Allied Tel. Co. v. Arkansas Public Service Commission

• Citation: 239 Ark. 492,393 S.W.2d 206
• Decision Date: 24 May 1965
• Docket Number: No. 5-3540,5-3540
• Parties: , 61 P.U.R.3d 45 ALLIED TELEPHONE COMPANY, Appellant, v. ARKANSAS PUBLIC SERVICE COMMISSION et al., Appellees.
• Court: Supreme Court of Arkansas

Page 206

393 S.W.2d 206

239 Ark. 492, 61 P.U.R.3d 45

ALLIED TELEPHONE COMPANY, Appellant, v. ARKANSAS PUBLIC SERVICE COMMISSION et al., Appellees.

No. 5-3540.

Supreme Court of Arkansas.

May 24, 1965.

Rehearing Denied Sept. 20, 1965.

H. Clay Robinson, Ft. Smith, R. H. Thornton, Jr., Little Rock, for appellant.

Harry E. McDermott, Jr., Little Rock, Donald King, Bill R. Holland and Hershel H. Friday, Little Rock, F. Mark Garlinghouse, St. Louis, Mo., for appellees.

McFADDIN, Justice.

The important question in this case is whether the appellant should be allowed to use a machine called 'Telfast' for completing long distance calls to points in Arkansas served by Southwestern Bell Telephone The appellant, Allied Telephone Company (hereinafter called 'Allied'), is an Arkansas corporation owning and operating telephone exchanges in the cities of Sheridan and Fordyce, as well as in several other cities in Arkansas. Southwestern Bell Telephone Company (hereinafter called 'Southwestern') is a corporation (being a subsidiary or affiliate of American Telephone and Telegraph Company) operating telephone exchanges and long distance lines in Arkansas and several other states. The Bell System of American Telephone and Telegraph Company (of which Southwestern is a part) is nationwide, whereas Allied is one of several so-called independent companies operating in Arkansas.

Company. A minor question relates to an injunction.

In order that the subscribers of the independent telephone companies may complete long distance calls to points on the Southwestern system throughout Arkansas, ¹ and in order that Southwestern subscribers in other Arkansas cities may complete long distance calls to subscribers served by independent companies, there exists a so-called standard 'Traffic Agreement' between Southwestern and the various independent companies specifying how long distance calls will be handled over the long distance lines of Southwestern throughout the State. Thus long distance calls are available from any point in the State to any telephone exchange having such Traffic Agreement with Southwestern. The present Traffic Agreement between Allied and Southwestern was signed on July 21, 1961, and was for one year and then automatically renewable until notice of termination should be given by either party. Two of the provisions in the Traffic Agreement are:

'V. TOLL OPERATING. The toll operating (ticketing and timing) required hereunder shall be performed as may be agreed upon from time to time between the parties.

'VI. METHODS AND PRACTICES. With respect to all matters covered by this Agreement, each company will adopt and comply with standard Bell System operating methods and practices and will observe the rules and regulations of the lawfully established tariffs. Each company will, upon request, furnish to the other such information relating to the interchanged business covered herein as may reasonably be required.'

There are at least three methods now in use for making and completing long distance calls:

(1) Call the operator ² at a local exchange and place the long distance call to the place, number, and/or person desired; and the operator handles interchange and communications, and the person placing the call has only to wait until his desired number or person is reached. This is called the 'Operator Method.'

(2) Use the method of 'Distance Direct Dialing,' whereby the person making a station to station call dials an area code, exchange number, and the number of the telephone at the destination desired. This is called the 'DDD Method.'

(3) Use the method known as 'Person to Person Called Special' whereby the person making the long distance call may dial The foregoing three methods are now in operation in various exchanges; but the problem involved in this litigation arises because of a fourth method which Mr. Hugh R. Wilbourn, President of Allied, has invented and desires to use at the Allied telephone exchange in Sheridan, Arkansas. This fourth method for handling of long distance calls is called 'Telephone Fully Automatic Switching and Ticketing,' and is herein referred to as 'Telfast.' Below of copy the description of 'Telfast' as contained in Allied's brief in this Court:

direct to the desired city but have an operator come on the lien to control completion of the call and the billing of the charges either to the person called or to a credit card or to a third party number. This method is called 'PPCS.'

