Title: GTC, Inc. v. Joe Garcia
Citation: N/A
Docket Number: SC94-656
State: Florida
Issuer: Florida Supreme Court
Date: November 16, 2000

Supreme Court of Florida
  
____________
No. SC94656
____________
GTC, INC.,
Appellant, Cross-Appellee,
vs.
JOE GARCIA, etc., et al.,
Appellees, Cross-Appellants.
[November 16, 2000]
REVISED OPINION
PER CURIAM.
GTC, Inc. appeals an order of the Public Service Commission
(“Commission”) concerning the termination of an interLATA access subsidy that
GTC had been receiving since 1985 from BellSouth Telecommunications, Inc.
(“BellSouth”).  BellSouth cross-appeals the PSC’s decision requiring it to reduce
its rates due to the elimination of the subsidy.  We have jurisdiction pursuant to
article V, section 3(b)(2) of the Florida Constitution.  For the following reasons, we
affirm the Commission’s decision to terminate the interLATA subsidy, but we
1There are several LATAs within Florida and these geographical areas define the territory
within which the local exchange carriers (LEC) are authorized to operate.  See Miles W. Hughes,
Comment, Telecommunications Reform and the Death of the Local Exchange Monopoly, 24 Fla. St.
U.L.R. 179, 186 (1996).
2At the time Order No. 14452 was issued, the Commission acknowledged that full
implementation of the bill and keep system would leave several LECs with an insufficient rate of return,
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reverse the Commission’s decision requiring BellSouth to reduce its rates.
BACKGROUND
GTC is a local exchange carrier in Port St. Joe, Florida.  In the early to mid
1980s, the Commission established a system of uniform statewide access charges
for calls between Florida local access transport areas (“LATAs”),1 whereby
interexchange carriers (“IXCs”) had to compensate local exchange carriers
(“LECs”) for toll calls originating or terminating in the LEC network.  Under this
system, the LECs’ access revenues and expenses were pooled and the profit was
divided among the member LECs.  In 1985, the Commission issued an order which
created an interLATA access subsidy to aid in the transition from a system of
pooling access revenues to a “bill and keep” system whereby each LEC would
retain the revenues it received for use of its facilities.  See In re Intrastate access
charges for toll use of local exchange services, 85 F.P.S.C. 6:69 (1985) (Docket
No. 820537-TP; Order No. 14452, June 10, 1985) [hereinafter “Order No.
14452”].2  Although the Commission believed that the “bill and keep” system
despite additional revenues from newly enacted $.25 calling charge and directory assistance charges. 
The Commission concluded that
[e]ven after adjusting for these additional revenues, seven LECs will still
experience a shortfall.  Since our stated intent is to have a “wash” when
implementing bill and keep, we find that a temporary subsidy pool is
required and is in the public interest.  The pool will be funded by each
LEC contributing a portion of the access revenues it receives for use of
its local network.
Order No. 14452 at 12. 
3The companies included: Centel, Florala, GTE, Quincy, Southern Bell (n/k/a BellSouth),
Southland, and Vista-United.  Florala, Quincy, Southland, and Vista-United were removed from the
pool in 1989.  Centel was removed from the pool in 1990 and GTE was removed from the pool in
1993.  Only BellSouth remains a member of the pool.   
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would better compensate the LECs for use of their facilities and promote
competition, it recognized that immediate implementation of the new policy could
not be achieved because some LECs would suffer a loss under the new system. 
Accordingly, the Commission created a temporary access subsidy pool, the
purpose of which was to “keep each company in the same financial position it
would have been in prior to implementing bill and keep.”  Order No. 14452 at 11. 
The Commission stressed, however, that the subsidy pool was a temporary
mechanism to prevent any LEC from suffering a shortfall due to the new system. 
See id.
Under the subsidy pooling system, seven LECs contributed a portion of the
revenues collected from the interLATA access charge into a pool. 3  The pooled
4The receiving LECs included: Alltel, Gulf, Indiantown, Northeast, St. Joseph Telephone and
Telegraph Company (n/k/a GTC), and United.  Gulf, Indiantown and United were removed from the
pool in 1989.  In 1993, Northeast was removed from the subsidy pool.  In 1995, Alltel was removed
from the pool. 
