No. 3--96--0555

_________________________________________________________________

                    IN THE APPELLATE COURT OF ILLINOIS

                              THIRD DISTRICT

                                A.D., 1997

ILLINOIS BELL TELEPHONE                 )

COMPANY,                                )    

                                        )

     Petitioner-Appellant,              )

                                        )

v.                                      )

                                        )

ILLINOIS COMMERCE COMMISSION, AT&T      )

COMMUNICATIONS OF ILLINOIS, INC.,       )

MCI COMMUNICATIONS CORP., SPRINT        )    Petition for Review

COMMUNICATIONS COMPANY, L.P.,           )    of an Order of the

                                        )    Illinois Commerce

     Appellees                          )    Commission

                                        )

     and                                )

                                        )

PEOPLE OF COOK COUNTY ex rel. JACK      )

O'MALLEY, PEOPLE OF THE STATE OF        )

ILLINOIS ex rel. JAMES E. RYAN,         )

ALLNET COMMUNICATIONS SERVICES, INC.,   )    No. 95-204; 95-413

FRONTIER COMMUNICATIONS INTERNATIONAL,  )

INC., ILLINOIS CONSOLIDATED TELEPHONE   )

COMPANY, ILLINOIS PUBLIC                )

TELECOMMUNICATIONS ASSOCIATION,         )

CITIZENS UTILITY BOARD, CABLE           )

TELEVISION AND COMMUNICATIONS           )

ASSOCIATION OF ILLINOIS, GTE NORTH,     )

INC.,                                   )

                                        )

     Respondents.                       )

_________________________________________________________________

            JUSTICE BRESLIN delivered the opinion of the court:

_________________________________________________________________

     Petitioner Illinois Bell Telephone Company (Ameritech) appeals

an order of the Illinois Commerce Commission (Commission) which

denied its request for compensation for the use of its payphone

facilities.  Ameritech argues that the Commission erred by denying

its complaint for retroactive compensation and by finding that the

tariff it filed was void ab initio.  We hold that Ameritech is

entitled to compensation beyond the revenue it received for carrier

access services for the period between May 14, 1992 and May 5,

1995, as requested in its complaint.  However, we hold that the

Commission did not err by finding that the tariff filing procedure

is not the proper procedure for obtaining compensation pursuant to

section 13-510 of the Public Utilities Act, 220 ILCS 5/13-510

(1994), and the tariff was thus void ab initio.  Accordingly, we

affirm in part, reverse in part and remand.

     Ameritech provides pay telephone services to the public.  To

compensate Ameritech for these services, customers must normally

deposit coins into the payphone.  However, customers may place "1-

800" calls (retail 1-800 calls) without depositing any coins into

the payphone.  In addition, customers may place "billable operator

services calls" without depositing any coins.  These calls are made

in two different ways: (1) by dialing 0 plus the called number,

which results in routing the call to the "presubscribed" operator

services provider for the payphone, or (2) by dialing an access

code before dialing the called number, which routes the call to the

telecommunications carrier of the caller's choice.  Billable

operator services calls are paid for by charging the call to the

caller's home or business telephone number, a calling card, the

called party or a third-party number.  When a payphone customer

places a retail 1-800 call or a billable operator services call

from an Ameritech payphone, the telecommunications carrier that is

the operator services provider is the only carrier that receives

any direct compensation for the call.

     In 1992, the General Assembly enacted section 13-510 of the

Public Utilities Act (Act), which provides that telecommunications

carriers must pay just and reasonable compensation for the use of

a payphone provider's services or facilities. 220 ILCS 5/13-510

(1994).  Five months after the enactment of this statute, several

independent payphone providers (IPPs) filed a complaint with the

Commission in which they sought compensation pursuant to the

statute.  On October 3, 1995, the Commission determined that the

IPPs were entitled to 30 cents per call for billable operator

services calls and retail 1-800 calls initiated on their payphones. 

The Commission applied its ruling retroactively by granting the

IPPs compensation from the effective date of section 13-510 of the

Act.

