings ratio, yielding 6,534 CLEC business lines. He then added the 6,534 

business lines to the 728 residential lines for total CLEC lines of 7,262. 

Adding the 7,262 CLEC lines to Verizon's 6,668 lines, West concluded there 

were 13,930 lines in the Hopewell Exchange as of January 1, 2008, 6,668 of 
54 A-2909-18

which belonged to Verizon, thus giving it a 47.9% share of the exchange as of 

the assessment date.

Verizon also presented the testimony of an "outside" expert, Nicholas 

Vantzelfde, head of a "global strategy consulting firm" working "exclusively 

in telecommunications," including "quantifying market opportunity [and]

relative market share of competitors within designated geographies." 

Vantzelfde testified the term "local telephone exchange" was a "highly 

nuanced" term of art within the telecommunications industry, agreeing with 

West it was "essentially . . . a group of customers that are assigned a specific 

set of NPA-NXX codes that are attached to a rate center." He testified that 

"Neustar assigns numbering codes to rate centers. Those rate centers have 

customers associated with them. Those customers are part of that exchange 

associated with the rate center and ultimately, it doesn't matter where those 

customers are, it is what their phone numbers are."

19

In addition to endorsing West's definition of a local telephone exchange, 

Vantzelfde agreed with West's business lines to listing ratio, which Vantzelfde

19

 After hearing this testimony repeated by Verizon's experts in rebuttal, Judge 

Brennan asked West whether Neustar was the entity now defining New 

Jersey's local telephone exchanges. He responded "Neustar is the one that is 

making a determination about the rate center that this code is associated with." 
55 A-2909-18

referred to as "an active line conversion factor." Vantzelfde, however,

performed his "own analysis to estimate the total market lines" within the 

Hopewell exchange not relying on the E911 database. He explained he "took 

the specific demographics" and what he called "firmographics," a term he 

testified he didn't "think [he] invented" but doesn't "hear many other people 

use" to define the "unique characteristics of the businesses within a given area"

and used "that to build up [his] estimate of market lines" in the Hopewell 

exchange.

Vantzelfde explained that instead of "taking Verizon lines and 

estimating competitor lines" as West did, he estimated "how many lines the 

entire market buys. And so, we're calculating how many phone lines we think 

all of the households have and we're calculating how many phone lines all of 

the businesses have" using publicly available data from sources including the 

U.S. Census Bureau, Nielsen, the CDC and the Pew Research Center. 

Vantzelfde explained he used "very specific information about the types of 

households that are part of the Hopewell local telephone exchange and the 

types of businesses that are part of the Hopewell telephone exchange,"

including the industry they were in, "how many employees they have, and 

other relevant factors" he'd found over the course of "several decades in this 
56 A-2909-18

business to be very good predictors of the number of voice lines" those 

businesses would have.

Vantzelfde testified that "for as much as we talked about the fact that 

maps aren't perfectly relevant for this case, [he] still needed to use a map to do 

[his] analysis." Specifically, he explained based on his "experience in these 

cases," that he could "take the geographic representation or approximation of 

Verizon's service area and . . . calculate the specific firmographics and 

demographics in that area." Vantzelfde explained that "Verizon knows where 

its boundaries are," although "[i]t doesn't necessarily know where the CLECs'

customers and boundaries of exchanges are." He testified, however, that what 

his "experience has been is that the geography is a fair representation" of the 

local exchange — "sometimes there are customers located in that geography 

that are part of a different exchange" — "[s]ometimes there are customers 

located outside of that approximate boundary that are actually part of that 

exchange." But, he claimed "those tend to balance out with the exception that 

you need to care for, very specifically, large businesses," such as Johnson & 

Johnson and Merrill Lynch here.

Vantzelfde testified that there were 4,767 households "within the 

Hopewell local telephone exchange," and, using demographic characteristics 
57 A-2909-18

such as age, ethnicity and education, he estimated 12.8% of them had no 

landline, meaning there were 4,157 voice lines in the exchange as of the 

January 1, 2008 assessment date. Using the same demographic data, he 

estimated there were 184 dial-up and 1,052 other secondary access lines in the 

Hopewell exchange for a total of 5,393 residential lines, 4,597 of which 

belonged to Verizon according to West's count, giving Verizon 85.2% of the 

residential market.

Turning to the business lines, Vantzelfde testified he relied on InfoUSA, 

which sells information on businesses by zip code, which allows him "to see 

every business, and where they're located, what they do, how many employees 

do they have." Vantzelfde testified the information he requests from InfoUSA 

is "over-inclusive," meaning he "make[s] sure we not only include zip codes 

that are within the approximate boundary of the Hopewell local exchange that 

we got [from] Verizon, but also cover the surrounding area." 

Vantzelfde again explained "in general, in [his] experience, . . . there's 

some small businesses or a subset of businesses that are located within the 

geographic boundary that are actually part of a different exchange, and another 

subset of businesses that are located outside of that approximate boundary and 

part of the Hopewell exchange," expressing the view that "those tend to 
58 A-2909-18

balance out, except for very large businesses." He testified he geotags "each 

business, whether it's in or out of that approximate geographic boundary, and 

then we find the big businesses and we make sure that we appropriately care 

for those as based on their phone number whether they're in or out of an 

exchange."

Vantzelfde explained the Merrill Lynch complex, for example, with 

"5,600 employees or so, . . . was located outside of the approximate geographic 

. . . boundary of Verizon's customers, but it's part of the exchange." He 

testified the Merrill Lynch complex was "one that we had to make sure that 

when we went through our geotagging . . . that it actually counts as part of the 

local telephone exchange." Vantzelfde testified the same was "true with 

Johnson & Johnson, that is one that is physically located within Verizon's 

approximate boundary of its customers, but it's not part of the exchange. It is a 

different set of telephone numbers that is served [by] . . . Embarq."

Vantzelfde testified that once he isolated the businesses he thought 

appropriately included in the local exchange, he applied his proprietary model, 

which he explained was "a little bit how [he's] made [his] career is coming up 

with this," taking "every type of business and how many employees we have 

that exist at that location and we categorize them" by their "relative 
59 A-2909-18

communications needs" and from that "calculated how many [telephone] lines 

we think they have at that location." Applying his model, Vantzelfde 

estimated there were 7,818 business lines in the Hopewell local telephone 

exchange, 250 fewer lines than Verizon estimated in its analysis using the 

E911 database. 

Vantzelfde tested his model using data collected by the FCC on a 

statewide basis. Every local exchange company in the country — the ILECs 

and the CLECs — is required to report the actual number of access lines it 

serves per state twice a year. The FCC uses the data to calculate the market 

share of the ILECs, thereby monitoring the success of competition in the local 

markets. The FCC publishes the data annually in its "Local Telephone 

Competition Reports." See Verizon II, 31 N.J. Tax at 66 n.13 (describing the 

reports). 

Vantzelfde testified that allocating the total number of business access 

lines statewide, based on FCC data, to Hopewell and its 0.3% share of the 

State's employees, yields 6,402 business access lines, 18.1% less (1,416 fewer 

business lines) than his model predicts. In his report, Vantzelfde attributed the 

difference solely to the presence of Merrill Lynch, "a large, communications-
60 A-2909-18

intensive business," having "an above-average number of lines per employee"

in the Hopewell local exchange. 

At trial, Vantzelfde testified there was "a pretty simple explanation" for

the difference between his model and a straightforward calculation based on 

FCC and employee data. He explained "if you look at the types of businesses 

that are in Hopewell, they tend to either be . . . relatively small or very large, 

but highly telecom intensive." He explained "small businesses tend to have 

more phone lines per employee than large businesses." Because there were 

more small businesses in the Hopewell exchange, Vantzelfde contended "they 

should get an over-allocation of phone lines per employee." He added the 

exchange also has "one very important highly telecom intensive business 

which is the Merrill Lynch campus that also drives that figure to be higher than 

a straight employee allocation." 

