AviComm, Inc. v. Colorado Public Utilities Com'n, s. 96SA417

Decision Date13 April 1998
Docket NumberNos. 96SA417,96SA418,s. 96SA417
Citation955 P.2d 1023
Parties98 CJ C.A.R. 1685, 98 CJ C.A.R. 1692 AVICOMM, INC., a Colorado Corporation, Plaintiff-Appellant, v. The COLORADO PUBLIC UTILITIES COMMISSION, Commissioner Christine E.M. Alvarez, Commissioner Vincent Majkowski, Commissioner Robert Hicks, and US West Communications, Inc., Defendants-Appellees. and Agate Mutual Telephone Company; Big Sandy Telecommunications, Inc.; Bijou Telephone Co-Op Association, Inc.; Columbine Telephone Company; Delta County Tele-Com, Inc.; Eastern Slope Rural Telephone Association, Inc.; Nucla-Naturita Telephone Company; Nunn Telephone Company; Phillips County Telephone Company; Plains Cooperative Telephone Association, Inc.; Strasburg Telephone Company; Sunflower Telephone Company, Inc.; Wiggins Telephone Association, ("Agate, et al."); Farmers Telephone Company; Haxtun Telephone Company; Peetz Cooperative Telephone Company; Pine Drive Telephone Company; Rico Telephone Company; Roggen Telephone Cooperative Association; Stoneham Cooperative Telephone Corporation; Universal Telephone Company of Colorado; Willard Telephone Company, ("Farmers et al."); and El Paso Telephone Company, Intervenors-Appellees. MOUNTAIN SOLUTIONS LTD., INC., a Colorado corporation; and Denver Direct Dial, L.L.C., Plaintiffs-Appellants, v. The COLORADO PUBLIC UTILITIES COMMISSION, Commissioner Christine E.M. Alvarez, Commissioner Vincent Majkowski, Commissioner Robert Hicks, and US West Communications, Inc., Defendants-Appellees. and Agate Mutual Telephone Company; Big Sandy Telecommunications, Inc.; Bijou Telephone Co-Op Association, Inc.; Columbine Telephone Company; Delta County Tele-Com, Inc.; Eastern Slope Rural Telephone Association, Inc.; Nucla-Naturita Telephone Company; Nunn Telephone Company; Phillips County Telephone Company; Plains Cooperative Telephone Association, Inc.; Strasburg Telephone Company; Sunflower Telephone Company, Inc.; Wiggins Telephone Association, ("Agate, et al."); Farmers Telephone Company; Haxtun Telephone Company; Peetz Cooperative Teleph
CourtColorado Supreme Court

Ireland, Stapleton, Pryor & Pascoe, P.C., Tucker K. Trautman, Joseph G. Webb, Denver, for Plaintiff-Appellant AviComm, Inc.

Gorsuch Kirgis LLP, Dudley P. Spiller, Andrew D. Cohen, Denver, for Plaintiffs-Appellants Mountain Solutions Ltd., Inc.; and Denver Direct Dial, L.L.C.

Gale A. Norton, Attorney General, Richard A. Westfall, Solicitor General, Martha Phillips Allbright, Chief Deputy Attorney General, Linda L. Siderius, Deputy Attorney General, Richard Djokic, First Assistant Attorney General, Victoria R. Mandell, Assistant Attorney General, Mana L. Jennings Fader, Assistant Attorney General, Regulatory Law Section, Denver, for Defendants-Appellees The Colorado Public Utilities Commission, Commissioner Christine E.M. Alvarez, Commissioner Vincent Majkowski, Commissioner Robert Hicks, and US West Communications, Inc Antonio Bates Bernard, Professional Corporation, Roy A. Adkins, Denver, for Intervenor-Appellee El Paso County Telephone Company.

William P. Heaston, William M. Ojile, Jr., Karen Tatelman, Denver, for Defendants-Appellees US West Communications.

Denman & Corbetta, P.C., Steven H. Denman, Richard L. Corbetta, Melissa A. Dalla, Denver, for Agate Mutual Telephone Company; Big Sandy Telecommunications, Inc.; Bijou Telephone Co-Op Association, Inc.; Columbine Telephone Company; Delta County Tele-Com, Inc.; Eastern Slope Rural Telephone Association, Inc.; Nucla-Naturita Telephone Company; Nunn Telephone Company; Phillips County Telephone Company; Plains Cooperative Telephone Association, Inc.; Strasburg Telephone Company; Sunflower Telephone Company, Inc.; Wiggins Telephone Association.

LeBoeuf, Lamb, Greene & MacRae, L.L.P., Mark A. Davidson, Denver, for Intervenors-Appellees Farmers Telephone Company; Haxtun Telephone Company; Peetz Cooperative Telephone Company; Pine Drive Telephone Company; Rico Telephone Company; Roggen Telephone Cooperative Association; Stoneham Cooperative Telephone Corporation; Universal Telephone Company of Colorado; Willard Telephone Company.

