Opinion ID: 202245
Heading Depth: 4
Heading Rank: 2

Heading: Costs across all municipalities

Text: 33 PRTC provides telecommunications services throughout Puerto Rico. PRTC does not — and previously had never been required to — track its gross revenues and profit on a municipality-by-municipality basis; indeed, part of its objection to the ordinance stems from the financial burden that changes to its accounting and records systems would entail. 7 PRTC does have information on its gross revenues and profit from its services throughout Puerto Rico as a whole. Thus, in arguing that Ordinance No. 40 violates § 253(a), PRTC relies on its estimates of the aggregate cost to PRTC if all municipalities impose a 5% gross revenue fee. 34 PRTC advances two arguments to explain why the district court properly considered these estimates as part of its § 253(a) analysis. First, PRTC argues that the estimates reflect the legitimate concern that other municipalities are or will be adopting similar gross revenue fee requirements. In its brief, PRTC cites three other municipalities in Puerto Rico that have already enacted ordinances that apply similar gross revenue fees to telecommunications providers. The appellants acknowledged this fact during oral argument. Given the interconnected nature of utility services across communities and the strain that the enactment of gross revenue fees in multiple municipalities would have on PRTC's provision of services, the Commonwealth-wide estimates are relevant to determining how the ordinance affects PRTC's ability ... to provide any interstate or intrastate telecommunications service. 47 U.S.C. § 253(a). 35 PRTC does not, however, rest its case solely on the notion that all other municipalities will follow the Municipality of Guayanilla's lead by enacting gross revenue fees. It also argues that the Commonwealth-wide estimates serve as an indicator of how Ordinance No. 40 will affect the profitability of PRTC's operations within the Municipality itself. Extrapolating from its Commonwealth-wide profit margin and the impact that a Commonwealth-wide 5% gross revenue fee would have on its overall profits (an 86% decline), PRTC argues that a similarly significant decline in the profitability of its operations within the Municipality would occur under Ordinance No. 40 alone. Indeed, PRTC argues that the Commonwealth-wide figures may even underestimate Ordinance No. 40's effect. As PRTC explains, [g]iven that Guayanilla is a relatively small, rural municipality and that it generally costs more to provide services in rural or less heavily populated areas than it does in large urban centers, PRTC's profit margin on services that it sells within the Municipality is likely lower than the company's overall, island-wide margins. Accordingly, the cumulative figures submitted by PRT [i.e., an 86% reduction in profits] may well understate the impact of the Municipality's 5% fee on PRT's operations in the Municipality. 36 Taken in this sense, PRTC's estimates are an appropriate basis for analysis in this case. The estimates, which are uncontroverted, represent the best information readily available to either party by which to measure the impact of Ordinance No. 40 on PRTC's operations. The district court did not err by considering them as part of its analysis. 37