According to Vantzelfde's model, Verizon had 15.7% of the business 

lines in the Hopewell exchange as of the assessment date, a half percentage 

point less than West calculated. Adding the 7,818 estimated business lines to 

the 5,393 residential lines Vantzelfde estimated were in the exchange based on 

demographic data, Vantzelfde testified that in his opinion there were 13,211 

total lines in the Hopewell exchange. Comparing that estimate to his count of 
61 A-2909-18

Verizon's lines, 5,823 (845 fewer lines than West counted), Vantzelfde 

concluded Verizon had a 44.1% market share in the Hopewell local telephone 

exchange, almost four percentage points less than West's estimate. On crossexamination, Vantzelfde conceded if Merrill Lynch "was determined to be not 

part of the exchange then Verizon would have more than 51 percent" of the 

market according to his model. 

Hopewell's expert Starkey testified that while West and Vantzelfde 

claimed Verizon had less than a 51% market share in the Hopewell local 

telephone exchange as of the January 1, 2008 assessment date, the FCC put the 

ILEC market share for the entire State of New Jersey, which Verizon 

dominated, at 82.8% at the end of 2007. Starkey acknowledged the FCC data 

is statewide, included the State's two other incumbent local carriers with their 

4% of the market, and because it's based on information from the carriers,

didn't require resort to the E911 database and a conversion of listings to dial 

tone and access lines employing a "business lines to listing ratio." 

Nevertheless, he testified those factors did not adequately account for so 

substantial a difference between West's estimate that Verizon had 47.9% of 
62 A-2909-18

dial tone and access of the Hopewell local exchange, and the FCC's finding 

that Verizon still had 82.8% of the local market statewide.20

Starkey insisted the FCC's data was "the most reliable information we 

have in the case," because it came directly from Verizon and its competitors, 

whom the FCC required provide a detailed certification of their statewide line 

counts twice each year. Starkey testified Verizon's numbers differed so 

substantially from the FCC's for two reasons: Verizon incorrectly defined the 

local telephone exchange and the BLLR it applied to its competitors' listings in 

the E911 database was faulty.

20

 Starkey rejected Vantzelfde's 44.1% market share for Verizon because 

Vantzelfde not only excluded from Verizon's line count the three residential 

MCI lines West included based on MCI having been part of Verizon for two 

years as of the assessment date, but also the 842 resale and wholesale lines 

West specifically included in his Verizon line count. West explained he 

included access lines Verizon sold to CLECs for resale to their customers in 

Verizon's line count because "in terms of market share, what we're calculating 

here is who is providing the underlying facility. In the case of the resale and 

the Wholesale Advantage, we do that but we don't face the customer," in other 

words, "Verizon switching is involved in both of those lines." Vantzelfde

excluded those 845 lines from Verizon's total, reflecting them as CLEC lines. 

Re-running Vantzelfde's calculations with those lines shifted to Verizon, 

Starkey concluded Vantzelfde's model "yields a notably higher market share 

for Verizon than did Verizon's initial calculations — i.e., 6,668 Verizon lines / 

13,211 market lines equals 50.47%" — without accounting for Merrill Lynch's 

placement, erroneously in Starkey's opinion, in the Hopewell exchange.
63 A-2909-18

Specifically, Starkey asserted West and Vantzelfde defined the Hopewell 

local exchange in a way that allows them to "grab that Merrill Lynch facility, 

which is clearly outside the boundaries" of the exchange "and include it in 

their analysis because if you take that Merrill Lynch facility out, if you take 

those roughly 5,600 employees and their access lines out of the analysis, . . . 

it's obvious" Verizon serves "more than 51 percent in the Hopewell local 

telephone exchange." Starkey contended "[t]hat is a key reason why Hopewell 

appears to be so different than the state average." Starkey noted West relied 

on his own experience for his definition of a local telephone exchange, could 

cite no other authority for it, and Verizon never used West's definition in its 

tariff or product guide, or anywhere else for that matter. 

According to Starkey, excluding Merrill Lynch and leaving everything 

else in West's analysis the same resulted in Verizon having an 87.4% market 

share of the Hopewell Exchange, much closer to the FCC's assessment of 

Verizon's 82.8% share of the local market statewide. 

The other reason for the large discrepancy between West's assessment of 

Verizon's share of the Hopewell exchange and the FCC's assessment of 

Verizon's share of the local market statewide, in Starkey's view, was West's 

decision to apply Verizon's own business lines to listing ratio to its 
64 A-2909-18

competitors' businesses. Verizon calculated its BLLR by taking Verizon's

business listings statewide from the E911 database, divided by the company's

total number of business lines statewide. Starkey testified "that gives us a 

good sense . . . of how many listings [Verizon] has per line, but it really 

doesn't tell us very much about competitors because their business model, the 

way in which they approach the market is very different." 

Starkey testified Verizon's competitors such as AT&T, "don't go into a 

market to try to serve one and two-line businesses." He claimed "[t]hey're out 

for the Merrill Lynch's" or at least the Johnson & Johnson-size campus, 

especially during the 2008-time frame because they were employing different 

technology than Verizon's built-out copper wire network. Starkey testified 

Verizon's competitors in the local market were deploying fiber optic cable, 

which "isn't economically viable for one- and two-line businesses." Starkey 

testified that because of their different approach to the market, the CLECs'

ratio of telephone listings to lines was "very different" from "what you would 

see for Verizon" and applying Verizon's own lines to listings ratio to the 

disparate business model of its competitors was "another way in which 

Verizon overstates competitor market share and understates its own market 

share in the analysis."
65 A-2909-18

Explaining what he perceived to be the two main errors in Verizon's 

market share analysis in greater detail, Starkey testified he agreed with West 

about rate centers, how Verizon built out its network, how telephone numbers 

were not formerly assigned outside the geographic area of the rate center with 

which they were associated and how "[a]ll of that has changed dramatically 

over time" with local competition. West maintained, however, that "[w]hat 

doesn't change is the definition of a local telephone exchange."

Starkey explained that while Verizon maintains one or more switches in 

each exchange in which it's loaded the Verizon NPA-NXX codes associated 

with the exchange's rate center, CLECs do not operate in the same fashion. 

Starkey testified, and West acknowledged, that AT&T, for example, has not 

replicated Verizon's network with a switch in every exchange. 21 Instead, 

21

 Starkey explained:

The way the telephone system works is, if I make a 

call from Missouri to someone in Hopewell and they 

have a 609-274-1111 number, it looks at the first three 

digits and it says, okay, what area code is that going 

to? It's going to 609. That's New Jersey. All right? 

So, I'll send it to the closest switch I have nearest to 

New Jersey. Now, what's the 274? That's the central 

office code, the NXX, . . . which central office is 

assigned that code and as we saw from the LERG, the 

Local Exchange Routing Guide, it has all that 
66 A-2909-18

AT&T deploys far fewer switches serving much larger geographic areas, 

which it's able to do because it relies on fiber optic cable that can carry signals 

much farther than the copper wire of Verizon's legacy local exchange 

networks. 

West and Starkey agreed the 10,000 block of 609-274 numbers AT&T

assigned to Merrill Lynch is served out of AT&T's switch in Camden. While 

West testified Verizon, as a matter of "a mixture of policy and actual network 

design," would not permit a landline customer moving from Hopewell to 

another exchange to keep her 609-466-XXX number, because the company 

"doesn't like to mix and match [NPA-NXX] codes," he acknowledged "that's a 

Verizon thing. It's not a CLEC thing." Starkey testified Verizon's

competitors, such as AT&T, have no such qualms "because it knows that it can 

____________________

information listed and it — the LERG will tell you, 

okay, 274 — this isn't the case here but I'm just using 

it as an example — 274 sits in this Verizon switch in 

Hopewell. So, I'm going to send the call there. It's 

then Verizon's job to say, okay, what are the last four 

digits? The last four digits are 1111. In my records, I 

know that 1111 is Customer A. So, I'll extend the call 

from there. So, each one of these switches into each 

one of these exchanges for Verizon is going to have 

NPA-NXX codes, resident programed into that switch. 

