No. 81-512 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1982 

INTERMOUNTAIN TELEPHONE AND 

POWER COMPANY 

Petitioner and Appellant, 

DEPARTMENT OF PUBLIC SERVICE REGULATION, 

MONTANA PUBLIC SERVICE COMMISSION, 

Respondent and Respondent. 

.1 from: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone 

Honorable Robert Wilson, Judge presiding. 

Counsel of Record: 

For Appellant: 

Peterson, Schofield & Leckie, Billinqs, Montana 

Kenneth D. Peterson argued, Billings, Montana 

For Respondent: 

Calvin K. Simshaw argued, Helena, Montana 

Crowley Law Firm, Billings, Montana 

Submitted: September 10, 1982 

Decided: October 7, 1982 
Mr. Frank 5. Morrison, Jr., delivered the Opinion of the 

Court. 

On April 2, 1980, the Public Service Commission (PSC) 

conducted a public hearing in Custer, Montana, concerning 

the quality of telephone service being provided to the area 

by Intermountain Telephone and Power Company (Intermountain). 

The PSC issued a final order October 27, 1980, stating that 

the service was not "reasonably adequate." Intermountain 

petitioned the District Court of the Thirteenth Judicial 

District for judicial review of that order. The District 

Court affirmed the order of the PSC August 12, 1981, and 

issued a final judgment to that effect September 15, 1981. 

Intermountain now appeals that judgment. The District Court 

issued a stay of its judgment pending this appeal. 

For a number of years, the PSC received complaints from 

the Custer area residents concerning the poor quality of 

telephone service provided by Intermountain. These complaints 

were communicated by PSC to Intermountain's management. 

Service did not improve. The complaints continued. 

The PSC began a formal investigation, resulting in a 

public hearing in Custer on April 2, 1980. More than twenty 

Custer residents testified, along with Norman ??ills, Intermountain's 

spokesman and a representative of Mountain Bell. 

Testimony by the residents indicated that there were 

numerous problems with the telephone service. ~scertaining 

whether a phone worked or not was described as similar to 

playing Russian roulette. The weather affected the clarity 

of the connection. Incoming calls often did not ring. 

Wrong connections occurred. Long-distance service was 

sometimes non-existent for extended periods of time. ~elephone 
lines were draped over posts and on the ground in several 

instances. Repairs often took several days as there was no 

resident repairman in Custer. 

In respcnse, Norman Mills, owner of Intermountain, -- 

testified that fifty-seven miles of long-distance wire was 

the responsibility of Mountain Bell, not Intermountain and 

that Mountain Bell failed to relay messages concerning 

telephone problems until several days after they were received. 

His personal efforts, and those of Bell operators, to duplicate 

the problem of incoming calls not ringing through to subscribers, 

were unsuccessful. Some telephone wire was in need of 

replacement; however, no funds existed with which to replace 

it. The switchboard had been updated and was now capable of 

handling one hundred more calls than before. Further improvements would have to await more funds. He was nonconnittal 

on the desire of the Custer residents to have a full-time 

serviceman located in Custer. 

Mountain Bell representatives acknowledged joint 

responsibility for the fifty-seven miles of long-distance 

telephone wire. They testified that propositions to replace 

the wire had been conveyed to Intermountain, but that Intermountain refused to contribute its share of money to finance 

the repairs. 

Following the hearing and prior to issuing its order, 

the PSC sent an engineer to Custer to test the phones. In 

his report, the engineer stated he "drove to the last 

subscriber's house on most of the rural lines and found the 

quality to be normal, and got a dial tone immediately and 

talked to the operator in Billings." Individuals reported 

to him that although their phone service was presently okay, 

it had been inadequate in the past. Two phone lines which 
were "bad" were being repaired that day. Phone wires 

lying on the ground were being replaced by underground 

cable. The inside of the exchange was "not as neat as I 

have normally seen elsewhere; however, with further installations and rewiring in progress and in evidence, I would 

wish to inspect the premises at a later date after all 

reconstruction is complete." 

On the basis of the above-discussed facts, the PSC 

issued its final order, which the District Court affirmed. 

In its appeal, Intermountain presents the following issues 

for review: 

(1) Whether the order of the PSC was issued within the 

authority of the PSC? 

(2) Whether the order was supported by the evidence on 

the record? 

Section 69-3-102, MCA, gives the PSC supervision over 

and regulation of public utilities. Section 69-3-201, MCA, 

mandates that every public utility provide "reasonably 

adequate service and facilities." If the PSC is to supervise utilities adequately, it must be able to ascertain 

whether or not a utility is providing "reasonably adequate 

service." Therefore, the PSC was within its authority when 

it issued the October 27, 1980, order stating that Intermountain 

was not providing "reasonably adequate service." 

Twenty area residents testified regarding the poor 

quality of telephone service provided to them. One PSC 

engineer testified that he found good telephone service to 

exist the one day he was in the area. Clearly, the findings 

of the PSC regarding the quality of telephone service were 

supported by substantial credible evidence, as required by 

section 2-4-704 (2) (e) , MCA. 
Plontana has no statute providing for the licensing, 

franchising or certifying of telephone companies wherein 

those companies are granted an exclusive right to serve a 

certain area. There is also no exclusive property right 

under the Territorial Integrity Act of 1971, as that Act 

applies to suppliers of electrical service, not telephone 

service. Section 69-5-103, MCA. 

Telephone service competition is basically free and 

open in Montana, except so far as telephone cooperatives are 

concerned. Section 35-18-105(2), MCA, prohibits telephone 

cooperatives from duplicating "reasonably adequate service" 

already in existence. But, if no "reasonably adequate 

service" is being provided, telephone cooperatives may 

provide service to that area. 

The language in the order of the PSC stating "there 

exists no provision of Montana law that would prohibit 

another telephone company, whether private or cooperative, 

from providing telephone service to residents of the Custer 

area, . ." is merely dictum. Private telephone companies 

are free to compete at any time. Telephone cooperatives may 

compete when no "reasonably adequate service" is available. 

The order of the PSC is affirmed. * 

We Concur: 

-- Chief Justice 
Justice Daniel J. Shea did not participate in this decision.