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amount was then divided among six LECs in the form of a subsidy payment.4   As
of July 1, 1995, only BellSouth as a contributing LEC and GTC as a receiving LEC
remained in the interLATA subsidy pool.  
In 1995, the Legislature substantially altered the telecommunications statute
and enacted section 364.051, Florida Statutes (1995) relating to price regulation of
local exchange telecommunications companies.  See ch. 95-403, §9, Laws of Fla. 
Under the provisions of section 364.051, LECs may opt to cap their rates for basic
service.  If the company elects price regulation, the statute expressly states that
such companies shall be exempt from rate base, rate of return regulation, and the
requirements in several enumerated statutes.  The statute states in pertinent part:
     (1) SCHEDULE.--Notwithstanding any other
provisions of this chapter, the following local exchange
telecommunications companies shall become subject to
the price regulation described in this section on the
following dates:
     (a) For a local exchange telecommunications company
with 100,000 or more access lines in service as of July 1,
1995, such company may file with the commission a
notice of election to be under price regulation effective
January 1, 1996, or when an alternative local exchange
telecommunications company is certificated to provide
local exchange telecommunications services in its service
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territory, whichever is later.
     (b) Effective on the date of filing its election with the
commission, but no sooner than January 1, 1996, any
local exchange telecommunications company with fewer
than 100,000 access lines in service on July 1, 1995, that
elects pursuant to s. 364.052 to become subject to this
section.
     (c) Each company subject to this section shall be
exempt from rate base, rate of return regulation and the
requirements of ss. 364.03, 364.035, 364.037, 364.05,
364.055, 364.14, 364.17, and 364.18.
     (2) BASIC LOCAL TELECOMMUNICATIONS
SERVICE.--Price regulation of basic local
telecommunications service shall consist of the following:
     (a) Effective January 1, 1996, the rates for basic local
telecommunications service of each company subject to
this section shall be capped at the rates in effect on July
1, 1995, and such rates shall not be increased prior to
January 1, 1999.  However, the basic local
telecommunications service rates of a local exchange
telecommunications company with more than 3 million
basic local telecommunications service access lines in
service on July 1, 1995, shall not be increased prior to
January 1, 2001.
     (b) Upon the date of filing its election with the
commission, the rates for basic local telecommunications
service of a company that elects to become subject to
this section shall be capped at the rates in effect on that
date and shall remain capped as stated in paragraph (a).
§ 364.051(1)-(2), Fla. Stat. (1995) (emphasis added).  On June 25, 1996, GTC
notified the Commission of its decision to elect price regulation under section
364.051.  BellSouth had also elected price regulation.  On July 1, 1997, BellSouth
filed a petition with the Commission to terminate the interLATA access subsidy
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received by GTC.  
At a hearing held May 20, 1998, several expert witnesses testified.  The
witnesses agreed that the interLATA access subsidy was intended to be temporary
and that the subsidy to GTC should be eliminated.  They also agreed that the
Commission has the authority to discontinue the subsidy payments due to the fact
that it created the subsidy pool.  However, the witnesses disagreed as to what
criteria should be used in determining whether to eliminate GTC’s subsidy.  The
witnesses further disagreed as to the Commission’s authority to reduce BellSouth’s
rates if the subsidy is discontinued.  Finally, the parties disagreed as to whether
BellSouth’s prior rate reductions relieve it from further rate reductions if the
subsidy payments to GTC are eliminated.  In essence, the witness for BellSouth
testified that the Commission does not have the authority to require BellSouth to
reduce its rates, and even if it did, BellSouth has reduced its rates in the past in an
amount exceeding the subsidy payment to GTC.  Therefore, no further rate
reductions are necessary; BellSouth will not obtain any windfall by the
discontinuance of the subsidy payment to GTC.  No testimony or evidence was
presented during the hearing as to GTC’s earnings or whether it was currently over-
earning.