AT&T on the other hand is going to have all of its 

numbers in its big switch and it can assign them 

anywhere it wants across this region.
67 A-2909-18

assign numbers anywhere it wants on its network without regard to the local 

telephone exchange." Starkey testified "[t]he bottom line is the telephone 

numbers have no significance in today's telecommunications environment 

relative to location."

When asked by Judge Brennan whether that meant the CLECs didn't 

have local exchanges, Starkey responded by saying that Verizon's local 

exchange map in its tariff represents "the local telephone exchange for 

everybody. If . . . someone says what's the Hopewell local exchange? They'll 

say, I need to see the map. . . . [A]re you asking me what geographic region 

does it cover? I need to see the map." 

When the judge followed up by asking how then "do you measure 

AT&T's or any CLEC's presence within any specific local telephone 

exchange," Starkey responded "[t]he address of where the facility is 

terminated. The access line address," which is readily available in the E911 

database. Starkey acknowledged West was correct that "[t]he way the network 

knows whether [a call is] a toll call or a local call is it looks at the rate 

centers," but he claimed "that doesn't have anything to do with where your 

access line is going to be . . . or your service address is." Starkey insisted 
68 A-2909-18

"[t]hat's going to be based on [the customer's] . . . service address associated 

with the dial tone and access line facility to service the line."

Starkey testified the geographic boundaries of the local exchanges 

continued to be important to Verizon after the advent of local competition as 

evidenced by its inclusion of its local exchange maps in its 1993 tariff and 

2014 product guide and that it defined a local exchange with reference to

territorial boundaries in both documents. He maintained that Verizon is the 

incumbent local exchange carrier responsible for the Hopewell exchange, "but

the exchange is an industry geography, an industry building block that we all 

use." 

Starkey drove home that point by calling attention to Vantzelfde's selfacknowledged need to use the geographical boundaries of Verizon's Hopewell 

exchange to conduct his analysis of Verizon's market share. Starkey testified 

that although Vantzelfde claimed that "[l]ocal exchanges are not easily defined 

by a specific geographic boundary," his own analysis refutes that statement 

because "he relied on a very specific geographic boundary and then made two 

exceptions" for Merrill Lynch and Johnson & Johnson.

Starkey also testified the geographic boundaries of the local exchanges 

were important for circumscribing the area where an incumbent local exchange 
69 A-2909-18

carrier such as Verizon had "carrier of last resort obligations." See N.J.S.A. 

48:2-23. Starkey explained if someone were to build a house in a lessinhabited area of a local exchange with no nearby wireline facility, a CLEC is 

free to decline service because its facilities don't reach the customer. An 

incumbent, however, is required to provide wireline service to anyone seeking 

service in its local exchange, building out a new wireline facility if necessary.

Starkey testified Verizon, however, "is only required to do that if you are in 

one of their exchanges," thus the geographic boundaries of a local exchange 

are important for defining the company's carrier of last resort obligations. 

Finally, Starkey emphasized how large an impact including the Merrill 

Lynch facility in the Hopewell exchange had on Verizon's market share. 

Starkey noted West calculated there were 10,372 CLEC business listings in the 

Hopewell exchange; 10,000 of those listings were for the Merrill Lynch 

facility.22 Starkey testified "you can imagine what it does to the calculation if 

you take out that number. It is the only thing that really matters at the end of 

the day in the analysis because it dictates that [Verizon] serve[s] far more than 

22

 Actually 9,997 or 9,998 of the 10,000 block of 609-274 numbers. Starkey 

explained carriers always hold a few numbers back from any 10,000-block 

assignment for routing and administrative purposes.
70 A-2909-18

51%, really closer to 85%," or precisely 87.37% if Merrill Lynch is excluded 

from West's calculation. 

Starkey ran the calculation excluding Merrill Lynch but including 

Johnson & Johnson's 1,200 listings. He testified that when you include 

Johnson & Johnson's 1,200 listings in the Hopewell exchange and apply 

Verizon's 0.63 business lines to listings ratio, Verizon still has 79.5% of the 

market as of the January 1, 2008 assessment date, again, much closer to the 

FCC's assessment of Verizon's 82.8% of the local market statewide. He 

testified that running the calculation without a BLLR, thus assuming a one-toone ratio between Johnson & Johnson's 1,200 listings and access lines, which 

almost certainly vastly overstates the number of access lines the facility 

employs, results in Verizon having a 75.5% share of the Hopewell local 

exchange as of the assessment date.

As already noted, Starkey testified that in addition to erroneously 

including the Merrill Lynch facility in the Hopewell exchange, Verizon's

market share analysis is flawed by employing its own business lines to listing 

ratio to its competitors' listings. Starkey explained Verizon inherited a copper 

network, and "there's only so far you could push a signal from the central 
71 A-2909-18

office switch out on copper before it became so weak you couldn't hear it 

anymore." 

Although noting "it depends on a lot of different circumstances," Starkey

estimated the "engineering reality" is that a carrier could generally extend a 

copper wire for only approximately 20,000 feet and maintain acceptable sound 

quality. While acknowledging the network could be supplemented with fiber

optic cable, Starkey testified the limitations of "how far they [could] push 

[copper]" when the Bell System "built these exchanges and they built these 

networks" explains these exchange boundaries and why "there's 180 of them in 

Verizon's territory in New Jersey in large part."

Starkey testified that by the time the CLECs entered the local market, 

"technology had changed somewhat dramatically." Because fiber optic cable 

was more available, the CLECs "could build networks that extended miles, 20 

miles, 100 miles depending on how they built it." He testified "AT&T puts a 

switch in Camden and then serves entire portions of New Jersey and perhaps 

the entirety of New Jersey with that single switch. It does that with fiber optic 

cable that it extends and generally puts into buildings or large campuses." 

According to Starkey, "[t]hat's what its business model is." He claimed AT&T

is "not looking to serve your barber shop . . . or your salon that has one line. 
72 A-2909-18

It's looking for somebody who has 1,000 lines, 5,000 lines, 10,000 lines to 

substantiate the investment it has to make in fiber associated with reaching 

those places."

According to Starkey, that business model makes applying Verizon's 

business lines to listing ratio to the CLECs inappropriate. Starkey testified 

Verizon, because it is the incumbent local exchange carrier and the carrier of 

last resort "is going to have a lot of those single-line businesses. Competitors 

are not." Using the digital GIS (geographic information system) mapping 

coordinates Verizon provided to Vantzelfde defining the Hopewell local 

telephone exchange and the E911 data, Starkey was able to plot the dial tone 

and access lines Verizon included in its market share analysis. The graphic 

bears out that Verizon provides dial tone and access to many more small 

customers than its competitors in the Hopewell exchange. A fact Verizon's 

experts did not dispute. 

Starkey concluded Verizon's competitors, on average, are going to have 

"substantially" "fewer lines per number [listing] than Verizon,"

23 making 

23

 Vantzelfde made essentially the same point in his testimony explaining why 

the higher number of small businesses in the Hopewell exchange results in "an 

over-allocation of phone lines per employee" as compared to a statewide 

average.
73 A-2909-18

Verizon's lines to listing ratio higher than what a CLEC's BLLR would be. 

Starkey explained Verizon's 0.63 BLLR means Verizon calculates a business 

customer with 100 telephone numbers listed in the E911 database will have 63 

corresponding business access lines. He testified that number is roughly four 

times higher than the "trunk equivalency tables" the company has published in 

other parts of the country to estimate the number of dial tone access lines 

serving a PBX.