Justice MULLARKEY delivered the Opinion of the Court.

The district court consolidated AviComm, Inc. v. Public Utilities Commission, No. 96CV341 (Denver Dist. Ct. Sept. 26, 1996), and Mountain Solutions Ltd. v. Public Utilities Commission, No. 96CV240 (Denver Dist. Ct. Sept. 26, 1996) to determine whether appellants Mountain Solutions Ltd., Inc. and Denver Direct Dial, L.L.C. (collectively, the "Providers") should be required to purchase telephone services from U S West's Access Service Tariff or be allowed to continue to purchase from U S West's Exchange and Network Services Tariff. The appellants appealed the district court's ruling affirming the decision of the Public Utilities Commission (PUC) that Providers provided "interexchange telecommunications services" as defined by section 40-15-102(12), 17 C.R.S. (1993), and must purchase service from the Access Service Tariff. We have jurisdiction over this appeal pursuant to section 40-6-115(5), 11 C.R.S. (1997). We now affirm the judgment of the district court.

I.

For telephone purposes, Colorado is divided into geographic regions called "local calling areas." 1 Within those local calling areas, local exchange carriers (LECs) such as U S West, provide unlimited local calling service for a flat monthly fee. 2 When a customer wishes to call beyond his or her local calling area, the call is generally handled by an interexchange carrier (IXC). These interexchange calls are billed at a per-minute charge which the customer pays to the IXC. In turn, the IXC compensates the LEC at the originating and terminating end of the call through payment of "access charges." These access charges are a source of revenue to the LECs which helps defray the cost of providing local exchange service, and are taken into account by the PUC in setting rates.

The Providers in this case sell a service which allows a subscriber to place intrastate telephone calls outside that subscriber's local calling area without incurring long-distance toll charges. This service is possible when two local calling areas partially overlap and a Provider's office is located within the area of overlap. For example, Longmont and Boulder are in the same local calling area. Boulder and Denver are also in the same local calling area, but Denver and Longmont are not. Assume X lives in Longmont and wishes to call Y who lives in Denver. If X calls Y directly, X has made an interexchange call and pays a per-minute charge. If X is a subscriber of a Provider, however, X places a local call to the Provider located in Boulder which uses its computer equipment to forward X's call to Y. Thus, the Provider patches together two local phone calls to make what would otherwise be a toll call. X pays a flat rate to the Provider which is less than the toll rate would be. The Providers charge their customers a flat, monthly rate for this "call transfer service" because no long-distance charge is incurred. The call transfer service is made possible through the use of the Providers' own computers in conjunction with certain purchased U S West services under U S West's Exchange and Network Services Tariff. Thus, the Providers enable their subscribers to make interexchange calls without incurring any long-distance charges.

On October 28, 1994, the Providers filed an Application for Declaratory Order with the PUC pursuant to Rule 60 of the PUC's Rules of Practice and Procedure. See 4 CCR 723-1-60 (1996). The Providers sought, inter alia, a declaration that the Providers did not provide "interexchange telecommunications services" pursuant to section 40-15-102(12) and thus were not required to purchase services from U S West's Access Service Tariff. Numerous parties intervened including U S West, IXCs, several small LECs, and AviComm, Inc. (AviComm), a company that provides a similar service to that of the Providers' call transfer service.

This matter was referred to an administrative law judge (ALJ), and the Providers and the appellees moved for summary judgment. The ALJ, on summary judgment, concluded that the Providers provide interexchange telecommunications services or the functional equivalent of such services and, as a result, were required to purchase switched access from U S West pursuant to the Access Service Tariff. The ALJ reasoned that if he were to rule otherwise, section 40-15-102 would be in conflict with the anti-discrimination provisions of sections 40-15-105 and 40-3-106(1)(a), 17 C.R.S. (1993).

The PUC adopted these recommendations and held that the Providers were in violation of the Exchange and Network Services Tariff because they resold to customers services which could not be resold by the terms of the tariff. The PUC stated that the Providers could no longer purchase services from the Exchange and Network Services Tariff because allowing them to do so would result in illegal preferences or discrimination. The PUC construed the phrase, "priced based upon usage," in the definition of "interexchange telecommunications services" in section 40-15-102(12) to be merely descriptive and not language which exempted the Providers from the definition. Therefore, the PUC stated, the Providers could be required to purchase services from U S West's Access Service Tariff because they provided "interexchange telecommunications services" as defined by statute or the functional equivalent thereof. The PUC concluded by holding that this matter was an adjudication and not a rule-making procedure. The Providers appealed and the district court affirmed the determinations of the PUC. 3

II.

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