Based on the testimony submitted, the Commission found that the
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interLATA access subsidy was a temporary mechanism created to ease the
transition from the pooling system to a bill and keep system.  See In re Petition of
BellSouth Telecommunications, Inc. to remove interLATA access subsidy received
by St. Joseph Telephone & Telegraph Co., 98 F.P.S.C. 8:470 (1998) (Docket No.
970808; Order no. PSC-98-1169-FOF-TL, Aug. 28, 1998) [hereinafter “Order No.
PSC-98-1169-FOF-TL”].  It further found that its prior orders relied on the
company’s earnings status as the means for discontinuing the access subsidy.  See
id. at 6.  The Commission acknowledged that in those cases, the companies
operated under the rate of return regulation and GTC is now price-cap regulated. 
See id.  Nevertheless, the Commission concluded that the access subsidy was
“clearly intended” only as a temporary mechanism that “was to last only until a
company experienced some change in circumstances that [it] found justified
terminating the subsidy.”  Id.  Accordingly, it stated that the “changed
circumstances” should continue to be the criterion for determining whether a
subsidy should be eliminated.  See id.  
As for GTC’s entitlement to a continued access subsidy, the Commission 
concluded that the fact GTC’s rates are frozen under price-cap regulation does not
alter its ability to terminate the subsidy.  It stated: “Based on the evidence and
arguments presented, we find that we have the authority to eliminate the subsidy
5That section provides in pertinent part:
Notwithstanding the provisions of subsection (2), any local exchange
telecommunications company that believes circumstances have changed
substantially to justify any increase in the rates for basic local
telecommunications services may petition the commission for a rate
increase, but the commission shall grant such petition only after an
opportunity for a hearing and a compelling showing of changed
circumstances. 
§ 364.051(5), Fla. Stat. (1995).  The 1997 version of this section is the same.
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payment to GTC by virtue of our original authority to establish the subsidy.”  Id. at
8.  The Commission noted that under section 364.051(5),5 GTC may petition the
Commission for an increase in rates if it believes that circumstances have changed
substantially to justify the increase.  See Order No. PSC-98-1169-FOF-TL at 12.
As for BellSouth, the Commission concluded that because BellSouth no
longer has to pay a subsidy to GTC, it must reduce its rates to avoid a “windfall.” 
See id. at 17.  In so concluding, the Commission expressly rejected BellSouth’s
argument that because it has reduced its rates in the past it is relieved from further
rate reductions.  See id. at 16.   
APPEAL
On appeal, GTC argues that the Commission exceeded its scope of authority
in terminating the interLATA subsidy and requiring a rate reduction by BellSouth. 
It contends that the access subsidy was established while it operated under a rate of
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return regulatory scheme.  In contrast, under price-cap regulation, local exchange
carriers who opted for price-cap regulation have agreed to freeze their basic local
rates and in exchange therefor are free from further rate of return regulation.  GTC
contends that by electing to operate under section 364.051, GTC is no longer
subject to the rules of rate of return regulation and, therefore, the Commission lacks
the authority to eliminate the subsidy.
Both BellSouth and the Commission argue, on the other hand, that the
subsidy was intended to be temporary.  The Commission argues further that neither
the statutes nor the legislative history to the statutes guarantee GTC the revenues it
was receiving at the time it elected price-cap regulation.  Moreover, the
Commission maintains that section 364.01(3) grants it regulatory oversight to
promote the development of fair and effective competition, and thus it has the
authority to terminate the subsidy.   
We begin our analysis by recognizing the well-established rule that “orders of
the Commission come before this Court clothed with the statutory presumption that
they have been made within the Commission’s jurisdiction and powers, and that
they are reasonable and just and such as ought to have been made.”  United
Telephone Co. v. Public Service Comm’n, 496 So. 2d 116, 118 (Fla. 1986)
(quoting General Telephone Co. v. Carter, 115 So. 2d 554, 556 (Fla. 1959)); see
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also BellSouth Telecommunications, Inc. v. Johnson, 708 So. 2d 594, 596 (Fla.
1998); Ameristeel Corp. v. Clark, 691 So. 2d 473, 477 (Fla. 1997).  Such deference
may not be accorded where the Commission exceeds its statutory authority.  See
United Telephone Co., 496 So. 2d at 118; see also Florida Interexchange Carriers
Ass’n v. Beard, 624 So. 2d 248, 251 (Fla. 1993).  In this case, however, we find
the Commission acted within the scope of its powers and jurisdiction in eliminating
GTC’s interLATA subsidy.