24 Those tables assume only 16 access lines would be needed 

for a PBX customer with 100 telephones, and thus 100 listings in the E911 

database, resulting in a BLLR of 0.16 — not 0.63, and also much higher than 

the FCC's standard for estimating the average number of stations or telephones

per line for PBX service, which is 9.

Starkey testified Verizon's error in applying its own BLLR to its 

competitors' customers without accounting for the CLECs' business model of 

seeking out "the largest and most lucrative customers" in a local market, i.e., 

"cherry-picking" or "skimming," is well illustrated in Verizon's treatment of 

the Merrill Lynch complex. Assuming for purposes of argument that it was 

____________________

24

 Starkey explained "dial tone access lines serving PBXs are referred to as 

'trunks' because they connect the Verizon switch and a private switch — e.g., 

the customer's private branch exchange — PBX."
74 A-2909-18

within the Hopewell local exchange, a point Starkey disputed, he noted that 

applying Verizon's 0.63 BLLR to Merrill Lynch's 10,000 block of numbers 

resulted in attributing 6,298 lines to the complex, which is likely a significant 

overstatement of its access lines given both parties agree Merrill Lynch had 

only 5,600 employees there as of the January 1, 2008 access date.25

Starkey further claimed Verizon's application of its 0.63 business lines 

to listings ratio to its competitors' listings, which he claimed overestimates 

competitor lines as in the Merrill Lynch example, has a disproportionate 

impact on its market share analysis because "the vast majority of competitor 

lines are business lines while the vast majority of Verizon lines are residential 

lines." Starkey contended "[t]hat means that to the extent Verizon's 'Business 

Lines-to-Listings Ratio' overstates the number of dial tone access lines per 

listing, it has a tendency to substantially increase Verizon's competitors' lines 

versus its own lines."

Judge Brennan's Decision

25

 Starkey buttressed his point with reference to comments AT&T filed in an 

unrelated matter with the FCC, assailing the use of E911 data to determine its 

market share in a local exchange based on its likely effect of overstating the 

number of access lines of its largest customers.
75 A-2909-18

After hearing the testimony of the parties' experts over three full days of 

trial, Judge Brennan determined Hopewell's understanding of a "local 

telephone exchange" was more aligned with the Legislature's intent in N.J.S.A.

54:4-1 than Verizon's understanding of the term. She reasoned:

Although not defined in N.J.S.A. 54:4-1, the term 

"local telephone exchange" is a common and historical 

concept in the telecommunications industry. It is a 

geographically defined area serviced by a physical 

construct that functions as the building block for 

service delivery, call routing and the regulatory 

infrastructure that has dominated the 

telecommunications industry for decades. 

[Verizon II, 31 N.J. Tax at 74.]

Judge Brennan further found that "Verizon's tariff maps are publicly 

available and define with specificity the boundaries of its Hopewell Telephone 

Exchange," and "[t]hat the business personal property being taxed is physically 

located within the boundaries of the exchange bearing its name demonstrates a 

geographic component to the definition of a 'local telephone exchange.'" Id. at 

74-75. That "connection to a geographically identifiable area also serves as a 

foundation for the boundaries of competition and the LATA system," and 

employing "a geographic definition permits the usage of public and transparent 

data sources when calculating market share, such as data from the FCC, United 

States Census Bureau, Nielsen, PEW, and InfoUSA." Id. at 75. Finally, Judge 
76 A-2909-18

Brennan found the court's interpretation of the phrase "local telephone 

exchange" in N.J.S.A. 54:4-1 was consistent with the Supreme Court's 2002 

description of a "local exchange" in Verizon Communications, 535 U.S. at 

489-90. Ibid.

Because there was no dispute that Verizon provided dial tone and access 

to more than 51% of the Hopewell local telephone exchange as of the 

January 1, 2008 assessment date, defined in accordance with the territorial 

boundaries of Verizon's tariff exchange map, thereby excluding the Merrill 

Lynch complex, the Tax Court entered judgment after trial to Hopewell,

affirming imposition of the tax under N.J.S.A. 54:4-1 for tax year 2009. Id. at 

75-76.

Verizon's Appeal From the Final Judgment

Verizon appeals, reprising its arguments to the trial court as to the 

meaning of the statutory phrase "local telephone exchange" and adding that the 

Tax Court's adoption of a "geography-based test for the 51% threshold"

created "an unworkable test that cannot be applied without rendering N.J.S.A. 

54:4-1 fatally ambiguous." Verizon further argues the Tax Court erred by 

failing to properly evaluate the expert testimony and concluding Verizon bore 
77 A-2909-18

the ultimate burden of proof; by accepting Hopewell's definition of a local 

telephone exchange and rejecting the "definition offered by the industry leader, 

Verizon"; by failing to adopt "the methodology and calculations of Verizon's 

experts" for measuring the 51% threshold and accepting the "net opinion"

offered by Hopewell's expert; and by failing to consider "the practicality of 

implementing its holding or providing guidance to future litigants on how to 

calculate the 51% threshold." We reject its arguments because we agree with 

Judge Brennan that "local telephone exchange" as used in N.J.S.A. 54:4-1 

means a local telephone network within a defined geographical area as 

depicted on Verizon's tariff exchange maps.

Our Analysis

The scope of appellate review of a Tax Court decision after trial "is the 

same as that applicable to a non-jury determination of any other trial court." 

Yilmaz, Inc. v. Dir., Div. of Tax'n, 390 N.J. Super. 435, 443 (App. Div. 2007). 

"The 'court's interpretation of the law and the legal consequences that flow 

from established facts are not entitled to any special deference,'" and "[w]e

apply a de novo review to a trial judge's legal conclusions." City of Newark v. 

Twp. of Jefferson, 466 N.J. Super. 173, 180 (App. Div. 2021) (quoting 
78 A-2909-18

Manalapan Realty, LP v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 

(1995)). Statutory interpretation, of course, is always a "question of law 

subject to de novo review" on appeal. Saccone v. Bd. of Trs. of Police & 

Firemen's Ret. Sys., 219 N.J. 369, 380 (2014).

As we've already noted in our discussion of Judge Menyuk's ruling that 

the 51% test in N.J.S.A. 54:4-1 must be applied annually, a court faced with 

having to interpret a statute is to apply the tools of statutory interpretation to 

"effectuat[e] the legislative plan as it may be gathered from the enactment read 

in full light of its history, purpose and context." Koch, 157 N.J. at 7 (quoting 

State v. Haliski, 140 N.J. 1, 9 (1995)). We begin with the statute's language, 

ascribing to the "words their ordinary meaning and significance," DiProspero, 

183 N.J. at 492, that is "unless the Legislature has used technical terms, or 

terms of art," Marino v. Marino, 200 N.J. 315, 329 (2009), "which are 

construed 'in accordance with those meanings,'" Praxair Tech., Inc. v. Dir., 

Div. of Tax'n, 201 N.J. 126, 136 (2009) (quoting In re Lead Paint Litig., 191 

N.J. 405, 430 (2007)). See 2A Norman J. Singer, Sutherland Statutory 

Construction §§ 47:29, 47:30 (6th ed. 2002); N.J.S.A. 1:1-1 ("Technical words 

and phrases . . . shall be construed in accordance with such technical or special 

and accepted meaning.").
79 A-2909-18

Although we would normally note here our acknowledgment of the Tax 

Court's expertise in explaining why we will not disturb its factual findings 

"unless they are plainly arbitrary or there is a lack of substantial evidence to 

support them," Yilmaz, 390 N.J. Super. at 443 (quoting Alpine Country Club 

v. Borough of Demarest, 354 N.J. Super. 387, 390 (App. Div. 2002)), we need 

not do so here as this was not an ordinary Tax Court trial. Verizon was not 

challenging the assessor's valuation of its property in the Borough or the 

amount of the tax the Borough imposed. 

