Illinois Bell Telephone Co. v. Com'n

• Decision Date: 01 December 2005
• Docket Number: No. 4-04-0911.,4-04-0911.
• Parties: ILLINOIS BELL TELEPHONE COMPANY, Petitioner-Appellant, v. The ILLINOIS COMMERCE COMMISSION; United States Cellular Corporation; Voicestream PCS I, L.L.C.; Voicestream GSM I Operating Co., L.L.C.; Omnipoint Holdings, Inc.; Powertel/Kentucky, Inc.; and AT & T Communications of Illinois, Inc., Respondents-Appellees.
• Court: Illinois Supreme Court

840 N.E.2d 704

ILLINOIS BELL TELEPHONE COMPANY, Petitioner-Appellant, v. The ILLINOIS COMMERCE COMMISSION; United States Cellular Corporation; Voicestream PCS I, L.L.C.; Voicestream GSM I Operating Co., L.L.C.; Omnipoint Holdings, Inc.; Powertel/Kentucky, Inc.; and AT & T Communications of Illinois, Inc., Respondents-Appellees.

No. 4-04-0911.

Appellate Court of Illinois, Fourth District.

Argued September 22, 2005.

Decided December 1, 2005.

COPYRIGHT MATERIAL OMITTED

Theodore A. Livingston, John E. Muench, Demetrios G. Metropoulos (argued), Mayer, Brown, Rowe & Maw, LLP, John T. Lenahan, Nancy J. Hertel, SBC Illinois, Chicago, for Illinois Bell Telephone Company.

John P. Kelliher (argued), Special Assistant Attorney General, Illinois Commerce Commission, Chicago, for Illinois Commerce Commission.

John W. McCaffrey, Kathleen R. Pasulka-Brown, Foley & Lardner LLP, Chicago, for United States Cellular Corporation.

Owen E. MacBride, Schiff Hardin LLP, William A. Davis II, Chief Regulatory Counsel, David J. Chorzempa, Senior Attorney, AT&T Legal Department, Chicago, for AT&T Communications of Illinois, Inc.

Justice APPLETON delivered the opinion of the court:

In 2004, in administrative rule-making proceedings, the Illinois Commerce Commission (Commission) adopted a rule entitled "Wholesale Service Quality for Telecommunication Carriers" (83 Ill. Adm.Code pt. 731 (2004), as adopted at 28 Ill. Reg. 12083 (eff. September 1, 2004)). In this new rule, the Commission regulates a type of wholesale telecommunications service called "special access." 83 Ill. Adm.Code § 731.310 (2004), as adopted at 28 Ill. Reg. 12083, 12101-02 (eff. September 1, 2004). Petitioner, Illinois Bell Telephone Company, appeals on two grounds. First, the statute from which the Commission claims to derive its regulatory authority, section 13-712(g) of the Public Utilities Act (Act) (220 ILCS 5/13-712(g) (West 2004)), confers no authority to regulate special access. Second, by classifying telecommunications carriers into four levels (83 Ill. Adm.Code § 731.110 (2004), as adopted at 28 Ill. Reg. 12083, 12095-96 (eff. September 1, 2004)) and regulating only the special access provided by "Level 1 carriers" (83 Ill. Adm.Code § 731.310 (2004), as adopted at 28 Ill. Reg. 12083, 12101-02 (eff. September 1, 2004)), the Commission violates section 13-712(a) of the Act (220 ILCS 5/13-712(a) (West 2004)).

We find section 13-712(g) to be ambiguous on the question of whether the Commission has authority to regulate special access. Because the legislature has charged the Commission with the task of administering and enforcing section 13-712, we defer to the Commission's interpretation of subsection (g), an interpretation we find to be reasonable. As for petitioner's second contention, the Commission's four-tiered classification of carriers does not offend section 13-712(a). On its face, subsection (a) applies to "basic local exchange service," not special access. 220 ILCS 5/13-712(a) (West 2004). Therefore, we affirm the denial of petitioner's application for rehearing, and we uphold the challenged rule. See 220 ILCS 5/10-201(e)(v) (West 2004).

I. BACKGROUND

Petitioner is a "local exchange carrier." A "carrier" is a provider of "telecommunications services between points within the State which are specified by the user." 220 ILCS 5/13-202 (West 2004). A "local exchange carrier" provides local, "switched" telephone service. 220 ILCS 5/13-204, 13-206 (West 2004). A "switch" is a computer that routes calls to their destination. An "exchange" is the geographical area — usually a city, town, or village — in which calls are deemed local under the "tariff," or schedule of rates, of the carrier. 220 ILCS 5/13-204, 13-206 (West 2004). (Long-distance or "interexchange telecommunications service" is service between two or more exchanges. 220 ILCS 5/13-205 (West 2004).)

Respondents are the Commission and an alliance of wireless carriers, the Wireless Coalition. From the standpoint of a wireless carrier, wireless telecommunication is not entirely wireless. When someone makes a call on a cellular (cell) phone — whether it be a local, toll, or long-distance call — the wireless carrier receives the signal at a cell site (an antenna mounted on a tall structure such as a tower or building) and then transmits the signal, at high speed, to the wireless carrier's switch. To transmit the signal from its cell site to its switch, the wireless carrier uses special-access circuitry maintained by a local exchange carrier such as petitioner.