In its final order, the Commission explains that it has authority to eliminate
the subsidy payment to GTC “by virtue of our original authority to establish the
subsidy.”  Order No. PSC-98-1169-FOF-TL at 8.  The Commission reasoned
further that:
Elimination of the subsidy payment to GTC does not
conflict in any way with Section 364.051, Florida
Statutes.  The evidence does not suggest that the
enactment of the Florida Telecommunications Act of
1995 impaired our authority to implement and enforce our
prior, lawfully enacted orders regarding the subsidy. . . . 
The fact that GTC is now price regulated does not alter
our authority with regard to this subsidy, which was
implemented prior to GTC’s election of price regulation.
Id.  GTC argues, however, that section 364.051 precludes the Commission from
eliminating the subsidy. 
As noted above, section 364.051(1)(c) expressly exempts companies who
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elect to be price regulated from rate of return regulation: “Each company subject to
this section shall be exempt from rate base, rate of return regulation and the
requirements of ss. 364.03, 364.035, 364.037, 364.05, 364.055, 364.14, 364.17, and
364.18.”  Section 364.03, Florida Statutes (1995), provides that rates must be “fair,
just, reasonable, and sufficient.”  Section 364.035, Florida Statutes (1995),  gives
the Commission the authority to fix rates and guarantees to telecommunication
companies a reasonable rate of return on their rates.  Section 364.037, Florida
Statutes (1995), requires the Commission to consider revenues derived from
advertising in telephone directories in setting rates.  Sections 364.05 and 364.055,
Florida Statutes (1995), grant the Commission authority to change any rates, tolls,
rentals, contracts, or charges by a telecommunication company or to permit the
collection of an interim rate during the pendency of the rate change proceedings. 
Section 364.14 permits the Commission to change any rates it finds are “unjust,
unreasonable, unjustly discriminatory, unduly preferential, or in anywise in violation
of law,” insufficient, or excessive.  See § 364.14(1)(a), Fla. Stat. (1995).  Finally,
sections 364.17 and 364.18, Florida Statutes (1995), deal with the accounts and
records of telecommunication companies.
Thus, section 364.051 grants the Commission the authority to keep records
of which companies have elected price regulation, see id. § 364.051(1)(a), and to
6According to the legislative history to the 1995 changes in the law, the price regulation scheme
“permits the prices and rates for services to be regulated by market forces rather than the PSC.”  Fla.
H.R. Comm. on Util. & Telecom., CS for SB 1554 (1995) Staff Analysis 1 (final May 18, 1995) (on
file with comm.).
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consider rate increase requests where a price-regulated company makes a
“compelling showing of changed circumstances.”  See id. § 364.051(5).  The
section also grants the Commission “continuing regulatory oversight of nonbasic
services for purposes of ensuring resolution of service complaints, preventing
cross-subsidization of nonbasic services with revenues from basic services, and
ensuring that all providers are treated fairly in the telecommunications market.”  See
§ 364.051(6)(b) (emphasis added). 
We recognize that by enacting section 364.051, the Legislature intended to
reduce the Commission’s authority over price-cap regulated companies.6  Thus,
GTC correctly argues that the Legislature limited the Commission’s regulatory
control over companies electing price-cap regulation.  However, we do not agree
with GTC that the limitations on the Commission’s authority completely strips the
Commission of its power to regulate telecommunication companies, including those
companies who no longer operate under rate of return regulation.  Several statutory
provisions, which were not altered by the Legislature during the 1995 amendments,
support this conclusion.  
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For example, section 364.01 still gives the Commission broad regulatory
powers with regard to the telecommunications industry.  See § 364.01(2), Fla. Stat.
(1995) (“It is the legislative intent to give exclusive jurisdiction in all matters set
forth in this chapter to the Florida Public Service Commission in regulating
telecommunications companies, and such preemption shall supersede any local or
special act or municipal charter where any conflict of authority may exist.”). 