This trial, consisting only of the testimony of three telecommunications 

industry experts, was geared almost entirely to assisting the court in 

understanding the meaning their industry gives to "local telephone exchange,"

the term of art the legislature employed in N.J.S.A. 54:4-1, and how to 

determine whether Verizon provided dial tone and access to 51% of the 

Hopewell exchange, which in this particular case rested entirely on the 

meaning ascribed to "local telephone exchange." The court, in essence, held a 

trial to primarily decide a legal issue, which when decided left no factual 

questions to resolve. 
80 A-2909-18

Thus, we turn to consider how a court goes about interpreting a term of 

art.26 In Norfolk Southern Railway Co. v. Intermodal Properties, LLC, 215 

N.J. 142, 147 (2013), a case involving the eminent domain powers of a 

railroad, our Supreme Court has provided us a good model. The question for 

the Court, as it relates here, was "whether the railroad demonstrated that the 

taking of defendant's property was occasioned by the 'exigencies of business'

within the meaning of that phrase as it is used in the statute that governs 

takings by railroads." Ibid. (quoting N.J.S.A. 48:12-35.1).

The particulars of the case are not as important as the Court's approach 

to determining the Legislature's understanding of the term. Rejecting the 

condemnee's contention that the language required urgent or emergent 

circumstances, we'd adopted the administrative law judge's dictionary 

definition of "exigency," understanding the phrase to mean "'the need, demand, 

or requirement intrinsic to a circumstance, [or] condition' such as 'the 

exigencies of city life[.]'" Id. at 157 (quoting Random House Webster's 

26

 There can be little doubt the statutory phrase "local telephone exchange" is 

a term of art. The dictionary definitions of the term tend to focus on the 

building housing the switch and not the physical manifestation of the exchange 

network implied in the statute. See, e.g., Webster's Third New International 

Dictionary 2350 (1993) (defining "telephone exchange" as "a central office in 

which the wires of telephones may be connected to permit conversation").
81 A-2909-18

Unabridged Dictionary (2d ed. 2006)). Employing the standard tools of 

statutory construction, we were convinced "the Legislature did not intend to 

limit the exercise of the condemnation power in N.J.S.A. 48:12-35.1 to 

emergency situations," largely based on how long it took a railroad to 

condemn property and comply with the statute's other requirements, which 

implied to us the Legislature did not intend the railroad to have to demonstrate 

an urgent need for the property. Id. at 157-58.

Although affirming our decision, the Court rejected our approach to 

interpreting the statutory phrase, "exigencies of business." Id. at 166-67. 

Writing for the Court, Justice Hoens acknowledged we'd relied on a dictionary 

providing a definition "that apparently fits the overall statutory intent," but 

noted it wasn't the only dictionary, and others "define exigency in terms of 'a 

state of affairs that makes urgent demands[,]' or as a 'state of urgency; a 

situation requiring immediate action.'" Id. at 167 (internal citation omitted) 

(first quoting Webster's Ninth New Collegiate Dictionary 435 (1985); and then 

quoting Black's Law Dictionary 655 (9th ed. 2009)).

The existence of conflicting "modern day definitions," which "are 

inconsistent and lead to contrary conclusions," impelled the Court to conduct 

its own interpretation of the statutory language, charting "a somewhat different 
82 A-2909-18

course." Ibid. Justice Hoens wrote that "modern understandings of words or 

phrases may not be appropriate guides in statutory interpretation, particularly 

if a statute was crafted decades in the past," or "uses a term of art," requiring a 

construction in accordance with that meaning. Id. at 167-68. Because the 

phrase "exigencies of business" found in N.J.S.A. 48:12-35.1 was "not one of 

recent vintage, but has deep roots in predecessor statutes governing the 

formation of railroads and the creation of their routes," the Court looked to 

where the phrase first appeared in a statute related to railroads in the 1870s and 

traced the phrase forward through different statutes, drawing guidance from 

court cases interpreting it. Id. at 168-72.

That review allowed the Court to conclude that "when courts have been 

called upon to interpret the meaning of the phrase 'exigencies of business' in 

the past, it has been regarded as a term of art," and "understood to describe 

generally the needs of business, or the ordinary course of business, rather than 

to allude to an emergent, urgent, immediate, or pressing need." Id. at 173. 

The Court found it was "the influence of our modern jurisprudence in the 

criminal context that has imbued the term with those notions." Ibid. The 

Court concluded, "as [it] must, that the Legislature meant the phrase 
83 A-2909-18

'exigencies of business' to be understood in accordance with the way in which 

it was used at the time when the language was chosen." Ibid.

The Court further found "that understanding of the phrase is the most 

sensible one when considering the way in which railroads operate." Ibid. 

Justice Hoens wrote: "Simply put, demanding that the railroad demonstrate 

that there is an urgency or an immediacy that motivates its exercise of eminent 

domain to acquire a tract of land, as [the condemnee] suggests, would require 

us to close our eyes to the reality of how railroads are developed and built." 

Ibid. Thus, the Court could "detect no basis on which to conclude that the 

Legislature intended to demand that railroads prove urgency, immediacy or 

emergency of their need for land as a prerequisite to exercising their statutory 

condemnation power." Ibid. 

Applying the Court's method and insights in Norfolk Southern to this 

matter, we return to the history of the telephone companies and New Jersey's 

approach to taxing them offered in the first pages of this opinion. Although

"local telephone exchange" does not have the century-long history in our 

statutes as "exigencies of business," having only first appeared in 1989, that 

appearance is nevertheless significant because it was only five years after the 

break-up of AT&T. Indeed, Judge Menyuk noted "the enactment of L. 1989,
84 A-2909-18

c. 2, which amended N.J.S.A. 54:4-1," as well as several other statutes, was the 

first reflection in the tax statues of "[t]he changes to the telecommunications

industry following divestiture." Verizon I, 26 N.J. Tax at 412. See Sponsor's 

Statement to A. 135 (pre-filed for introduction in the 1988 session) ("The 

purpose of this bill is to restructure the method of taxing the 

telecommunications industry in New Jersey to reflect the dramatic changes, 

both technological and structural, that have occurred in that industry.").

The 1989 amendment to N.J.S.A. 54:4-1, which since 196627 had defined 

the "[p]ersonal property taxable under this chapter" to include "the tangible 

goods and chattels, exclusive of inventories, used in business of telephone . . . 

companies" subject to Chapter 4 of the Franchise and Gross Receipts Tax, 

added the qualifier "local exchange" to "telephone companies" and defined a

"local exchange telephone company," as "a telecommunications carrier 

providing dial tone and access to substantially all of a local telephone 

exchange." See L. 1989, c. 2, § 4.

27 See N.J. Bell Tel. Co. v. Laurel Springs Borough, 1 N.J. Tax 619, 628 

(1980) (noting "[a]t the time N.J.S.A. 54:4-1 was amended in 1966 thereby 

limiting the taxation of personal property thereunder to tangible personal 

property of telephone companies, the mere ownership of tangible personal 

property by a telephone company, subjected said property to be assessable 

within the community where found on the assessing date").
85 A-2909-18

The purpose of the amendment, as Judge Menyuk found, was to reflect 

the new reality of the break-up of AT&T and the Bell System: there was no 

longer essentially only one telephone company or only one type of telephone 

company. Verizon I, 26 N.J. Tax at 418. AT&T was now solely a longdistance carrier, prohibited from competing in the local exchange markets, and 

the "divested carriers," such as New Jersey Bell, were now local exchange 

companies assigned "the provision of local telephone service," Verizon 

Commc'ns, 535 U.S. at 475, their geographic reach limited by the newly drawn 

LATA boundaries. See N.Y. SMSA, 13 N.J. Tax at 568 (noting the effect of 

the 1989 amendment "after the AT&T divestiture, [was] to shift the local 

personal property tax from AT&T to New Jersey Bell which had become the 

local exchange company").

