Nos. 3-00-0860 & 3--01--0331

_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2002

ILLINOIS BELL TELEPHONE CO.	)	

(Ameritech Illinois),		)   

						)	

	Petitioner-Appellant,	)	Appeal from the Orders of the

						)	Illinois Commerce Commission

		    v.			)	in Ill. C.C. Dkt. No. 99--0615

						)	

ILLINOIS COMMERCE COMMISSION,	)	

			               )

	Respondent-Appellee.	)	

_________________________________________________________________

	JUSTICE SLATER delivered the opinion of the court:

_________________________________________________________________

	This is an appeal from the Orders of the respondent, the

Illinois Commerce Commission ("Commission"), regarding the

amendment of a collocation services tariff1 proposed by the petitioner, Illinois Bell Telephone Company d/b/a Ameritech

("Ameritech").  The proceedings in this case began on October 5,

1999, when Ameritech filed several revised tariff sheets

(collectively, "the amended tariff").  The Commission reviewed

the amended tariff and found that the proposed expansion should

be suspended until it had held a hearing on the propriety of Ameritech’s amended tariff.  Several competitive local exchange

carriers ("CLECs") intervened in this case including AT&T

Communications of Illinois, Inc., Sprint Communications L.P.,

Nextlink Illinois, Inc., Rhythms Links, Inc., Covad

Communications and MCI World Com, Inc.  Hearings were held before

a Commission hearing examiner on January 5, January 31,

February 29, and March 9, 2000.  Evidentiary hearings were held

on May 23 and 24, 2000.  The Commission filed its order on

August 15, 2000.  It rejected the terms and conditions upon which

Ameritech offered shared and adjacent structure collocation.  It

also found that Ameritech’s cost studies and prices should be

rejected because its cost support was insufficient.  It therefore

ordered a 50% reduction in central office build-out charges

pending submission of a new cost study within 60 days.  After its

applications for rehearing were denied, Ameritech appealed. 

	I.  FACTS

	A.  Background information

	Ameritech’s amended tariff was filed in compliance with the

Federal Communication Commission’s ("FCC") Deployment of Wireline

Services Offering Advanced Telecommunications Capability, First

Report and Order of Further Notice of Proposed Rulemaking in FCC

Docket Number 98--147, released March 31, 1999 (the "Advanced

Services Order" or "ASO").  The ASO addressed issues regarding

collocation, spectrum compatibility and line sharing.  With

respect to collocation, the FCC required incumbent local exchange

carriers ("ILECs") to provide three new forms of collocation: shared cage, cageless and (when space is exhausted) adjacent

structure collocation.  On March 17, 2000, the United States

Court of Appeals for the District of Columbia Circuit affirmed in

part and remanded in part the ASO.  GTE Service Corp. v. F.C.C., 205 F.3d 416 (D.C. Cir. 2000).     

	B.  The Commission’s rulings

	1.  Shared collocation arrangements

	Shared collocation is an arrangement in which two or more

CLECs share a single collocation cage.  Ameritech’s amended

tariff required that CLECs wishing to share collocation space

designate a primary collocator that would deal directly with

Ameritech regarding the shared collocation space.  The primary

collocator would negotiate its own terms and conditions with any

secondary collocators with which is wished to share space.  The

proposed arrangement was a type of sub-lease.  

	Before ruling on Ameritech’s proposed arrangements for

shared collocation, the Commission set out the CLECs’ position on

this issue.  The CLECs contended that Ameritech’s proposed shared

cage collocation arrangement was unreasonable because it placed

an undue burden on the primary collocator, who was unlikely to be

familiar with the business plans or equipment of the secondary

collocators, to contract directly with Ameritech for other

services.  AT&T noted that even Ameritech’s witness conceded that

Ameritech’s proposal put the burden on the primary collocator to

insure that all secondary collocators met Ameritech’s

requirements for compliant equipment.  AT&T further emphasized that Ameritech’s shared cage collocation proposal not only placed

an unfair hardship on the primary collocator, but it also was

nothing more than a blatant attempt on the part of Ameritech to

discourage CLECs from using shared collocation arrangements. 