Additionally, section 364.01(4)(a)-(i) defines the Commission’s scope of authority,
including the power to protect the public health, safety, and welfare, the power to
promote competition, and the power to “[e]liminate any rules and/or regulations
which will delay or impair the transition to competition.”  Indeed, the last two
jurisdictional provisions (i.e., promoting competition and eliminating anti-
competition rules) were added by the 1995 legislature.  See ch. 95-403, § 5, Laws
of Fla.  Importantly, nothing within section 364.051 indicates that price-regulated
companies are exempt from the provisions in section 364.01.    
Moreover, this case presents a question concerning a subsidy that was
established by the Commission and was intended to last only on a temporary basis. 
In contrast, section 364.051 speaks only to rates for telecommunication services. 
Neither the statute nor its legislative history addresses subsidies.  Thus, we find that
while the Legislature intended to limit some of the Commission’s authority with
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regard to companies who no longer operate under rate of return regulation, the
Legislature did not vitiate the Commission’s authority to eliminate rules it set in
place while the telecommunication company operated under rate of return
regulation.  Indeed, continued adherence to a rule promulgated in accordance with
the rate of return regulatory scheme would be inconsistent with section 364.051,
which clearly promotes competition and a competitive marketplace. 
GTC also contends, however, that even if the Commission has the authority
to eliminate the subsidy, it nevertheless applied an incorrect standard in doing so. 
GTC argues that the statutes regulating local exchange telephone companies now
include two fundamentally incompatible regulatory schemes.  Under the old rate of
return scheme, LECs receiving the interLATA subsidy at issue in this case were
subject to periodic earnings review, and the subsidy was gradually reduced or
eliminated as over-earnings occurred.  Therefore, each decision to reduce or
eliminate the subsidy was grounded in the principle of revenue neutrality and in 
preventing an unconstitutional taking of the LECs’ property.  In contrast, the 1995
price-cap regulation statutes preclude continued application of an earnings analysis
to price-cap regulated companies such as GTC; under this new scheme, there is no
basis for eliminating the interLATA subsidy.  GTC maintains, therefore, that by
incorrectly applying language from the new act (i.e., concluding that GTC’s price-
7For example, in its 1995 order concerning Alltel, the Commission summarized its action:
The subsidy receipts and payments do not change each year except by
specific action of the Commission.  We have reduced subsidies and
removed LECs from the interLATA subsidy pool when it appeared that
the LEC no longer needed the subsidy.  Each such action has always
been in a case by case basis and has occurred when a LEC’s earnings
would support a reduction of the subsidy.
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cap election constituted a “changed circumstance”) to justify the elimination of the
revenues derived from the subsidy, the Commission blurred the distinction between
the two schemes.  We disagree. 
An agency’s interpretation of the statute it is charged with enforcing is
entitled to great deference.  See BellSouth Telecommunications, Inc. v. Johnson,
708 So. 2d 594, 596 (Fla. 1998).  As this Court has stated:
The party challenging an order of the Commission bears
the burden of overcoming those presumptions by
showing a departure from the essential requirements of
law.  We will approve the Commission’s findings and
conclusions if they are based on competent substantial
evidence and if they are not clearly erroneous.
Ameristeel Corp. v. Clark, 691 So. 2d 473, 477 (Fla. 1997) (citations omitted).  A
review of the Commission’s prior decisions concerning elimination of the
interLATA subsidy for the other recipients of the access subsidy pool reveals that
the subsidy was terminated based on those companies’ earnings and their need for
the subsidy.7  Thomas F. Lohman, BellSouth’s expert, testified that Gulf was the
In re Investigation into interLATA bill and keep subsidy of Alltel Florida, Inc., Docket No. 950261-
TL, Order No. PSC-95-0486-FOF-TL, at 2 (F.P.S.C. Apr. 13, 1995).
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first company to lose its subsidy because it was over earning and it no longer
needed the subsidy.  Lohman stated that Indiantown lost its subsidy in 1989
because of its current and anticipated earnings situation.  Northeast was next; that
company lost its subsidy in 1993 based on its level of earnings and revenues it was
receiving from the $.25 calling plan.  Finally, the Commission removed Alltel from
the subsidy pool in 1995 because it was over-earning.  Lohman interpreted this
historical account to mean that “the Commission has removed the subsidy when
circumstances change and the company no longer needs it.”