Critically, at the time of the 1989 amendment introducing the phrase 

"local telephone exchange," New Jersey Bell was still an entrenched monopoly

in the local exchange market. Although Neustar was by then assigning the 

telephone numbers, New Jersey Bell was allocating them to its customers as it 

always had, assigning them with reference to the NPA-NXXs assigned to each

rate center. In other words, New Jersey Bell was assigning the 609-466, -639 

and 333 codes it received from Neustar, which were assigned to the Hopewell 
86 A-2909-18

rate center, to customers and subscribers within the territorial boundaries of its 

Hopewell exchange. West testified the exchange maps included in Verizon's 

tariff throughout "the 1970s, 1980s, the so-called pre-competition era, were 

very good representations of the local telephone exchanges." That is, "the 

exchange area map boundaries coincided with the true exchange boundaries —

the reach of the NPA-NXXs assigned to the exchange."

Thus, when the Legislature adopted the phrase "local telephone 

exchange" in 1989, the term was unambiguously understood to refer to the 209 

established local exchanges inside New Jersey's three geographically defined 

LATAs, 180 of which were depicted in highly accurate exchange maps

available to the public in New Jersey Bell's tariff. There is nothing to suggest 

the Legislature would have understood a local exchange to be anything other 

than how it was then defined — and depicted — in New Jersey Bell's tariff

(and remains today in Verizon's product guide): "[a] unit established by the 

Company for the administration of communication service in a specified area 

which usually embraces a city, town or village and its environs. It consists of 

one or more central offices which may be located within or without the 

territorial boundaries of the exchange." 
87 A-2909-18

By 1997 when the Legislature amended N.J.S.A. 54:4-1 to redefine a 

local exchange telephone company from "a telecommunications carrier 

providing dial tone and access to substantially all of a local telephone 

exchange," L. 1989, c. 2, § 4, to "a telecommunications carrier providing dial 

tone and access to 51% of a local telephone exchange," New Jersey Bell had 

changed its name, but not its tariff definition of an exchange or its exchange 

area maps, L. 1997, c. 162, § 60. Although the Company's Hopewell exchange 

map had not been updated since 1974, West testified unequivocally that the 

company's exchange maps remained accurate representations of the local 

telephone exchanges until its monopoly was ended by Congress in the 1996 

Telecommunications Act.

28

 

Moreover, although Congress opened the local markets to competition in 

1996, the legislation did not alter the configuration of New Jersey's exchange 

28

 West testified "[t]here was no local competition authorized in this territory"

prior to the federal 1996 Telecommunications Act, and that New Jersey Bell 

was "a virtual monopoly in this space." In the Telecommunications Act of 

1992, N.J.S.A. 48:2-21.16 to -21.21, the Legislature authorized BPU to permit 

some competition in the local retail telephone market, which BPU had done 

prior to the 1996 Telecommunications Act, although implementation did not 

occur until after its passage. See Bell Atl.-New Jersey, Inc. v. Tate, 962 F. 

Supp. 608, 614-16 (D.N.J. 1997); Verizon I, 26 N.J. Tax at 418-19 (noting

BPU "did not even begin to investigate whether local exchange competition 

should be permitted in New Jersey until 1996").
88 A-2909-18

boundaries and local calling areas, which made up the LATAs. The territorial 

boundaries of New Jersey's local exchanges and calling areas continued, as 

they had before, to comprise the contiguous geographic areas of the State's 

three LATAs. 

Verizon doesn't dispute those points. West's argument is that Verizon's

Hopewell exchange map, like all of its exchange maps, was never more than a 

reflection of "the array of customers that are served by any of the NPA-NXX

code combinations that are associated with a particular rate center." West

contends that because the routing, rating and billing of calls nationwide is 

driven by the NPA-NXX code combinations assigned to a rate center, treating 

CLEC customers assigned an NPA-NXX code associated with the Hopewell

rate center, who are physically located outside the boundaries of Verizon's

Hopewell exchange map, as belonging to another exchange would create

"distortions" and "mismatches" in how calls to and from that customer are 

rated and billed at the wholesale and retail levels. 

In his view, the way to avoid those mismatches, which become

"exponentially more likely post-competition," when CLECs assign NPA-NXX 

numbers assigned to a particular rate center to customers located outside the 

territorial boundaries of the exchange associated with that rate center, is to 
89 A-2909-18

abandon the concept of an exchange map as an accurate depiction of the local 

exchange market and instead adopt his more "dynamic definition of [a] local 

telephone exchange," which relies on the NPA-NXXs that are assigned to the 

relevant rate center, which he "advocated and explained in [his] expert report."

Verizon's argument for its definition of a local telephone exchange is not 

frivolous, especially as West insists it represents the concept underlying

Verizon's exchange maps from the time in which New Jersey Bell operated as 

a monopoly, but we find it unlikely to have been the Legislature's 

understanding of the term when it amended N.J.S.A. 54:4-1 in 1989 and 1997. 

First, West conceded he could cite no authority for his "dynamic definition" of 

a local exchange, undermining Verizon's claim that West's definition is widely 

shared throughout the telecommunications industry. 

Second, it is the understanding of a local exchange, post-competition, by 

a Bell engineer, exceedingly knowledgeable about the arcane and enormously 

complicated subjects of telephone technology, the architecture of telephone 

networks and competitive telecommunications markets. But it's inside 

baseball, requiring a sophisticated understanding of rate centers, call routing, 

and the differences between switch access and reciprocal compensation. West 

testified he developed his definition by looking at various sections of Verizon's 
90 A-2909-18

tariff and the Local Exchange Routing Guide and "just kind of think[ing] 

through how these calls route and rate and that's how you come up with a 

working definition of local telephone exchange that avoids the sort of 

mismatches that occur when you assign Merrill Lynch to the Pennington local 

telephone exchange." 

There is nothing in the record to suggest the Legislature understood the 

term "local telephone exchange" in the way West does when it amended the 

local property tax law to define a "local exchange telephone company," as "a 

telecommunications carrier providing dial tone and access to substantially all 

of a local telephone exchange." And we reject Verizon's view that the Tax 

Court judge should have afforded it and its experts the same deference a court 

shows a state administrative agency by adopting the "definition offered by the 

industry leader, Verizon." Verizon's vested interest in avoiding the tax makes

its comparison of itself to an administrative agency an inapt analogy.

We also do not find the Tax Court erred in evaluating the testimony of 

the experts or failed to make adequate factual findings. Matters of credibility 

are within the unique province of the trial court, which is free to accept all, 

some, or none of an expert's opinion. Todd v. Sheridan, 268 N.J. Super. 387, 

401 (App. Div. 1993). Moreover, as we've already noted, the nature of the 
91 A-2909-18

parties' dispute did not make it incumbent on the Tax Court to find facts in this 

case. 

The parties' experts, particularly West and Starkey, were offered to 

provide their differing views on the telephone industry's understanding of a 

local telephone exchange to assist the court in its interpretation of the statute. 

This trial was devoted almost entirely to resolution of the statutory 

interpretation of "local telephone exchange" in N.J.S.A. 54:4-1, an issue of law 

we review de novo, which explains why we have so extensively quoted from 

the experts' trial testimony to illustrate their different views of this term of art. 

