Armstrong Communications, Inc. v. PA. PUBLIC UTILITY COM'N

• Decision Date: 12 March 2001
• Citation: 768 A.2d 1230
• Parties: ARMSTRONG COMMUNICATIONS, INC., Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent. Citizens Telephone Company of Kecksburg, Petitioner, v. Pennsylvania Public Utility Commission, Respondent.
• Court: Pennsylvania Commonwealth Court

768 A.2d 1230

ARMSTRONG COMMUNICATIONS, INC., Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.

Citizens Telephone Company of Kecksburg, Petitioner, v. Pennsylvania Public Utility Commission, Respondent.

Commonwealth Court of Pennsylvania.

Argued September 13, 2000.

Decided March 12, 2001.

Michael E. Lowenstein, Pittsburgh, for petitioner, Armstrong Communications, Inc.

Norman J. Kennard, Harrisburg, for petitioner, Citizens Telephone Company of Kecksburg.

Elizabeth H. Barnes, Harrisburg, for respondent.

Before DOYLE, President Judge, COLINS, Judge, McGINLEY, Judge, PELLEGRINI, Judge, FRIEDMAN, Judge, KELLEY, Judge, FLAHERTY, Judge. COLINS, Judge.

In these two consolidated cases, Armstrong Communications, Inc. (Armstrong) and Citizens Telephone Company of Kecksburg (Citizens) have filed cross-petitions for review of an April 28, 1999 order of the Pennsylvania Public Utility Commission that found Citizens exempt under Section 251(f)(1)(A) of the Telecommunications Act¹ (Act) from interconnection obligations and granted Citizens a two-year suspension from these interconnection obligations. The Commission's Order further held that Armstrong was technically and financially fit to provide facilities-based and non-facilities-based competitive local exchange carrier (CLEC) services to within Citizens' territory. We affirm the Commission's decision and order.

Citizens is a rural incumbent local exchange carrier (LEC).² Its wholly owned subsidiary, Citizens Cable, provides cable television in the relevant telephone service territory that is the subject of Armstrong's instant CLEC Applications. Armstrong seeks authorization to provide CLEC services in the same geographic area where Citizens now serves as the LEC. Citizens opposes Armstrong's Application, and both entities dispute the interconnection obligations³ under Section 251(f) of the Act. On May 1, 1998, the Commission consolidated Citizens' Section 251(f) interconnection obligation issues with Armstrong's CLEC Application proceedings.

The recommended decision of the Administrative Law Judges (ALJs) dated September 17, 1998 held that (1) Citizens is exempt from the interconnection obligations of the Act as a result of Section 251(f)(1)(A); (2) the provision of cable service by Citizens did not exclude it from the exemption provision of Section 251(f)(1)(C) of the Act; (3) Citizens was entitled to a limited suspension of the interconnection obligations; and (4) Armstrong was unfit to be certified as a CLEC. Exceptions to the recommended decision were filed on October 7, 1998, by Citizens, Armstrong, the Office of Consumer Advocate, and the Pennsylvania Cable and Telecommunications Association. Reply exceptions were filed by Citizens and Armstrong.

On April 28, 1999, the Commission issued the Order that is the subject of this petition for review.⁴ This order found that Citizens was exempt under Section 251(f)(1)(A) of the Act from the statutory obligation to provide Armstrong with certain Section 251(c) interconnection services and granted Citizens a suspension under Section 251(f)(2) of the Act through July 10, 2000. The order also granted Armstrong's applications to be approved as a facilities-based and non-facilities-based CLEC. This appeal followed.

It is well settled that the scope of judicial review in Commission cases is quite limited. In the absence of an error of law or violation of constitutional rights, an order of the Commission must be upheld if it is supported by substantial evidence. 2 Pa.C.S. § 704. Peoples Natural Gas Company v. Pennsylvania Public Utility Commission, 523 Pa. 370, 567 A.2d 642 (1989). An agency's interpretation should not be disregarded unless it is shown to be clearly erroneous. Saia's Used Cars v. Commonwealth, 142 Pa.Cmwlth. 27, 596 A.2d 1212 (1991). The Commission is charged with the responsibility of considering all relevant evidence, determining the weight of evidence, credibility of witnesses, and reliability of estimates and opinions. York Water Company v. Pennsylvania Public Utility Commission, 51 Pa.Cmwlth. 61, 414 A.2d 138 (1980).