The Commission’s staff witness Mailhot, on the other hand, testified that
“[p]rior to the beginning of price cap regulation, the earnings of the subsidy
recipient were the only criteria used by the Commission for ending the subsidy.” 
However, he admitted on cross-examination that nothing within the Commission’s
prior orders stated that earnings were the sole criteria for eliminating the subsidy.  
After considering the above testimony, the Commission acknowledged that it
previously used over-earnings as the criterion for eliminating the subsidy.  See
Order PSC-98-1169-FOF-TL at 12.  However, the Commission agreed with
BellSouth that GTC’s election of price-cap regulation “is a substantial change in
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GTC’s circumstances” and that “GTC has demonstrated a desire to take on the
opportunities of the competitive arena by electing price regulation.”  Id. 
Accordingly, the Commission concluded that GTC’s election to operate under
price-cap regulation constituted a changed circumstance, warranting the termination
of the subsidy.  Moreover, the Commission concluded that if GTC believes that the
termination of its subsidy amounts to a changed circumstance warranting a rate
increase, it may seek relief under section 364.051(5).  We find no error with the
Commission’s conclusion.  
While, admittedly, none of the Commission’s prior decisions eliminating the
interLATA subsidy expressly relied on “changed circumstances” as the criterion
for eliminating the subsidy, it is apparent from the face of the Commission’s prior
orders eliminating the subsidy to other LECs that the elimination was based on the
fact that the LECs no longer required the subsidy.  In other words, the LECs’
earnings circumstances had changed to the effect that they no longer relied on the
subsidy.  Considered in this light, GTC’s switch to price-cap regulation is an
indication that it no longer needs to be subsidized in order to remain competitive. 
Further, as the Commission noted, section 364.051(5) offers GTC relief if it finds
that its rates are too low.  Under that statute, GTC may apply for a rate increase if it
demonstrates that its circumstances have now changed due to the termination of the
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interLATA subsidy.  Accordingly, we affirm the Commission’s decision to
terminate GTC’s subsidy or to employ “changed circumstances” as the criterion
for eliminating the subsidy.     
CROSS-APPEAL
On cross-appeal, BellSouth argues that the Commission erroneously ordered
it to reduce its rates in order to avoid a “windfall” based on the terminated subsidy. 
It maintains that the Commission had no statutory authority to impose such a
requirement because, like GTC, BellSouth is now price-cap regulated.  Therefore,
BellSouth contends that it is exempted from the statutes allowing the Commission
to change BellSouth’s rates.  BellSouth further contends that even if the
Commission has the authority to require BellSouth to reduce its rates, its
determination was not based on competent, substantial evidence.
As noted above, we will approve the Commission’s findings and
conclusions only if they are based on competent, substantial evidence and if they
are not clearly erroneous.  See Ameristeel Corp. v. Clark, 691 So. 2d at 477.  We
need not determine whether the Commission acted within the scope of its authority
in reducing BellSouth’s rates because we find that the Commission’s decision in
this regard is not supported by competent, substantial evidence.  
According to BellSouth’s expert, Thomas F. Lohman, BellSouth initially held
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a surplus of $2.7 million due to the transition to the bill and keep system.  He
explained, however, that the surplus eventually dissipated over the years by
BellSouth’s reduction in access charges and that the surplus has not existed for
many years.  He further explained that beginning in 1988, access rates were no
longer uniform and, in fact, varied from company to company.  Since 1987,
BellSouth has reduced its access rates by over $200 million and is no longer
collecting access revenues for GTC.  Rather, BellSouth is simply paying GTC a
subsidy.  Therefore, Lohman contended that based on the amount of rate
reductions BellSouth has made since 1987, BellSouth will not gain a windfall or
otherwise benefit from the termination of the subsidy to GTC.  
