AT & T Communications of the Southern States v. Marks, 69732

• Decision Date: 12 November 1987
• Docket Number: No. 69732,69732
• Citation: 515 So.2d 741,12 Fla. L. Weekly 572
• Parties: 12 Fla. L. Weekly 572 AT & T COMMUNICATIONS OF THE SOUTHERN STATES, INC., et al., Appellants, v. John R. MARKS, et al., Appellees.
• Court: Florida Supreme Court

Page 741

515 So.2d 741

12 Fla. L. Weekly 572

AT & T COMMUNICATIONS OF THE SOUTHERN STATES, INC., et al., Appellants, v. John R. MARKS, et al., Appellees.

No. 69732.

Supreme Court of Florida.

Nov. 12, 1987.

Robert J. McKee, Jr., Atlanta, Georgia, and John P. Fons and Robert L. Hinkle of Aurell, Fons, Radey & Hinkle, Tallahassee, for AT & T Communications of the Southern States, Inc.

David Baumann, Atlanta, Ga., and Richard D. Melson of Hopping, Boyd, Green & Sams, Tallahassee, for MCI Telecommunications Corp.

Patrick K. Wiggins of Ranson & Wiggins, Tallahassee, for Microtel, Inc.

William S. Bilenky, Gen. Counsel and Harold McLean, Associate Gen. Counsel, Tallahassee, for Fla. Public Service Com'n.

Alan N. Berg, Gen. Atty., Altamonte Springs, for United Telephone Co. of Florida.

James V. Carideo, Vice President-Gen. Counsel and Thomas R. Parker, Associate Gen. Counsel, Tampa, for Gen. Telephone Co. of Fla.

BARKETT, Justice.

We have for review an appeal from Order No. 16804 ("PSC Order"), issued November 4, 1986, by the Public Service Commission ("PSC"). We have jurisdiction. Art. V, § 3(b)(2), Fla. Const.; §§ 350.128 & 364.381, Fla.Stat. (1985). We affirm the order.

This is another in a series of cases arising from the PSC's ongoing effort to restructure intrastate communications following the introduction of competition into long-distance telephone service, both inter- and intrastate. ¹ At issue is whether the PSC may extend beyond a review date of September 1, 1986, an interim policy imposed by prior order ² and by related licensing restrictions ³ forbidding intrastate long-distance interexchange carriers ("IXCs") such as AT & T from obtaining or building their own access lines linking themselves directly to local customers. In effect, this "bypass restriction" requires the IXCs to purchase access lines from the local exchange companies ("LECs") at rates set artificially high.

The higher rates defray expenses imposed on the LECs by current rate structures in order to advance the "universal service" concept that mandates lower-than-market local phone rates. Universal service rests on a policy that local phone service should be affordable by all who wish it, and thus subsidized from some other source, including long-distance and business service. It is a continuation of a nationwide practice instituted when AT & T held a monopoly on long-distance phone service.

Prior to the 1980s, Florida's intrastate long-distance telephone service was provided entirely by the current LECs or their predecessors, many of which were part of the Bell network owned by AT & T and its subsidiaries. Under a joint agreement, these companies coordinated services and costs among themselves, divided profits, and administered the policy of universal service. The breakup of AT & T's national monopoly and the introduction of competition into intrastate long-distance service by the 1982 legislature made the policy of universal service more problematic. The severance of some of the more lucrative long-distance routes and other regulatory measures created an incentive for bypass that previously had not existed. To forestall this possibility and the concomitant danger to the availability of universal service, the PSC imposed the bypass restrictions that form the basis of this suit.

When the bypass restriction was first imposed, the PSC noticed that it was "only an interim measure" and stated that "an investigation of the bypass and the development of a different rate structure are underway." Fla. PSC Order No. 1309, slip op. at 5-6. The PSC later noted that

this Commission has continuously stated its belief that the continuation of support by the IXCs for universal service will benefit society as a whole and does not detract from the provision of telecommunications services.... In outlining our plan for intrastate access charges for toll use of local exchange company services, we recognized that the bypass of local facilities [by IXCs] is a threat to many LECs in Florida.

PSC Order, slip op. at 4 (citation omitted). Upon reviewing the matter, the PSC decided to continue the bypass restriction because the new rate structures had not yet been developed to better reflect the changed climate created by long-distance competition. The order continuing the bypass is challenged by several IXCs which argue that the PSC's action violates Florida's nondelegation doctrine, ⁴ improperly interferes in IXC management and is unsupported by substantial competent evidence.