Like Judge Brennan, we find Starkey's testimony as to the telephone 

industry's understanding of a local exchange more persuasive — and likely a 

good deal closer to the understanding of the Legislature when it deployed the 

term. Verizon II, 31 N.J. Tax at 74. Starkey agreed with West about the 

importance of rate centers to the routing and rating of calls and West's 

description about how Verizon built out its network. He agreed with West that 

Verizon did not assign customers telephone numbers outside the geographic 

area of the rate center with which the numbers were associated, and thus that 

the territorial boundaries of Verizon's exchange maps were driven by the 

assignment of telephone numbers to Verizon's customers, i.e., West's array of 
92 A-2909-18

customers served by any of the NPA-NXX code combinations associated with 

a particular rate center. He also agreed Verizon's competitors did not share its 

policy about "not mix[ing] and match[ing] the local telephone exchanges," —

assigning a customer an NPA-NXX code combination assigned to a rate center 

associated with one exchange to another exchange — and, thus, that there are 

likely to be some CLEC customers with NPA-NXX codes associated with the 

Hopewell rate center who are physically located outside the territorial 

boundaries of Verizon's Hopewell exchange map.

What Starkey disagreed with West about was West's insistence that the 

territorial boundaries of Verizon's exchange maps no longer have any meaning 

in the post-competition era because they essentially capture only Verizon's 

customers and not those of its competitors. Starkey acknowledged the 

presence of competitors in the local markets and their use of remote switches

to serve vast swaths of the State using fiber optic cable represents a dramatic 

change from the Bell System model of having a switch in every exchange

loaded with the NPA-NXX combinations associated with the exchange's rate 

center. But he insisted those changes did not change "the definition of a local 

telephone exchange."
93 A-2909-18

Starkey maintained AT&T's ability to load 10,000 NPA-NXX code 

combinations associated with the Hopewell rate center into its Camden switch

to serve the Merrill Lynch complex in Hopewell Township located outside the 

territorial boundaries of the Hopewell local exchange doesn't mean the 

Hopewell exchange now encompasses the Merrill Lynch complex as Verizon 

asserts. He explained that because AT&T can serve large portions of the State, 

and maybe the entire State, from its single switch in Camden, it could assign 

those numbers to customers anywhere on its network. 

Applying West's "dynamic definition" of the Hopewell local exchange

would not only mean that Merrill Lynch, located within the territorial 

boundaries of the Pennington exchange, would be included in the Hopewell 

exchange, so would the customers in Trenton and Atlantic City to whom 

AT&T had assigned NPA-NXX code combinations associated with the 

Hopewell rate center — a point West was forced to concede. Indeed, West 

contended AT&T's and its other competitors' ability to assign NPA-NXX code 

combinations associated with the Hopewell rate center virtually anywhere 

made it impossible to map the Hopewell exchange in 2008 or at the time of 

trial. 
94 A-2909-18

Like Judge Brennan, we agree a local telephone exchange that cannot be 

mapped or defined by specific geographic boundaries because the array of 

customers associated with the NPA-NXX codes assigned to a particular rate 

center associated with the exchange of the same name are now scattered across 

the State is completely at odds with the traditional understanding of local 

exchanges as defined, geographical areas that can be mapped, which when 

grouped together with other exchanges in local service areas form the

contiguous geographic areas of the LATAs. Id. at 74-75. It's also at odds with 

the definition of "basic exchange service" in Verizon's pre- and postcompetition tariffs and product guide as "telecommunications service 

furnished to individual line business and residence customers within a 

specified geographical area for the purpose of local calling . . . and to gain 

access to and from the telecommunications network" as well as the Company's

continued representation of its exchange maps as depicting "the territorial 

boundaries of the exchange area." Id. at 54.

In addition to the federal and State case law defining local exchanges in 

connection with the breakup of the Bell System and its aftermath and Verizon's

own explanation of its exchanges in its tariffs, exchange maps and 2014

product guide, perhaps the most telling indicator in this case of the generally 
95 A-2909-18

accepted understanding of the idea of a local exchange as a "specified 

geographical area" depicted on an exchange map, is that Verizon's expert, 

Vantzelfde, based his entire analysis of Verizon's competitive market share in

the Hopewell local exchange on the territorial boundaries of Verizon's 1974

Hopewell exchange map.

29

Although endorsing West's definition of a local exchange as essentially 

"a group of customers . . . assigned a specific set of NPA-NXX codes that are 

attached to a rate center," which Vantzelfde appeared to rely on only for 

purposes of including Merrill Lynch in the Hopewell exchange and excluding

Johnson & Johnson, Vantzelfde testified unequivocally he "needed to use 

[Verizon's exchange] map to do [his] analysis." Vantzelfde also testified he'd 

used the same methodology relying on exchange map coordinates to establish 

market share in local exchanges in other reports for Verizon and other 

telecommunications companies as well as for state public utility commissions. 

Vantzelfde testified he used the boundaries of Verizon's Hopewell exchange as

29

 Verizon's repeated claim in its briefs that Hopewell and the Tax Court relied 

"on an outdated, pre-competition understanding" of a local telephone exchange 

based on an "obsolete" and "meaningless" 1974 exchange map ignores that 

West testified the map remained a very accurate representation of the 

Hopewell local exchange for another nearly twenty-five years, i.e., through the 

end of the pre-competition era and the 1997 amendment of the statute, and that 

it is on file today with BPU as part of Verizon's product guide.
96 A-2909-18

depicted on its exchange map as "the geographic area" of the Hopewell 

exchange because although Verizon "doesn't necessarily know where the 

CLECs' customers and boundaries of exchanges are," his "experience has been 

. . . that the geography is a fair representation" of the local exchange. 

Finally, going back to the Court's analysis in Norfolk Southern, we 

consider the testimony offered by both West and Starkey about how Verizon's

New Jersey local telephone exchanges developed "to assist us in interpreting 

the phrase in accordance with its intended meaning." 215 N.J. at 168. West 

testified the purpose of the Hopewell exchange map "was to try to capture the 

scope of the Hopewell local telephone exchange," and that "[t]he real scope, 

the real end point of this Hopewell local telephone exchange is defined by how 

far these lines reach." 

Starkey's understanding was the same. He testified the legacy network 

Verizon inherited was "largely based on its exchange boundaries." He 

explained, as West had, that New Jersey Bell had a central office in each 

exchange and sent cables out to the boundaries "and then a different central 

office and a different exchange network handled exchanges that were beside 

them." 
97 A-2909-18

Thus, "the real scope" of the Hopewell exchange West described, "how 

far these lines reach[ed]" when Bell built the system, was dictated by how "far 

you could push a signal from the central office switch out on copper before it 

became so weak you couldn't hear it anymore." Starkey explained it was that 

"engineering reality" of the reach of copper wires to carry signals that 

explained "why these exchange boundaries" existed and why there are "180 

[local telephone exchanges] in Verizon's territory in New Jersey."

We reject West and Verizon's more modern and "dynamic" 

understanding of a local telephone exchange as the array of customers served 

by any NPA-NXX code combination associated with a particular rate center, 

regardless of where those customers are located, as an appropriate guide for 

understanding the meaning of the phrase as used by the Legislature when it 

amended N.J.S.A. 54:4-1 in 1989 and 1997. The phrase "local telephone 

exchange" has "deep roots" in the development of the public switched 

telephone network and particular importance in the restructuring of the 

telephone industry after the breakup of AT&T.

We are convinced by the centrality of the local exchanges to the 

structure of the telephone industry in the wake of the break-up of AT&T and

New Jersey's changing approach to taxing the monopolies providing local 
98 A-2909-18

exchange service, as well as by the testimony of the experts in this case, that 

when the Legislature added the qualifier "local exchange" to "telephone 

companies" and defined such as "a telecommunications carrier providing dial 

tone and access to substantially all of a local telephone exchange" in 1989, it 

intended the phrase "local telephone exchange" to be understood as a specified 

geographical area, the territorial boundaries of which were as depicted on 

exchange maps on file with BPU "in accordance with the way in which it was 

used at the time when the language was chosen." Norfolk S., 215 N.J. at 173. 

