Alma Tel. Co. v. Public Serv. Com'n.

• Citation: 183 S.W.3d 575
• Decision Date: 10 January 2006
• Docket Number: No. SC 86529.,SC 86529.
• Court: United States State Supreme Court of Missouri
• Parties: STATE ex rel. ALMA TELEPHONE COMPANY, et al., Respondents, v. PUBLIC SERVICE COMMISSION OF THE STATE of Missouri, Appellant, State ex rel. BPS Telephone Company, et al., Respondents, AT & T Wireless Services, Inc., et al., Appellants.

Page 575

183 S.W.3d 575

STATE ex rel. ALMA TELEPHONE COMPANY, et al., Respondents, v. PUBLIC SERVICE COMMISSION OF THE STATE of Missouri, Appellant, State ex rel. BPS Telephone Company, et al., Respondents, AT & T Wireless Services, Inc., et al., Appellants.

No. SC 86529.

Supreme Court of Missouri, En Banc.

January 10, 2006.

Rehearing and Modification Denied January 31, 2006.

Marc D. Postom, Public Service Com'n, Jefferson City, for Appellant.

Alok Ahuja, Paul DeFord, Kurt Schaefer, Kansas City, Joseph D. Murphy, Champaign, IL, Charles W. McKee, Overland Park, Kansas, Paul G. Lane, Leo J. Bub, St. Louis, MO, for Appellees.

Craig S. Johnson, Lisa Cole Chase, W.R. England, III, Brian T. McCartney, Jefferson City, MO, for Respondents.

STEPHEN N. LIMBAUGH, JR., Judge.

In these two consolidated cases, the Missouri Public Service Commission disallowed a proposal by certain rural telephone companies to amend "access tariffs" to be imposed on several wireless telephone service providers.¹ On petition for writ of review, the circuit court reversed the PSC's decision, and thereafter, the PSC and the wireless service providers appealed. After opinion by the Court of Appeals, Western District, this Court granted transfer. Mo. Const. art. V, sec. 10. The judgment of the trial court is reversed, and the PSC's decision is affirmed.

I. Facts and Procedural History

This litigation involves a dispute concerning the method by which the rural telephone companies should be compensated for delivering calls that originated from wireless telephones and terminated in the rural companies' local exchanges during February 1998 through January 2001. The telephone traffic at issue involves wireless calls that occurred within one of Missouri's two "Major Trading Areas" (MTA) for telecommunications. Thus, the traffic was intrastate, as well as intraMTA.

Prior to 1998, Southwestern Bell Telephone Company (SBTC), operating as a large interexchange carrier, transported and terminated calls for wireless carriers, or commercial mobile radio service providers (CMRS providers). SBTC charged the CMRS providers a tariff for this service. However, this tariff did not compensate rural local exchange carriers (LECs) — the respondents herein — for completing wireless calls that terminated on their systems. During the early 1990s, the PSC found SBTC liable to the LECs under the LECs' own existing access tariffs. Then in 1998, SBTC was permitted to revise its wireless termination tariffs to eliminate its obligation to pay the LECs, and instead the CMRS providers were to compensate the LECs directly. In this regard, the PSC ordered the CMRS providers to seek reciprocal compensation arrangements with the LECs for the termination of the wireless traffic or, otherwise, to cease delivering wireless traffic to the LECs. Despite this order, few reciprocal arrangements were entered, and CMRS providers continued to transmit wireless originated traffic to the LECs, which were unable to block the wireless calls. In an effort to obtain compensation, the LECs then billed the CMRS providers under existing access tariffs which established the rates that the LECs could charge for completing long distance or toll calls on their local exchanges. However, the CMRS providers refused to pay on the ground that the tariffs did not apply to wireless originated traffic, which the Federal Communications Commission (FCC) deemed to be intraMTA, or local traffic. During that time, though, the LECs did not seek enforcement of the PSC's order requiring the CMRS providers to enter reciprocal compensation arrangements or cease delivering traffic to the LECs.²

In 1999, the LECs filed proposed amended access tariffs with the PSC to clarify the tariffs' applicability to wireless originated traffic. Under the proposal, each tariff would be amended as follows:

The provisions of this tariff apply to all traffic regardless of type or origin, transmitted to or from the facilities of the Telephone Company, by another carrier, directly or indirectly, until and unless superseded by an agreement approved pursuant to 47 U.S.C. 252, as may be amended.

The CMRS providers and SBTC intervened and objected to the tariffs, and after a hearing, the PSC rejected the proposed amended tariffs. The LECs then filed a writ of review with the circuit court, which reversed the decision of the PSC. After an initial appeal to the court of appeals, which reversed and remanded for failure of the PSC to make adequate findings of fact, the PSC again ruled against the LECs, relying on federal regulatory rulings in determining that intraMTA calls are local calls and not subject to access tariffs. The LECs again sought a writ of review in the circuit court, the court again reversed the PSC, and the PSC and CMRS providers then appealed. Both sides agree that the facts are not in dispute and only a question of law remains to be resolved.

II. Analysis

This case is controlled by the Federal Telecommunications Act of 1996(FTA), 47 U.S.C. sec. 251 et seq. (2000). The FCC is charged with implementing and enforcing the provisions of the FTA, 47 U.S.C. sec. 201(b) (2000), and FCC regulations and decisions are binding on the industry and state commissions, AT & T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 377-79, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999).

The FTA requires interconnection, directly or indirectly, between telecommunications carriers. 47 U.S.C. at sec. 251(a). To allow for the recapture of costs for interconnection, the FTA provides for "reciprocal compensation arrangements for the transport and termination of telecommunications," id. at sec. 251(b)(5), and implementing regulations place a duty on LECs and wireless carriers to negotiate and enter in to those arrangements, 47 C.F.R. 51.301. In this case, as noted, no such arrangements were completed.

The FCC has recently confirmed that in the absence of a reciprocal compensation arrangement, "CMRS providers accept the terms of otherwise applicable state tariffs." In the Matter of Developing a Unified Intercarrier Compensation Regime; T-Mobile et al. Petition for Declaratory Ruling Regarding Incumbent LEC Wireless Termination Tariffs, 2005 FCC LEXIS 1212, para. 12 (2005). The access tariffs that the LECs now seek, however, are not "otherwise applicable state tariffs." That question was settled in a FCC ruling known as the "Local Competition Order," issued when the FTA...