	The Commission initially noted that the scope of its inquiry

was to determine whether Ameritech’s collocation services tariff

were just, reasonable, and non-discriminatory.  It then found

that the ASO created a rebuttable presumption that if any ILEC

offered a collocation arrangement in any jurisdiction that same

collocation arrangement was presumed to be technically feasible

in Illinois.  It noted that Southwestern Bell Telephone Company

("SWBT"), a sister affiliate of Ameritech, provided a tariffed

shared cage collocation arrangement in which SWBT billed each

CLEC separately for unbundled network elements ("UNEs") and all

interconnection arrangements.  SWBT also made each CLEC

responsible for its own performance under the tariff.  The

Commission noted that Ameritech offered no evidence that it was

not technically feasible for it to offer that same shared cage

arrangement to CLECs desiring to collocate in its premises in

Illinois.  Therefore, the Commission required Ameritech to import

the "best practices" of SWBT and offer CLECs the option, via

tariff, of a shared cage collocation arrangement similar to that

offered in Texas whereby each CLEC in a shared cage arrangement

contracts directly with Ameritech for all floor space, power,

cabling, transport, UNEs, and interconnection.  It also held that

in order to ensure that no collocator is responsible for the actions of other collocators in a shared cage, the tariff should

state, as the Texas tariff does, that "[A]ll collocators,

including those who are sub-leasing the caged space, are bound by

the terms and conditions of this tariff."  Accordingly, the

Commission ruled that all language in the proposed tariff

requiring the primary CLEC to be responsible for the actions of

the secondary CLEC was to be stricken.

	2.  Adjacent structure collocation arrangements

	Adjacent structure collocation is an arrangement, for

central offices which have no remaining collocation space, in

which collocators can place their equipment in a controlled

environmental vault, equipment hut, or similar space on the

central office premises, but outside the office itself.  This

would be accomplished by building a structure near the central

office building.  Ameritech argued that adjacent space allocation

should not be made standard for three reasons:  (1) the

arrangement is very uncommon and therefore the need is minimal;

(2) neither ILECs nor CLECs have any significant experience with

this arrangement and no such arrangements currently existed in

the country; and (3) the arrangement would be inappropriate

because of the large number of variables involved that would

greatly affect the cost of the arrangements (surface and

underground conditions, code and zoning restrictions, cable

entrance facilities, building expansion plans, etc.).  

	With respect to requiring Ameritech to tariff adjacent on-

site collocation as a standard physical collocation offering, the Commission deferred to the FCC’s rebuttable presumption that

unless Ameritech demonstrates why it is not technically feasible

to offer it on a standard basis as SWBT does, Ameritech must

offer it in Illinois.  It found that SWBT tariffed adjacent

collocation as a standard offering and that Ameritech had offered

no credible evidence to indicate that it was not technically

feasible to offer adjacent on-site collocation as a standard

physical collocation offering in Illinois.  

	The Commission also expressed concern that the non-standard

collocation request process that Ameritech proposed the CLECs use

for adjacent collocation created significant cost and delay into

processing CLECs collocation requests.  It said that if the CLEC

had to resort to the Commissions’ complaint process, its

collocation request could be on hold for a year or more, which

would severely hamper any type of competitive entry in Illinois. 

Finally, it noted that requiring Ameritech to provide adjacent

on-site collocation as a standard offering would help eliminate

the risk of discrimination since all CLECs will be paying the

same amount of money and would be subject to the same intervals,

terms and conditions.  Therefore, the Commission found  that

Ameritech should adopt the "best practices" of its sister

affiliate, SWBT, and tariff adjacent on-site collocation as a

standard offering in Illinois.

	3.  Central Office Build-Out ("COBO") Charges 

	On May 23, 2000, Douglas Price, Director of  Rates in the

telecommunications division of the Illinois Commerce Commission, testified that he had reviewed the cost study submitted by

Ameritech.  Douglas, a 44-year veteran of the telecommunications

division, recommended a 50% reduction in Ameritech’s proposed

labor times.  In his testimony, he gave several reasons for the

reduction.  Among those reasons, he noted that Ameritech’s labor

times appeared excessive; the cost study may recover

inappropriate costs from CLECs in its rates; the total required

floor space in the cost of an alternative collocation arrangement

appeared excessive; the security costs in the study were

unsupported and questionable; and no cost support was provided

for converting virtual collocation arrangements to cageless

arrangements.  Finally, Douglas noted that Ameritech’s reported

times were alarmingly high, that there were redundancies included

within specific work groups and among different work groups, and

that even when labor times were cut in half it appeared that

Ameritech would have ample time to accomplish the necessary

tasks. 

	The Commission agreed with Price’s findings and found that

many of Ameritech’s proposed costs were overstated and that the

cost support provided was grossly insufficient.  Therefore, the

Commission concluded that collocation costs, including security

costs, should be pro-rated based on square footage, including the

square footage occupied by Ameritech, consistent with the

requirements in the ASO.  It then adopted Price’s recommendation

of a 50% reduction in COBO charges. 