We are also convinced that understanding is the most sensible when 

considering how New Jersey's 209 local exchanges were built and developed. 

Ibid. 

As Judge Menyuk found in recounting the history of New Jersey's

taxation of the telephone companies, when N.J.S.A. 54:4-1 was again amended 

in 1997 as part of a legislative effort to revise the taxation of the local 

exchange companies "in order to preserve certain revenues under transitions to 

more competitive markets in . . . telecommunications," the Legislature plainly 

anticipated that competition from CLECs would eventually end the entrenched 

local monopolies of the incumbent local exchange carriers and "[t]he personal 

property tax . . . would suffer a slow death by attrition whenever Verizon or 
99 A-2909-18

another ILEC ceased providing 51% of the dial tone and access of an 

exchange." Verizon I, 26 N.J. Tax at 413, 420. 

The 51% test thus is intended to measure the penetration of the CLECs

into a local telephone exchange, understood in accordance with the way the 

statutory phrase was used in 1989 at the time the language was first employed, 

meaning as depicted on the local exchange maps. Defining the statutory 

phrase as Verizon would have us do, not to a market having readily 

identifiable territorial boundaries relative to the local municipality where 

Verizon's switch is located but to one without territorial boundaries and 

impossible to map, does not so much measure the local exchange market, in 

our view, as redefine it. 

According to the FCC, Verizon, Century Link and Warwick Valley's 

statewide share of the local exchange market dipped below 51% in 2012. 

Thus, the truly competitive local exchange markets the Legislature anticipated 

may have already arrived in many of the State's local exchanges, with the slow 

death Judge Menyuk predicted of the personal property tax on the incumbent 

local exchange carriers already well underway. While we are convinced 

Verizon served more than 51% of the Hopewell telephone exchange as of the 

January 1, 2008 assessment date at issue here, the same may not be true in 
100 A-2909-18

other exchanges. Merrill Lynch's presence in the Pennington exchange for 

example, may mean Verizon no longer provides dial tone and access to 51% of 

that exchange.

That brings us to how the 51% should be measured, and whose burden is 

it to do so. Because Verizon conceded that defining the local exchange with 

reference to the territorial boundaries of its exchange map would exclude 

Merrill Lynch — and make clear it provided dial tone and access to more than 

51% of the Hopewell local telephone exchange as of the January 1, 2008 

assessment date, even including Johnson & Johnson's campus as part of the 

Hopewell exchange as Hopewell contended was appropriate — Judge Brennan 

did not consider the question of how to measure the 51%. We offer the 

following brief comments only to address certain issues Verizon has raised and 

as guidance for cases in which the issue will have to be litigated.

As Judge Brennan noted, evaluating any expert's "analysis and 

methodology" in ascertaining the incumbent local exchange carrier's share of a 

local telephone exchange "will be highly fact sensitive, will likely vary from 

year to year, and may also be dependent on the characteristics of a specific 

exchange." Verizon II, 31 N.J. Tax at 61. We have no hesitation in agreeing 

with Judge Brennan that Verizon bore the ultimate burden of proof here to 
101 A-2909-18

establish it is no longer a "local exchange telephone company," that is "a 

telecommunications carrier providing dial tone and access to 51% of a local 

telephone exchange." Our reasons are two-fold. First, telecommunications 

carriers subject to the tax in N.J.S.A. 54:4-1 are initially required to selfreport, i.e., establish, the value of their taxable personal property.30

 See Little 

Egg Harbor Twp. v. Am. Tel. & Tel. Co., 9 N.J. Tax 314, 328 (Tax 1987) 

(noting "that N.J.S.A. 54:4-2.48 requires a taxpayer to self-report the value of 

its taxable personal property does not relieve the assessor from performing his 

statutory duty to independently value the property"), aff'd sub nom. Twp. 

Comm. of Little Egg Harbor in Cnty. of Ocean v. Am. Tel. & Tel. Co., 10 N.J. 

Tax 236 (App. Div. 1988).

Second, our Supreme Court has generally "imposed the burdens of 

persuasion and production on the party best able to satisfy those burdens,"

reasoning "the party with greater expertise and access to relevant information 

should bear those evidentiary burdens." J.E. ex rel. G.E. v. State, 131 N.J. 

30

 We reject Hopewell's claim that Verizon should bear the burden of proof in 

this proceeding because it is seeking an exemption from the local property tax. 

We do not share the Borough's understanding. In our view, Verizon is simply 

attempting to demonstrate it no longer meets the definition of a "local 

exchange telephone company" subject to the business personal property tax.
102 A-2909-18

552, 569-70 (1993). The record here makes clear that party is Verizon. 

Besides having access to the E911 database in its role as administrator of the 

Automatic Location Identification database for New Jersey's E911 system, 

which it apparently has used for years for performing competition analyses, 

West testified he regularly conducted "wire line analyses proving the state of 

competition" on Verizon's behalf before state utility commissions in regulatory 

proceedings. He testified the analysis he conducted in this matter of Verizon's

lines and competitors' lines in the Hopewell exchange was the same he'd 

performed for a "competition case" before BPU in which the company 

presented "market share calculations . . . for all 180 [of Verizon's] local 

telephone exchanges."

We reject out-of-hand Verizon's argument that the Tax Court's adoption 

of a "geography-based test for the 51% threshold" created an "unworkable test 

that cannot be applied without rendering N.J.S.A. 54:4-1 fatally ambiguous." 

In our view, Verizon presented two reasonable methods for establishing its 

percentage share of dial tone and access provided to the Hopewell exchange as 

of the assessment date. It's undisputed the E911 database provides up-to-date 

information linking each listing to a specific location, and Vantzelfde relied on 

Hopewell's exchange map and a host of publicly available information 
103 A-2909-18

permitting him to estimate the "total market lines" within the Hopewell 

exchange without relying on the E911 database. 

Finally, we reject Verizon's contention the Tax Court erred in accepting 

Starkey's opinion when he failed to conduct "his own analysis of the total 

market share of dial tone and access provided by Verizon" in the Hopewell 

exchange as of the January 1, 2008 assessment date, and did not suggest "an 

alternative methodology that could have been used to establish Verizon's 

market share in the absence of actual competitor data."

From our perspective, this trial provides an excellent example of how 

these tax cases should be tried. The parties were represented by very able 

lawyers presenting knowledgeable and well-prepared experts. As already 

noted, Verizon presented two reasonable methods for calculating its market 

share. 

While Hopewell's expert might have presented his own analysis, we see 

nothing amiss in the Borough's decision to instead rely on Starkey's critique of 

the opinions offered by Verizon. In addition to expressing a different opinion 

on the industry's understanding of a local exchange, Starkey also presented a 

reasonable critique of Vantzelfde's line counts, West's business lines to listing 

ratio and the significant difference between both experts' estimates of 
104 A-2909-18

Verizon's market share in the Hopewell exchange and the FCC's determination 

of the statewide market share for all three incumbent local exchange carriers as 

of the end of 2007, data Vantzelfde also relied on to test his market analysis. 

While we express no opinion on the validity of any of these calculations or 

critiques, they represent the sorts of fact-sensitive issues the Tax Court will 

have to resolve in other cases presenting similar challenges.

We affirm Judge Menyuk's 2012 decision finding N.J.S.A. 54:4-1's 51% 

market-share calculation must be performed annually and that an annual 

market-share calculation, as applied to Verizon, does not violate the State and 

federal equal protection guarantees, the State prohibition of special legislation 

or the Uniformity Clause, and Judge Brennan's 2019 decision that Verizon is 

subject to the tax imposed for tax year 2009 because it provided dial tone and 

access to 51% of the Hopewell Local Telephone Exchange in 2008. To the 

extent we have not expressly addressed any of the parties' arguments, it is 

because we have determined them to be without sufficient merit to warrant 

discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.