Special access differs from basic local exchange service in two ways. First, special access does not pass through the switches of the local exchange carrier; instead, it uses "a dedicated non-switched transmission path" to reach the switch of the wireless carrier. 83 Ill. Adm.Code § 731.105, as adopted at 28 Ill. Reg. 12083, 12095 (eff. September 1, 2004) (definition of "wholesale special access"); cf. 220 ILCS 5/13-204 (West 2004) (defining "local exchange telecommunications service" as "switched telecommunications services"). Second (and this distinction is perhaps just another aspect of the first), special access enables telecommunications to travel outside rather than inside the local exchange — or "carrier[]to[]carrier" as the rule puts it (83 Ill. Adm.Code § 731.105 (2004), as adopted at 28 Ill. Reg. 12083, 12095 (eff. September 1, 2004) (definition of "wholesale special access")). Thus, special access can never be basic local exchange service, the very purpose of special access being to bypass the local exchange.

Although wireless carriers bypass the local exchange, they cannot bypass the local exchange carrier. They depend on the special access that the local exchange carrier provides. To the extent that special access fails, the wireless service fails, resulting in dropped calls, an inability to make or receive calls, and poor call quality.

After workshops with industry stakeholders, evidentiary hearings, and briefing, the Commission found a need to regulate the quality of special access. Several witnesses from wireless carriers testified that local exchange carriers provided poor wholesale special access and thereby impaired their companies' ability to compete. The Commission found these witnesses to be credible.

In Illinois, the Commission found, the vast majority of special access came from three local exchange carriers: petitioner; Verizon North, Inc.; and Verizon South, Inc. (we will call the latter two "Verizon," collectively). The rule divides carriers into four levels on the basis of differing size and characteristics (83 Ill. Adm.Code § 731.110 (2004), as adopted at 28 Ill. Reg. 12083, 12095-96 (eff. September 1, 2004)) and regulates special access provided by "Level 1 carriers," i.e., those with 400,000 or more access lines (83 Ill. Adm.Code § 731.310 (2004), as adopted at 28 Ill. Reg. 12083, 12101-02 (eff. September 1, 2004)), but not special access provided by the (smaller) carriers in the remaining three levels. Petitioner and Verizon are the only two carriers in Illinois that meet the description of a "Level 1 carrier," and therefore they are the only ones whose special-access services the Commission regulates.

On August 4, 2004, having received a certification of no objection from the Joint Committee on Administrative Rules (JCAR), the Commission adopted the rule over petitioner's objection. Petitioner filed an application for rehearing, arguing, as it did before JCAR, that the Commission lacked jurisdiction to regulate special access. The Commission denied the application on September 22, 2004. This appeal followed. See 220 ILCS 5/10-201(a) (West 2004).

II. ANALYSIS

A. Standard of Review

In this appeal, petitioner does not challenge the Commission's factual findings or its evidentiary basis for adopting the rule. Instead, this appeal presents two narrow issues, both of which require nothing more than statutory construction. First, does section 13-712(g) of the Act empower the Commission to regulate special access? Second, does section 13-712(a) allow the Commission to limit its regulation of special access to that provided by "Level 1 carriers"?

As a creature of statute, an administrative agency such as the Commission has only the powers that the statute confers. People ex rel. Kilquist v. Brown, 203 Ill.App.3d 957, 961, 148 Ill.Dec. 928, 561 N.E.2d 234, 237 (1990). An agency may adopt a rule and regulate an activity only insomuch as a statute empowers the agency to do so. Popejoy v. Zagel, 115 Ill.App.3d 9, 11, 70 Ill.Dec. 769, 449 N.E.2d 1373, 1374 (1983). An administrative rule unauthorized by statute is invalid, and we must strike it down. Illinois RSA No. 3, Inc. v. Department of Central Management Services, 348 Ill.App.3d 72, 76, 284 Ill.Dec. 15, 809 N.E.2d 137, 140 (2004); 220 ILCS 5/10-201(e)(iv)(B), (C) (West 2004).

Because the meaning of a statute is a question of law, we generally construe statutes de novo. Quad Cities Open, Inc. v. City of Silvis, 208 Ill.2d 498, 508, 281 Ill.Dec. 534, 804 N.E.2d 499, 505 (2004). We say "generally" because if the legislature has charged an agency with administering and enforcing a statute, we "will give substantial weight and deference" to the agency's resolution of any ambiguities in that statute — even if the ambiguity concerns the extent of the agency's jurisdiction under that statute. Illinois Consolidated Telephone Co. v. Illinois Commerce Comm'n, 95 Ill.2d 142, 152, 69 Ill.Dec. 78, 447 N.E.2d 295, 300 (1983). In Illinois Consolidated Telephone Co., 95 Ill.2d at 145-46, 69 Ill.Dec. 78, 447 N.E.2d at 296, for instance, the issue was whether the definition of "public utility" in section 10.3(b) of the Act (Ill.Rev.Stat.1979, ch. 111 2/3, par. 10.3(b)) gave the Commission authority to regulate radio paging. On appeal, the Commission interpreted section 10.3(b) to exclude radio paging (Illinois Consolidated Telephone Co., 95 Ill.2d at 145, 69 Ill.Dec. 78, ...