	4.  Final orders

	At the conclusion of its order, the Commission made the

following findings which are pertinent to this appeal:  

		"(5) it is technically feasible and

constitutes good competitive policy to

require Ameritech to tariff a shared cage

collocation arrangement in which each CLEC

contracts directly with Ameritech for UNEs,

interconnection, power, transport, floor

space, cabling, etc. as SWBT does in Texas

and not have one CLEC be responsible for the

actions (legally or otherwise) of another

CLEC in a shared cage;

	***	

		(7) it is technically feasible and

constitutes good competitive policy to

require Ameritech to provide adjacent on-site

collocation as a standard tariff offering as

SWBT does in Texas;                           

	***

		(10) Ameritech’s cost studies and the prices

based thereon should be rejected because its

cost support is insufficient.  Ameritech

shall file new cost studies based on an

efficient, forward-looking environment

consistent with our conclusions herein within 60 days of the effective date of this Order. 

In the interim, we adopt Staff’s

recommendations; Ameritech’s prices, as

adjusted by Staff are accepted as interim

rates until the outcome of the upcoming

docket examining the entirety of rates to be

charged for collocation;"

The Commission then ordered Ameritech to revise its collocation

tariff within 10 days of the effective date of its order to

conform with the above findings.

	II.  ANALYSIS

	A.  Legal standard used to review the amended tariff

	On appeal, Ameritech first argues that the Commission

applied the wrong legal standard in reviewing the provisions of

the amended tariff governing both shared collocation and adjacent

structure collocation.  Specifically, Ameritech argues that the

Commission ignored the statutory "just and reasonable" standard

and instead simply found that the Commission used the SWBT tariff

to find that the terms and conditions proposed by the CLECs were

technically feasible and therefore the "best practice." 

According to Ameritech, the Commission then ordered that those

terms and conditions be provided in Illinois without any attempt

to determine whether they were just and reasonable.   

	The Illinois Public Utilities Act (Act) requires that the

prices, terms and conditions for collocation services be just and

reasonable.  220 ILCS 5/9--101, 201(c) (West 2000).  Further, section 9--201 of the Act provides that when the Illinois

Commerce Commission investigates a tariff, it "shall establish

the rates or other charges, classifications, contracts,

practices, rules or regulations proposed, in whole or in part, or

others in lieu thereof, which it shall find to be just and

reasonable."  220 ILCS 5/9--201(c).  

	The Illinois Commerce Commission is an administrative

agency, and judicial review of its orders is limited.  Illinois Power Company v. Illinois Commerce Commission, 316 Ill. App. 3d 254, 736 N.E.2d 196 (2000).  The Commission’s findings of fact

are prima facie correct and will not be overturned by a reviewing court unless they are against the manifest weight of the

evidence.  People ex rel. Hartigan v. Illinois Commerce Commission, 148 Ill. 2d 348, 592 N.E.2d 1066 (1992).  However, the Commission’s interpretation of a question of law is not

binding on a court of review.  Archer-Daniels-Midland Company v. Illinois Commerce Commission, 184 Ill. 2d 391, 704 N.E.2d 387 (1998).  The review of a question of law in the appellate court

is de novo.  Continental Mobile Telephone Company v. Illinois Commerce Commission, 269 Ill. App. 3d 161, 645 N.E.2d 516 (1994).  	We agree with Ameritech that the question of whether the

Commission used the wrong legal standard is one of law and should

not be entitled any deference.  Therefore, we shall review this

issue de novo.  

	Ameritech does not dispute that the shared collocation and

adjacent structure collocation that SWBT employs are technically feasible in Illinois.  It simply contends that technical

feasibility alone does not make a practice just and reasonable. 

We agree.  However, a complete review of the Commission’s order

demonstrates that it did not use an incorrect standard.  First,

in its final order, the Commission explained that the scope of

its inquiry was to determine whether Ameritech’s collocation

services tariff and amended tariff were just, reasonable, and

non-discriminatory.  The fact that shared and adjacent structure

collocation were technically feasible was only one part of the

Commission’s finding.  With respect to both types of collocation,

the Commission found that it was not only technically feasible

for Ameritech to provide these arrangements but, based on the

record in this case, constituted good competitive policy. 

Although it did not specifically list why shared cage collocation

constituted "good competitive policy," it set out the CLECs’

reasons why Ameritech’s proposal was unreasonable.  Specifically,

the CLECs complained that:  (1) Ameritech’s proposal placed an

undue burden on the primary collocator to contact directly with

Ameritech on behalf of the other collocators when the primary

collocator had no knowledge of the secondary collocators’

business plans and equipment; and (2) this "sub-lease" type of

arrangement was nothing more than a blatant attempt on

Ameritech’s part to discourage CLECs from using shared

collocation arrangements.  We find that a reading of the entire

order indicates that the Commission did not simply rely on SWBT’s

tariff and use a "best practices" standard but instead analyzed Ameritech’s shared collocation arrangements under a "just and

reasonable" standard. 

