Bell Atlantic Mobile, Inc. v. Dept. of Public Utility Control, (SC 16147)

• Court: Supreme Court of Connecticut
• Citation: 754 A.2d 128,253 Conn. 453
• Decision Date: 13 June 2000
• Docket Number: (SC 16147)
• Parties: BELL ATLANTIC MOBILE, INC. v. DEPARTMENT OF PUBLIC UTILITY CONTROL ET AL.

253 Conn. 453
754 A.2d 128

BELL ATLANTIC MOBILE, INC.
v.
DEPARTMENT OF PUBLIC UTILITY CONTROL ET AL

(SC 16147)

Supreme Court of Connecticut.

Argued January 18, 2000.

Officially released June 13, 2000.

McDonald, C. J., and Borden, Norcott, Palmer and Sullivan, Js.

253 Conn. 454

Dina S. Fisher, with whom, on the brief, was David W. Bogan, for the appellant (plaintiff)

Tatiana D. Eirmann, assistant attorney general, with whom, on the brief, was Richard Blumenthal, attorney general, for the appellee (named defendant).

Jennifer L. Emma filed a brief for the state office of consumer counsel as amicus curiae.

253 Conn. 455

Opinion

BORDEN, J.

The plaintiff, Bell Atlantic Mobile, Inc., is a commercial mobile radio service provider licensed by the Federal Communications Commission (commission), to provide cellular service in Connecticut. The plaintiff appeals¹ from the judgment of the trial court dismissing its administrative appeal from a decision of the named defendant, the department of public utility control (department), concerning universal telephone service contributions. The plaintiff claims that the trial court improperly concluded that: (1) federal law does not preempt General Statutes § 16-247e² to the extent

253 Conn. 456

that it requires commercial mobile radio service providers to contribute to the state universal service program; (2) the assessment methodology employed pursuant to § 16-247e does not violate federal law; and (3) § 16-247e does not have an unlawful discriminatory effect among commercial mobile radio service providers such as the plaintiff. We disagree with the plaintiffs claims and, accordingly, we affirm the judgment of the trial court

A brief review of the relevant historical development of the statutory and regulatory framework governing telecommunications is necessary to an understanding of this case. In the mid-1970s, pursuant to the federal Communications Act of 1934; 47 U.S.C. § 151 et seq.; the commission allocated certain radio frequencies for the development of cellular telephone service. The commission anticipated licensing one cellular telephone system, operated by the local telephone company, in each local market. In the 1980s, however, as a result of increased demand and in order to promote competition, the commission decided to increase the spectrum allocation, and subsequently divided it between two competing cellular carriers in each market. See Connecticut Dept. of Public Utility Control v. Federal Communications Commission, 78 F.3d 842, 845 (2d Cir. 1996).

Prior to 1993, the Communications Act of 1934 distinguished between "common carrier" service and "private carrier" service, the former of which was much more regulated than the latter. Common carriers were subject to both federal and state regulation, whereas private carriers generally were not. This, coupled with the way in which the commission defined "private carrier" service, created the possibility of generally unregulated private carriers directly competing with heavily regulated common carriers. See generally Second Report

253 Conn. 457

and Order, Implementation of Sections 3 (n) and 332 of the Communications Act, 9 F.C.C.R. 1411, 1414-16 (1994) (Second Report); Connecticut Dept. of Public Utility Control v. Federal Communications Commission, supra, 78 F.3d 845. Although private carriers and common carriers had become virtually indistinguishable, they were subject to differing regulatory schemes. H.R. Rep. No. 103-111, 103rd Cong., 1st Sess. 261 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 586-87

As part of the Omnibus Budget Reconciliation Act of 1993 (Budget Act); Pub. L. No. 103-66, 107 Stat. 312 (1993), codified in relevant part at 47 U.S.C. § 332 (c); Congress amended the Communications Act of 1934 to revise the regulation of the wireless telecommunications industry, which encompasses cellular telephone service. Congress had two principal objectives in amending 47 U.S.C. § 332: (1) to ensure that similar mobile services are subject to consistent regulatory treatment; and (2) to impose only the level of regulation necessary to promote competition and protect mobile communications customers. Second Report, supra, 9 F.C.C.R. 1418; see also H.R. Rep. No. 103-111, 103rd Cong., 1st Sess. 261 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 586-87.