AT&T’s witness, Mike Guedel, on the other hand, testified that BellSouth’s
past reductions were the result of earnings reviews.  He claimed that “[b]ecause the
subsidy payments were part of BellSouth’s intrastate operations at the time of these
reviews, presumably these subsidy payments were included in the determination of
intrastate earnings.  In other words, previous rate reductions reflected excess
earnings determined after the recognition of the subsidy payments.”  Guedel
concluded that despite BellSouth’s prior reductions, BellSouth would still enjoy a
financial windfall if it is not required to reduce “other rates.”  Guedel pointed out
that the pool was funded by the revenue received from the access charges to the
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interexchange companies.  Dale Mailhot, the Commission’s staff witness, agreed
with Guedel’s conclusion.  However, neither witness offered documentation or
other proof that BellSouth would enjoy a windfall.
The record clearly reflects that neither GTC, the Commission’s staff, nor
AT&T provided documentary evidence at the hearing that BellSouth collects
access charges for GTC.  Nevertheless, the Commission agreed with GTC,
AT&T, and its staff that BellSouth would enjoy a windfall if its rates were not
reduced.  The Commission acknowledged BellSouth’s past rate reductions and the
disposition of its $2.7 million surplus.  However, it noted that the “evidence
indicates that the IXCs funded the subsidy pool by their use of the local network,
even though BellSouth’s access charges were reduced.”  Accordingly, the
Commission concluded that in eliminating GTC’s subsidy, “it is also appropriate to
require BellSouth to make adjustments in order to eliminate all aspects, including
any windfall, associated with this subsidy, which was implemented when BellSouth
and GTC were both under a different regulatory scheme.”  Order No. PSC-98-
1169-FOF-TL at 16.  Because of the fact that BellSouth has significantly reduced
its access charges in the past, the Commission ruled that BellSouth could select a
different rate to reduce.  The record simply does not support the Commission’s
conclusion.  
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As pointed out by BellSouth, although AT&T’s witness testified that
BellSouth would enjoy a windfall if its rates were not reduced, AT&T did not
produce any documents or factual support for this conclusion.  Indeed, the only
evidence of a “windfall” appears to be the conclusory statements by two witnesses
(i.e., Guedel and Mailhot).  There was no testimony as to what rates or charges
BellSouth uses to fund the subsidy payments.  In fact, in response to a question
from one of the commissioners, Lohman testified that it is impossible to track the
source of the subsidy payments as coming solely from access charges.  He claimed
that the subsidy payment comes from all services provided.  He further noted that
the Commission ceased requiring uniform access rates and that the access rates
varied from company to company.  Finally, Lohman testified that BellSouth no
longer collects access charges for GTC.  Based on the lack of evidence that
BellSouth would realize a financial windfall from the elimination of the subsidy
payment to GTC and based on the unrefuted testimony by BellSouth that it no
longer collects rates for GTC, we find that the Commission’s decision requiring
BellSouth to reduce its rates was clearly erroneous.  See Ameristeel Corp., 691 So.
2d at 477.  Accordingly, we hold that the Commission erred in ordering BellSouth
to reduce its rates in order to avoid a windfall.
CONCLUSION
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In sum, we affirm the portion of Order No. PSC-98-1169-FOF-TL
concerning the Commission’s decision to terminate the interLATA subsidy to
GTC.  However, we reverse the portion of the order requiring BellSouth to reduce
its rates in conjunction with the elimination of the subsidies to GTC on the ground
that the decision was not supported by competent, substantial evidence.  
It is so ordered.
SHAW, HARDING, ANSTEAD, PARIENTE, LEWIS and QUINCE, JJ., concur.
WELLS, C.J., recused.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
A Notice and Cross-Notice of Appeal from the Public Service Commission
Patrick Knight Wiggins and Susan Davis Morley of Wiggins & Villacorta, P.A.,
Tallahassee, Florida, 
for Appellant, Cross-Appellee
Robert D. Vandiver, General Counsel, David E. Smith, Director of Appeals, and
Christiana T. Moore, Associate General Counsel, Florida Public Service Commission,
Tallahassee, Florida; and Raoul G. Cantero, III and Jeffrey W. Blacher of Adorno &
Zeder, P.A., Miami, Florida, BellSouth Telecommunications, Inc., Miami, Florida,
for Appellees, Cross-Appellants