Bell Atlantic-Pennsylvania, Inc. v. PA PUC

• Decision Date: 25 October 2000
• Citation: 763 A.2d 440
• Court: Pennsylvania Commonwealth Court
• Parties: BELL ATLANTIC-PENNSYLVANIA, INC., Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent. Sprint Communications Company, L.P. and the United Telephone Company of Pennsylvania, Petitioners, v. Pennsylvania Public Utility Commission, Respondent. GTE North, Incorporated, Petitioner, v. Pennsylvania Public Utility Commission, Respondent. AT & T Communications of Pennsylvania, Inc., Petitioner, v. Pennsylvania Public Utility Commission, Respondent. MCI Worldcom, Inc., Petitioner, v. Pennsylvania Public Utility Commission, Respondent.

763 A.2d 440

BELL ATLANTIC-PENNSYLVANIA, INC., Petitioner, v. PENNSYLVANIA PUBLIC UTILITY COMMISSION, Respondent.

Sprint Communications Company, L.P. and the United Telephone Company of Pennsylvania, Petitioners, v. Pennsylvania Public Utility Commission, Respondent.

GTE North, Incorporated, Petitioner, v. Pennsylvania Public Utility Commission, Respondent.

AT & T Communications of Pennsylvania, Inc., Petitioner, v. Pennsylvania Public Utility Commission, Respondent.

MCI Worldcom, Inc., Petitioner, v. Pennsylvania Public Utility Commission, Respondent.

Commonwealth Court of Pennsylvania.

Argued May 17, 2000.

Decided October 25, 2000.

Reargument Denied January 5, 2001.

Julia A. Conover, Philadelphia, for petitioner Bell Atlantic-PA, Inc.

Zsuzanna B. Benedek, Harrisburg, for petitioners, Sprint Communications and United Telephone.

Edward J. Fuhr, Richmond, VA, for petitioner, GTE North, Inc.

Robert C. Barber, Oakton, VA, for petitioner A T & T Communications PA.

Jeffrey A. Rackow, Washington, DC, for petitioner, MCI Worldcom, Inc.

Maryanne R. Martin and Kathryn G. Sophy, Harrisburg, for respondent.

Philip B. McClelland, Harrisburg, for intervenor, Office of Consumer Advocate.

Angela T. Jones, Harrisburg, for intervenor, Office of Small Business Advocate.

Christopher B. Craig, Harrisburg, for intervenor, PA Senators (Fumo, Madigan and White).

Stephen P. Hershey, Philadelphia, for intervenor, ATX Telecommunications Services.

Renardo L. Hicks, Harrisburg, for intervenor, Nextlink, Focal, Hyperion, Rythm and CTSI.

BEFORE: DOYLE, President Judge, and COLINS, Judge, McGINLEY, Judge, FRIEDMAN, Judge, KELLEY, Judge, FLAHERTY, Judge, and LEADBETTER, Judge.

TABLE OF CONTENTS OPINION 440 Introductory Statement 2 452 BACKGROUND - THE GLOBAL SETTLEMENT ATTEMPT 453 HISTORY OF THIS CASE - GLOBAL RESOLUTION 454 Pleadings - The Two Petitions 454 Record of the Global Resolution Proceedings 455 Standard of Review 456 Decision of the PUC Here Reviewed 456 Majority Decision 456 Dissent 457 THE ISSUES 457 Due Process Question as to the Global Resolution Proceedings 457 Structural Separation of Bell into Retail and Wholesale Companies 460 Present Reviewability of the Structural Separation Order 460 Claim of Denial of Due Process as to Structural Separation Decision 461 Statutory Authority for Requiring Structural Separation 462 Structural Separation Dissenting View 462 Record Support for Structural Separation 465 Code of Conduct 467 Advance Notice as to the Code of Conduct 467 The Code of Conduct - Directive or Regulation 467 Statutory Authority and Factual Basis for the Code of Conduct 468 Code of Conduct First Amendment Issue 469 Compliance of Global Order with Chapter 30 and Bell's Plan 470 Effect of Chapter 30 Plan Previously Approved 470 PUC's Power to Issue Subsequent Orders Related to Plan's Content 471 Access Charges 476 Validity of Order as Establishing UNE Rates 481 Access to Network Platforms and Enhanced Extended Loops 483 The Platform - A Bundle of Elements Otherwise Unbundled 483 The Revenue Threshold on Bell's UNE-P Obligation 485 Time Limitation upon UNE-P 486 Lifeline Program Rulings in Relation to Chapter 30 and Bell's Plan 486 Majority Decision on Lifeline 487 Lifeline Dissenting View 488 Other Global Order Provisions - Compliance with State Law 488 Consumer Education Program 488 Consumer Education Program as Proposed and Ordered 488 Consumer Education Program under Bell's Plan and Chapter 30 Policy 489 Effect of Waiver and Estoppel as to Consumer Education Program 492 Universal Service Fund 492 Effect of Pending Prior Appeal on Universal Service Fund Issue 494 Estoppel to Question Statutory Authority for Universal Service Fund 495 Statutory Authority for Universal Service Fund 496 Universal Service Fund and Rulemaking Powers 497 Exclusion of Bell and GTE North as Recipients from USF 498 Competitive Services Designations 500 Competitive IntraLATA Toll Services 500 Competitive Business Services 502 Reciprocal Compensation Agreements and Internet Connections 505 Global Order Validity under the Federal Telecommunications Act 508 Federal Law and the Rural/Residential Promotion 508 Wholesale Rates and Federal Law 510 Unbundled Network Element Rates and the Federal Law 511 Unbundled Access to Switching and DSLAMS 512 ORDER 513 Appendix A - Glossary of Telecommunications Acronyms Appendix B - Outline of Record Evidence McGINLEY, Judge.