Like all state administrative agencies, the PSC operates under the mandate of the legislature. For the issues in dispute here, the PSC's licensing power arises chiefly from section 364.335(4), Florida Statutes (1985), which provides in pertinent part:

The [PSC] may grant a certificate, in whole or in part or with modifications in the public interest, but in no event granting authority greater than that requested in the application or amendments thereto ...; or it may deny a certificate. The commission shall not grant a certificate for a proposed telephone company, or for the extension of an existing telephone company, which will be in competition with or duplicate the local exchange services provided by any other telephone company, unless it first determines that the existing facilities are inadequate to meet the reasonable needs of the public and it first amends the certificate of such other telephone company to remove the basis for competition or duplication of services.

(Emphasis added.) Similarly, the PSC's authority to impose restrictive orders and rules derives from section 364.14(2), Florida Statutes (1985):

Whenever the [PSC] finds that the rules, regulations, or practices of any telephone company are unjust or unreasonable, or that the equipment, facilities, or service of any telephone company are inadequate, inefficient, improper, or insufficient, the commission shall determine the just, reasonable, proper, adequate, and efficient rules, regulations, practices, equipment, facilities and service to be thereafter installed, observed, and used and shall fix the same by order or rule as hereinafter provided.

Under the circumstances presented here, we can find no indication that the legislative policy-making function has been usurped by or improperly transferred to the PSC. Indeed, the PSC's actions advance the three fundamental and primary legislative policies relevant to the current dispute. First, the legislature has made a decision that there shall be long-distance competition in Florida. Microtel, Inc. v. Florida Public Service Commission, 464 So.2d 1189, 1191 (Fla.1985). See § 364.335(4). Second, the legislature has determined that there shall be no similar competition in local phone services, which will continue to be offered on a monopoly basis. § 364.335(4). See U.S. Sprint Communications Co. v. Marks, 509 So.2d 1107, 1109 (Fla.1987) (consolidated cases). And third, the legislature has obliged the PSC to act in the public interest whenever it permits competition in any aspect of Florida's telecommunications system. § 364.337(2), Fla.Stat. We find nothing in this record to indicate that the orders and restrictions now in dispute are aimed at anything more than fostering these three policies to the fullest extent now possible.

Appellants argue as appellants did in U.S. Sprint and Microtel that, in its construction of these statutes, the PSC has arrogated to itself a "roving commission" to do as it pleases, contrary to Florida's nondelegation doctrine. We rejected that argument in U.S. Sprint and likewise reject it here.

Nor are we persuaded that the PSC improperly has assumed an unlimited authority to define the term "public interest." Section 364.337(2) ⁵ provides sufficient criteria that must be considered by the PSC in determining the public interest whenever it licenses a phone company to engage in competition. U.S. Sprint at 1109-1110. We find nothing in the present case to suggest that these criteria have been subverted or are somehow so vague as to constitute an unlawful delegation of legislative power.

Finally, we are unpersuaded that the interim bypass restriction is so contrary to the ultimate goal of intrastate long-distance competition as to undermine the legislature's primary and fundamental policy decision. We previously have rejected claims that chapter 82-51, Laws of Florida (1982), required the sudden and unconditional injection of competition into all long-distance service, without regard to the chaos that thereby might ensue. U.S. Sprint, at 1110. We similarly hold that no such requirement rests upon the PSC in the current dispute. The new competitive policy in no sense obligates the PSC to abolish instantaneously all existing rate structures and access systems without a thought as to the consequences.

To the contrary, it is incumbent upon the PSC to act in a manner likely to achieve the goals of Florida's telecommunications policy to the fullest extent possible. Under current rate structures, a sudden introduction of competition in every imaginable aspect of long-distance service clearly would be inconsistent both with the public interest and the integrity of local phone companies. See U.S. Sprint, at 1110. The PSC has discretion to take interim measures designed to harmonize to the greatest extent the three goals of the new telecommunications policy wherever they are found to be temporarily inconsistent.

We caution, however, that our decision is predicated on accepting at face value the commission's own characterization of the bypass restriction as a "temporary" or "interim" measure:

Recognizing that this access plan would require time to implement and refine, we imposed the bypass restriction as an interim step to protect the LECs during the transition [to competition].

....

[W]e find it appropriate to retain the bypass restriction until we implement an appropriate rate structure for the recovery of [non-traffic sensitive]...