	With respect to adjacent structure collocation, the

Commission gave detailed reasons why, along with technical

feasibility, Ameritech should be required to offer adjacent

collocation on a standard basis.  It noted that the non-standard

collocation request process that Ameritech proposed the CLECs use

for adjacent collocation would:  (1) cause significant cost and

delay into processing the CLECs’ collocation requests; and (2)

cripple the competitive entry which the state of Illinois

condoned.  Finally, the Commission noted that requiring Ameritech

to provide adjacent on-site collocation as a standard offering

would help eliminate the risk of discrimination since all CLECS

would be paying the same amount of money and would be subject to

the same intervals, terms, and conditions.  For these reasons, we

find that the Commission also used the proper "just and

reasonable" standard when it reviewed the provisions of the

amended tariff governing adjacent structure collocation.  

	Within this argument, Ameritech contends that the Commission

wrongfully relied upon the SWBT tariff as evidence of "best

practices".  According to Ameritech, the SWBT tariff should not

have been admitted into evidence because other tariffs are

irrelevant to determining just and reasonable rates unless the

proponent of the evidence makes a threshold showing that the

underlying conditions are similar, which did not occur in this

case.  To support its contention, Ameritech cites to Atchison, Topeka & Santa Fe R.R. Co. v. Illinois Commerce Commission, 335 Ill. 624, 167 N.E. 831 (1929) (orders from other jurisdictions

are not relevant to review of Commission decisions).  We need not

determine whether this is a correct assessment of the law because

the Commission only looked at the SWBT tariff to determine

whether shared and adjacent structure collocation was technically

feasible in Illinois, not whether the amended tariff rates were

just and reasonable.  Ameritech does not dispute technical

feasibility in this case.  Therefore, we find this issue to be

without merit.

	B.  COBO Charges

	Next, Ameritech argues that the Commission’s adjustment of

the Central Office Build-Out ("COBO") charges ignored the legal

presumption that Ameritech’s cost studies were valid and failed

to determine just and reasonable COBO rates based on the evidence

in the record.  

	In proceedings before the Commission, once a utility makes a

showing of the costs necessary to provide service under its

proposed charges, it has established a prima facie case.  City of Chicago v. People of Cook County, 133 Ill. App. 435, 478 N.E.2d 1369 (1985).  The burden then shifts to others to show that the

costs incurred by the utility are unreasonable because of

inefficiency or bad faith.  City of Chicago v. People of Cook County, 133 Ill. App. 435, 478 N.E.2d 1369 (1985). 

	One of the basic functions of the Commission is to evaluate

the evidence before it.  People ex rel. O’Malley v. Illinois Commerce Commission, 239 Ill. App. 3d 368, 606 N.E.2d 1283 (1993).  The credibility of expert witnesses and the weight to be

given their testimony are matters for the Commission as the trier

of fact.  Lefton Iron & Metal Company v. Illinois Commerce Commission, 174 Ill. App. 3d 1049, 529 N.E.2d 610 (1988).  The Commission enjoys broad discretion and  its findings will not be

overturned unless they are against the manifest weight of the

evidence.  People ex rel. Hartigan v. Illinois Commerce Commission, 117 Ill. 2d 120, 510 N.E.2d 865 (1987).  

	Here, we agree with Ameritech that once it submitted its

costs studies it made a prima facie case supporting its collocation costs.  It was then incumbent upon the staff to show

that the costs incurred by Ameritech were unreasonable.  We have

reviewed the testimony of Commission staff member Douglas Price

and conclude that his testimony, which was accepted by the

Commission, was adequate to support the conclusion that

Ameritech’s cost studies were insufficient.  Douglas, a 44-year

veteran of the telecommunication industry, had sufficient

expertise to testify about the insufficiency of Ameritech’s cost

support.  Among other findings, Douglas testified that

Ameritech’s reported times were alarmingly high, that there were

redundancies included within specific work groups and among

different work groups, and that even when labor times were halved

it appeared that Ameritech would have ample time to accomplish

the necessary tasks.  The Commission adopted these findings and

ordered a 50% reduction until Ameritech filed new cost studies.  Since they are not contrary to the manifest weight of the

evidence, the Commission’s findings will not be disturbed.

	The Order of the Illinois Commerce Commission is affirmed.

	Affirmed.

	LYTTON, P.J., and BRESLIN, J., concur.