These appeals are from a decision¹ of the Pennsylvania Public Utility Commission (PUC) under the Public Utility Code, entered September 30, 1999, relating in substantial part to Chapter 30 of the Code, 66 Pa.C.S. §§ 3001-3009, entitled Alternative form of regulation of telecommunications services.

To be informed as to the complete content of the PUC's decision in this case, it is important to note that the latter portion of the decision, after the phrase IT IS ORDERED, R.R. 318a, Vol. 1, by reference incorporates significant provisions stated in the preceding Opinion and Order, R.R. 35a-317a, Vol. 1. Thus, to ascertain the complete content of many elements of the PUC's order, it is necessary to examine not only the provisions that follow the IT IS ORDERED heading, but also the cross-references in those provisions to wording appearing in the preceding Opinion and Order.

Note also two appendices incorporated into this opinion for reference. Appendix A is an alphabetized Glossary of Acronyms commonly used in the telecommunications field for the sake of brevity. Appendix B is an outline of Record Evidence received in this case.

Our Supreme Court and this Court have previously noted the pervasive public significance of the goals of Chapter 30. Popowsky v. Pennsylvania Public Utility, 550 Pa. 449, 453, 706 A.2d 1197, 1199 (1997); See also Popowsky v. Pennsylvania Public Utility Commission, 669 A.2d 1029, 1032 (Pa.Cmwlth.1995). By Chapter 30 the legislature seeks to encourage further development of state-of-the-art, i.e. broadband,² telecommunications networks that will be affordable and universally available in this Commonwealth. To implement that goal, the law authorizes the PUC to depart from traditional concepts of rate regulation of local telephone companies in two ways.

First, the PUC, upon application, may approve an alternative form of regulation for noncompetitive services, subject to price stability controls and assurances that the applicant will convert its networks to broadband capability by the end of the year 2015, under a plan to make such services widely available to a full range of public needs. 66 Pa.C.S. §§ 3003, 3004.

Second, upon petition by a local exchange telecommunications company the PUC may make a determination substantially deregulating rates for certain services identified as competitive, but subject to conditions allowing all competitors nondiscriminatory access to services and facilities they need in order to compete. 66 Pa.C.S. § 3005.

As pointed out in the Main Brief of AT & T Communications of Pennsylvania, Inc. (AT & T), the federal Telecommunications Act of 1996, 47 U.S.C. §§ 251-276 (TA 96), complements Pennsylvania's Chapter 30 and adds a national emphasis to the introduction of competition to all telecommunications markets. Pennsylvania's Chapter 30, although its 1993 enactment antedated the federal law, provides requirements and powers that serve to implement the federal goal.

BACKGROUND-THE "GLOBAL SETTLEMENT ATTEMPT"

In September 1998, the PUC, by Chairman Quain and Commissioner Rolka, announced³ that it was opening a Global Settlement Conference, inviting all telecommunications industry parties to engage in discussions to resolve existing proceedings concerning noncompetitive and competitive matters pursuant to Chapter 30 and the federal TA 96.

Many industry parties, including the parties to this appeal, took part in formal discussions and negotiations, continuing until March 1999, when the PUC, also by Chairman Quain and Commissioner Rolka, issued a confidential term sheet, to be considered as a basis for a final industry settlement.⁴ When no Global Settlement evolved, the PUC, by the same two members, invited the institution of formal proceedings to resolve the differences.⁵

HISTORY OF THIS CASE-THE "GLOBAL RESOLUTION PROCEEDINGS"

Pleadings — The Two Petitions

Industry parties responded to the announcement of resolution proceedings by filing two substantially different petitions on March 18, 1999, one seeking certain results more commonly favored by the incumbent local exchange carriers (ILECs) and the other seeking some results characteristically sought by competitive local exchange carriers (CLECs—See Appendix A, incorporated herein, for a list of initials used for brevity). ILECs, the incumbents such as Bell Atlantic-Pennsylvania, Inc., are the carriers that formerly had exclusive local telephone service territories. CLECs, the competitive carriers are the carriers now enabled by present law to provide local telephone service in the formerly exclusive territories, in competition with the incumbents.

Hence each of two petitions, reflecting agreement among its own particular group of signers, called upon the PUC, in these Resolution Proceedings, to resolve the many issues of the new competition environment in their favor.

One of the petitions, entitled Joint Petition for Global Resolution of Telecommunications Proceedings, was filed by Bell Atlantic-Pennsylvania, Inc., referred to as Bell by most of the parties and by this opinion, and as BA-PA by the PUC. Also joining in that petition, generally called the 1649 Petition in this case, referring to its docket number, were two other telecommunications companies and a coalition of 32 independent telephone companies.⁶

That 1649 Petition dealt with fifteen pertinent matters, including: (1) toll and access charges; (2) Universal Service Fund (USF); (3) rate cap on local exchange residential service; (4) Lifeline Service; (5) competitive business services; (6) consumer...