'Tape recording equipment is added to the existing automatic ticketing machines of a PPCS system. Station to station prepaid calls work like DDD and PPCS. The difference comes in sending other types of toll calls. To operate the equipment, the subscriber dials three digits; the first activates the machine, the second indicates the type of call that he wishes to make, and the third designates which station on a party line is making the call. Then the subscriber dials the area code (if the call is to another state), followed by seven digits of the desired number. Both the calling and called number are recorded in a computer, and the call is stored in the machine. At this point, the subscriber is connected with the tape recorder and a periodic beep tone commences. The tape recording tells the caller what type of call he has dialed and gives him instructions (e. g. for a credit card call, the recording might state, 'when you hear the bell, give your credit card number'). After a certain period of time, up to twenty (20) seconds, the machine rings the called number. When a party answers at the called number, the subscriber, in a person to person call, asks for the desired person, or, in a collect call, asks if the party will accept the charges. During this period the tape recorder is running to make sure that the correct party has reached the phone or that the charges will be accepted. When the desired party is reached, or charges are accepted, the calling party dials the digit 2 which disconnects the tape recorder (including the beep tone), and the call is timed and ticketed automatically. If, for any reason, a subscriber does not wish to use the Telfast equipment, e. g. if he wants time and charges, he may dial the digit '0', get the operator, and proceed to complete his call with operator assistance.'

There is no Telfast machine now in use in any telephone exchange in the United States. Mr. Wilbourn's invention of Telfast has been patented during the course of this litigation and the Kellogg Division of the International Telephone and Telegraph Company is ready to manufacture and install a Telfast machine in Allied's exchange in Sheridan, Arkansas.

With the above background matters, we come to the present litigation. On June 14, 1963, Southwestern filed before the Arkansas Public Service Commission ³ a complaint against Allied regarding Telfast. The complaint alleged the traffic agreement between Allied and Southwestern; that Southwestern had been notified of Allied's intention to install a Telfast machine in the Sheridan exchange; 'that the use of such equipment would create numerous problems and have such a detrimental effect on long distance telephone service that Southwestern 'The use of the aforesaid ticketing equipment in the making of long distance calls will conflict with Bell System standard practices and, therefore, violate the parties' Traffic Agreement. It will also cause damage, expense and financial loss to Southwestern, will adversely affect the quality of toll service furnished jointly by Allied and Southwestern, will lead to toll service abuses and will result in dissatisfaction, confusion and complaints on the part of Southwestern's customers and other telephone users in the State of Arkansas. The use of such equipment would unreasonably impair the ability ofSouthwestern and Allied to furnish reasonably safe, adequate and sufficient service to the telephone users in Arkansas and would be contrary to the public interest.'

could not agree to Allied's proposal.' The complaint also alleged:

The complaint detailed a number of results--all claimed to be detrimental to the long distance service--that it was claimed would flow from the use of Telfast by Allied in its Sheridan exchange; and the prayer of the complaint was that the Commission order Allied to refrain from the installation or use of Telfast. Allied resisted Southwestern's complaint, insisting that Allied had a managerial right to use the new and improved Telfast in its exchange; prayed that Southwestern's complaint be dismissed, and said:

'Allied is desirous of making available to its subscribers of all classes the best possible service which becomes available through technological advances in the science of telephony. Allied admits that one feature of the system being installed in Sheridan is technologically new, and like all new equipment can only be tested out in practice, as have been all of the technological advancements made in telephony; * * *'

Also Allied said:

'Allied proposes that a hearing on the merits of this controversy be delayed for six (6) months, during which time the Sheridan System can be given a trial run. During this period of time all dialings invoking the unique features of the system will be monitored by a human operator in Fordyce so that no possible fault in the system will result in harm to the subscribers or to Southwestern. Allied considers that the facts which will become available. through actual experience are necessary for a proper determination of all issues of customer service, and that actual experience in the operation will resolve all controversy with Southwestern with regard thereto.'

Southwestern resisted the six months abeyance plad of Allied; the Arkansas Telephone Association and the City of Sheridan intervened on behalf of Allied; and the Commission proceeded to a full hearing on all issues. Various witnesses testified and a record of more than 700 pages is before us. On December 12,...