     Ameritech believed that it was not receiving any compensation

for the "1-800" calls or billable operator services calls that were

made from its payphones but transmitted and billed to customers by

other telecommunications carriers.  Accordingly, it filed a

competitive tariff on April 4, 1995 which took effect on April 5,

1995.  Under the tariff, those telecommunications carriers whose

services were utilized by customers that placed retail 1-800 calls

or billable operator services calls from Ameritech payphones were

required to pay Ameritech a use fee of 35 cents per call.  One

month later, the Commission entered an investigative order to

determine the propriety of this tariff.  AT&T Communications of

Illinois, Inc. (AT&T), MCI Communications Corporation (MCI) and

Sprint Communications Company, L.P. (Sprint) intervened in the

proceeding.  AT&T, MCI and Sprint will be collectively referred to

as the long distance companies.

     Thereafter, Ameritech filed a separate complaint against the

long distance companies seeking just and reasonable compensation

for the use of Ameritech's payphones to make billable operator

services calls during the period between the effective date of

section 13-510 of the Act (May 14, 1992) and the effective date of

the tariff (April 5, 1995).  The complaint did not request

compensation for retail 1-800 calls or intrastate, inter LATA 1+

calls.

     The parties presented the written testimony of several

witnesses and hearings were held for cross-examination.  The

Commission hearing examiner issued a proposed order which declared

Ameritech's tariff void ab initio and denied Ameritech's claim for

retroactive compensation.  Thereafter, the Commission issued an

order which declared Ameritech's tariff void, directed Ameritech to

refund all sums collected under the tariff, and denied Ameritech's

claim for retroactive compensation.  However, the order directed

Ameritech to file a new tariff at a lower rate.  Ameritech

responded by filing a motion for clarification and a motion for

extension of time to comply with the order.  The Commission then

withdrew its order and adopted the hearing examiner's proposed

order.  In addition to finding that Ameritech's payphone tariff was

void ab initio, the Commission found that Ameritech was already

receiving just and reasonable compensation for the use of its

payphone facilities and services from the long distance companies. 

According to the Commission, the source of this compensation was

carrier access charges, which are the fees paid by

telecommunications carriers to Ameritech for switching and

transmitting a call from Ameritech's central office to the

telecommunication carrier's network.  The Commission denied

Ameritech's motion for rehearing and motion for stay, and Ameritech

appeals.

     The first issue on appeal is whether the Commission erred by

determining that revenues received by Ameritech for carrier access

charges may be considered compensation for purposes of section 13-

510 of the Act.

     Section 13-510 of the Act provides as follows:

     Any telecommunications carrier using the facilities or

     services of a payphone provider shall pay the provider

     just and reasonable compensation for the use of those

     facilities or services to complete billable operator

     services calls and for any other use that the Commission

     determines appropriate consistent with the provisions of

     this Act.  The compensation shall be determined by the

     Commission subject to the provisions of this Act.  This

     section shall not apply to the extent a

     telecommunications carrier and a payphone provider have

     reached their own written compensation agreement. 220

     ILCS 5/13-510 (West 1994).

Ameritech claims that the revenue it receives from carrier access

charges cannot be considered compensation for purposes of section

13-510 of the Act.  According to Ameritech, carrier access rates do

not compensate it for the use of its payphone facilities.  We

agree.

     The provision of carrier access service is distinct from the

provision of payphone facilities and services.  As several

witnesses acknowledged, Ameritech would receive the same carrier

access fees even if it discontinued all of its payphone services. 

Thus, the revenue Ameritech receives for providing carrier access

services cannot be considered "compensation for the use of

[payphone] facilities or services." 220 ILCS 5/13-510 (West 1994).

If the Commission believes that Ameritech is receiving too much

revenue from its carrier access fees, those rates should be

reviewed through the appropriate ratemaking procedures rather than

by denying Ameritech the compensation which it has a statutory

right to receive.

     The long distance companies and the Commission argue, however,

that even if Ameritech is entitled to receive compensation beyond

the revenue it received for carrier access services, its complaint

for retroactive compensation was properly denied.  According to the

Commission, Ameritech's payphone services were classified as non-

competitive during the period between May 14, 1992 and April 5,

1995.  As such, the rates Ameritech charged for its payphone

services were subject to Commission regulation and were set by the

Commission at a level that provided Ameritech with a reasonable

rate of return. See Illinois Bell Telephone Co. v. Illinois

Commerce Commission, 203 Ill. App. 3d 424, 561 N.E.2d 426 (1990). 