We first address the issue of whether Citizens is exempt from interconnection duties as delineated in the Act. Under Section 251(c) of the Act, each LEC has specific statutory interconnection duties. However, Section 251(f) of the Act provides rural telephone companies, such as Citizens, with an exemption from the interconnection requirements of Section 251(c). Section 251(f)(1)(A) provides:

Subsection (c) of this section shall not apply to a rural telephone company until (i) such company has received a bona fide request for interconnection, services, or network elements, and (ii) the State commission determines (under subparagraph (B)) that such request is not unduly economically burdensome, is technically feasible, and is consistent with section 254 of this title (other than subsections (b)(7) and (c)(1)(D) thereof).

47 U.S.C. § 251(f)(1)(A). A limitation to this exemption is found in subparagraph (C), which states,

The exemption provided by this paragraph shall not apply with respect to a request under subsection (c) of the section, from a cable operator providing video programming, and seeking to provide any telecommunications service, in the area in which the rural telephone company provides video programming. The limitation contained in this subparagraph shall not apply to a rural telephone company that is providing video programming on February 8, 1996.

47 U.S.C. § 251(f)(1)(C). Therefore, a rural telephone company that was also providing video programming on February 8, 1996 is grandfathered into the rural exemption under § 251(f)(1)(A). Conversely, a rural telephone company that did not provide video programming until after February 8, 1996 has no exemption.

The primary issue is whether the video programming activities undertaken by Citizens were sufficient to qualify Citizens for the exception to the limitation. Specifically, the question is whether Citizens was providing video programming on February 8, 1996, the date of enactment of the Act. Neither party disputes the fact that Citizens turned on actual service to its first customer on May 10, 1996, approximately three months after implementation of the Act. Armstrong avers that Citizens is not entitled to be grandfathered in since the phrase "providing video programming" is limited to the actual physical delivery of programming to a customer prior to February 8, 1996. To the contrary, Citizens asserts that "provide" should include the taking of precautionary measures to make or procure for future use. As such, Citizens would qualify for the grandfathering exception to the Section 251(f)(1)(C) limitation. Thus, the issue focuses on the interpretation of the word "providing."

An administrative agency's interpretation of a statute for which it has enforcement responsibility is entitled to great deference and will not be reversed unless clearly erroneous. Alpha Auto Sales v. Department of State, Bureau of Professional & Occupational Affairs, 537 Pa. 353, 644 A.2d 153 (1994). Judicial deference is even more necessary when the statutory scheme is complex. Graduate Health Systems, Inc. v. Pennsylvania Insurance Department, 674 A.2d 367 (Pa. Cmwlth.1996); Nationwide Mutual Insurance Co. v. Foster, 143 Pa.Cmwlth. 433, 599 A.2d 267 (1991); SmithKline Beckman Corp. v. Commonwealth, 85 Pa.Cmwlth. 437, 482 A.2d 1344 (1984), affirmed,508 Pa. 359, 498 A.2d 374 (1985). Hence, the proper place to begin the appropriate inquiry is with due deference to the views of the regulatory agency directly involved in administering the statute in question. Alpha Auto Sales. After a thorough review of the evidence, we conclude that the record as well as the Act support a finding that Citizens was "providing" cable service on February 8, 1996. Moreover, the Commission's interpretation of Section 251(f)(1)(C) is reasonable, is not clearly erroneous, and therefore should be sustained.

The Commission's decision, which accepted the ALJ's recommendation, is supported by the fact that Citizens had completed every regulatory hurdle and that the minor implementation processes necessary to delivering a service does not mean that Citizens was not "providing" services sufficient to lose its Section 251(f)(1) exemption under Section 251(f)(1)(C).⁵ By February 8, 1996, Citizens invested $850,000 in cable system construction, received video-programming signals to its cable head-end, and engaged in advertising campaigns offering cable service to customers within Citizens' telephone service area. Although Citizens turned on actual service to its first customer on May 10, 1996, approximately three months after implementation of the Act, Citizens could have physically connected its first subscriber to its cable system before February 8, 1996. Upon review of the record, we find that the Commission's interpretation of this statute is supported by substantial evidence and should be given due deference. Thus, Citizens did not forfeit its exemption by virtue of its video programming activities.

Armstrong next contends that the Commission erred in failing to terminate the rural exemption of Section 251(f)(1)(A) of the Act upon receipt of Armstrong's request under Section 251(f)(1)(B). Sections 251(f)(1)(A) and (B) allow the Commission to make a determination whether to terminate the exemption of a rural telephone company from Section 251(c) interconnection requirements. Section 251(f)(1)(B) of the Act provides:

The party making a bona fide request of a rural telephone company for interconnection, services, or network elements shall submit a notice of its request to the State commission. The State commission shall conduct an inquiry for the purpose of determining whether to terminate the exemption under subparagraph (A). Within 120 days after the State commission receives notice of the request, the State commission shall terminate the exemption

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