The 1993 amendments to 47 U.S.C. § 332 created new statutory classifications of "commercial" and "private" mobile radio services. Second Report, supra, 9 F.C.C.R. 1417. Commercial mobile radio service is defined as "any mobile service ... that is provided for profit and makes interconnected service available (A) to the public or (B) to such classes of eligible users as to be effectively available to a substantial portion of the public, as specified by regulation by the Commission."³ 47

253 Conn. 458

U.S.C. § 332 (d) (1) (Sup. II 1996). Private mobile radio service is defined as "any mobile service ... that is not a commercial mobile service or the functional equivalent of a commercial mobile service, as specified by regulation by the Commission." 47 U.S.C. § 332 (d) (3) (Sup. II 1996).

Allowing private mobile radio service to remain unregulated, Congress amended 47 U.S.C. § 332 in order to establish a new federal regulatory scheme for commercial mobile radio service. Section 332 also, however, provides a general preemption of state regulation for both private mobile radio service and commercial mobile radio service: "[N]o State or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service or any private mobile service...." 47 U.S.C. § 332 (c) (3) (A). The objective of the preemption provision was to preclude state regulatory practices that would conflict with the objectives of § 332 either by impairing the regulatory parity between commercial mobile radio service and private mobile radio service created by § 332 or by otherwise unnecessarily burdening competition. Second Report, supra, 9 F.C.C.R. 1413, 1421.

Under certain circumstances, however, a state may petition the commission for permission to regulate the rates for commercial mobile radio service. Section 332 (c) (3) (A) provides that state rate regulation is appropriate when: (1) market conditions have failed to protect subscribers adequately from unjust and unreasonable commercial mobile radio service rates or commercial mobile radio service rates that are unjustly or unreasonably discriminatory; or (2) such conditions exist and commercial mobile radio service is a replacement for land line telephone exchange service for a substantial portion of such service within the state. 47 U.S.C. § 332 (c) (3) (A); Second Report, supra, 9 F.C.C.R. 1505.

253 Conn. 459

As part of the Telecommunications Act of 1996; Pub. L. No. 104-104, 110 Stat. 56 (1996), codified in relevant part at 47 U.S.C. §§ 253 and 254;⁴ Congress enacted

253 Conn. 460

further amendments to the Communications Act of

253 Conn. 461

1934. The 1996 amendments, which deregulated the

253 Conn. 462

entire telecommunications industry, were designed "to

253 Conn. 463

promot[e] competition and reduc[e] regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid development of new telecommunications technologies." H.R. Rep. No. 104-204, 104th Cong., 2d Sess. 47 (1995), reprinted in 1996 U.S.C.C.A.N. 10, 11.

253 Conn. 464

"Universal Service." 47 U.S.C. § 254. Prior to 1996, universal service programs consisted of external subsidies, namely, payments between companies, and internal subsidies, namely, the subsidized provision of service to high cost subscribers by low cost subscribers. H.R. Rep. No. 104-204, 104th Cong., 2d Sess. 66 (1995), reprinted in 1996 U.S.C.C.A.N. 10, 31. This provision, 47 U.S.C. § 254, was enacted because Congress anticipated that the market created by the other amendments would make internal subsidies less viable, in that deregulation would remove providers' ability to subsidize high cost customers through rates charged to low cost customers. H.R. Rep. No. 104-204, 104th Cong., 2d Sess. 67-68 (1995), reprinted in 1996 U.S.C.C.A.N. 10, 33.

Subsections (d) and (f) of § 254 of title 47 of the United States Code (Sup. II 1996) set forth the scope of universal service requirements. Subsection (d) of § 254 provides in pertinent part: "Every telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal service...." The federal universal service program was created pursuant to this provision. State universal service programs, however, fall within the ambit of subsection (f) of § 254, which specifically provides: "A State may adopt regulations not inconsistent with the Commission's rules to preserve and advance universal service. Every telecommunications carrier that provides intrastate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, in a manner determined by the State to the preservation and advancement of universal service in that State. A State may adopt regulations to provide for additional definitions and standards to preserve and advance universal service within that State only to the extent that such

253 Conn. 465

regulations adopt additional specific, predictable, and sufficient mechanisms to support such definitions or standards that do not rely on or burden Federal universal service support mechanisms."⁵

Subsection (a) of § 254 directed the commission to convene a federal-state joint board to make recommendations regarding the preservation and advancement of universal telecommunications services at affordable rates to all Americans. 47 U.S.C. § 254 (a); see also H.R. Rep. No. 104-204, 104th Cong., 2d Sess. 128 (1995), reprinted in 1996...