The Commission thus found that Ameritech had already recovered the

costs associated with providing payphone services plus a reasonable

rate of return.  Accordingly, the Commission argues that allowing

Ameritech to recover compensation as required under section 13-510

of the Act would give Ameritech an undeserved windfall.

     While the effect of granting Ameritech's request for

retroactive compensation may be viewed as a windfall to Ameritech,

the statute requires that Ameritech receive such a windfall.  The

mandate of section 13-510 of the Act does not condition the

payphone provider's right to receive compensation upon whether the

provider is recovering the costs of providing payphone services

from other sources. Accordingly, we decline the Commission's

request to read an exception into section 13-510 of the Act.

     The long distance companies and the Commission also argue that

the denial of Ameritech's claim for retroactive compensation was

proper because Ameritech failed to file the complaint in a timely

manner.  We disagree for several reasons.

     First, the statute does not contain any limitation period for

requesting such compensation.  Second, the long distance companies

did not argue before the Commission that they had been prejudiced

by Ameritech's delay.  Third, at the time Ameritech filed its

complaint, the Commission had not adopted any specific procedure

for determining the amount of compensation to which payphone

providers were entitled, and the IPPs complaint for compensation

was still pending before the Commission.  Thus, in ruling on the

IPPs' complaint, it was likely that the Commission would establish

a procedure for resolving the issues raised by section 13-510 of

the Act.  It was therefore reasonable for Ameritech to await the

resolution of the IPPs complaint instead of filing a separate

complaint that raised the same issues.  Fourth, both the long

distance companies and the Commission failed to cite any authority

in support of their argument that Ameritech's complaint should be

denied because it was not filed in a timely manner.  Accordingly,

they waived this argument on appeal. See Pyskaty v. Oyama, 266 Ill.

App. 3d 801, 641 N.E.2d 552 (1994) (failure to support argument by

citation to legal authority in brief constitutes waiver of

argument).  Therefore, we find that the Commission could not deny

Ameritech's complaint based on Ameritech's failure to file the

complaint on an earlier date.

     For these reasons, we hold that the Commission erred by

determining that the compensation Ameritech receives for carrier

access services is also compensation for the use of its payphone

facilities and services, and we hold that Ameritech's complaint was

timely filed.  Therefore, Ameritech is entitled to compensation

beyond the revenue it received for carrier access services for the

period between May 14, 1992 and April 5, 1995, as requested in its

complaint.  Because the Commission denied Ameritech's request for

relief and thus did not determine the appropriate level of

compensation, we remand for further proceedings consistent with

this opinion.

     The last issue is whether the Commission erred by finding that

the tariff filing procedure is not the proper procedure for

obtaining compensation pursuant to section 13-510 of the Act.

     According to section 13-510 of the Act, unless the payphone

provider enters a written agreement with a telecommunications

carrier, the Commission has sole discretion to determine the amount

of compensation to which the payphone provider is entitled.  At the

time Ameritech filed the tariff at issue in the instant case, the

Commission had not established a procedure for making these

determinations.  Thus, the Commission was free to decide that

tariff filing is not the appropriate procedure.  Accordingly, while

Ameritech is entitled to compensation under section 13-510 of the

Act, we affirm the Commission's finding that Ameritech's tariff was

void ab initio.  Therefore, in order to recover prospective

compensation under section 13-510 of the Act and retroactive

compensation from April 5, 1995, Ameritech must file a complaint

with the Commission.

     In its brief, Ameritech raised additional grounds for

reversing the Commission's order.  However, because we have

reversed on the above grounds, we need not address the remaining

issues.

     For the forgoing reasons, the decision of the Illinois

Commerce Commission is affirmed in part, reversed in part and

remanded.

     Affirmed in part, reversed in part and remanded.

     HOLDRIDGE and SLATER, JJ., concurring.