Illinois Independent Telephone Ass'n v. Illinois Commerce Com'n

Decision Date03 November 1988
Docket NumberNos. 4-87-0899,4-87-0919,s. 4-87-0899
Citation183 Ill.App.3d 220,539 N.E.2d 717,132 Ill.Dec. 154
CourtUnited States Appellate Court of Illinois
Parties, 132 Ill.Dec. 154 ILLINOIS INDEPENDENT TELEPHONE ASSOCIATION, Petitioner, v. ILLINOIS COMMERCE COMMISSION, MCI Telecommunications Corporation, GTE MTO Inc., Illinois Consolidated Telephone Company, and Illinois Bell Telephone Company, Respondents. GTE NORTH INCORPORATED, Petitioner, v. ILLINOIS COMMERCE COMMISSION, MCI Telecommunications Corporation, Illinois Independent Telephone Association, Illinois Bell Telephone Company, AT & T Communications of Illinois, Inc., Illinois Consolidated Telephone Company, Illinois Telephone Association, People of the State of Illinois, Respondents.

Dennis K. Muncy, Peggy C. Thompson, Meyer, Capel, Hirschfeld, Muncy, Jahn & Aldeen P.C., Champaign, for Illinois Independent Telephone Assoc.

Vernon C. Maulson, James C. Stroo, GTE North Inc., Bloomington, for GTE MTO, Inc.

Marcia C. Alterman, Chicago, for MCI Telecommunications Corp.

John P. Kelliher, Sp. Asst. Atty. Gen., Chicago, for Illinois Commerce Comm.

Michael L. Ball, Donald A. Low, Eva Powers, U.S. Sprint Communications Co., Kansas City, Mo., Robert F. Ward, Chadwell & Kayser, Ltd., Chicago, amicus curiae.

MODIFIED ON DENIAL OF REHEARING

Justice KNECHT delivered the opinion of the court:

This case involves questions concerning the conditions under which long-distance telephone carriers may provide service between points located in the same market service area (MSA). Several provisions of the Universal Telephone Service Protection Law of 1985 (Protection Law) (Ill.Rev.Stat.1985, ch. 111 2/3, pars. 13-100 through 13- 803) provide the principal bases for the contentions of the parties.

Many technical terms peculiar to the telecommunications industry pervade this opinion. These terms are defined in our recent opinion in GTE MTO, Inc. v. Illinois Commerce Comm'n (1988), 166 Ill.App.3d 916, 118 Ill.Dec. 265, 521 N.E.2d 547, and we will not in this opinion repeat their definitions. (On January 6, 1989, 130 Ill.Dec. 401, 537 N.E.2d 730, the supreme court dismissed a petition for leave to appeal this court's decision in GTE MTO and vacated this court's judgment in that case. In a further order entered February 24, 1989, the supreme court denied a motion to reconsider its January 6, 1989, dismissal of the petition for leave to appeal in GTE MTO and remanded the cause to this court with instructions to consider all issues briefed and argued by the parties. The apparent basis for these orders was amendments to the Universal Telephone Service Protection Law of 1985 (Ill.Rev.Stat.1985, ch. 111 2/3, pars. 13-100 through 13-803), which were passed by the legislature and signed into law after the filing of this court's opinion in GTE MTO. (Pub.Act 85-1161, eff. Aug. 12, 1988; 1988 Ill.Legis.Serv. 1188, 1188-89 (West); 1988 Ill.Laws 1306 (amending Ill.Rev.Stat.1987, ch. 111 2/3, par. 13-405).) These statutory amendments are discussed later in this opinion. They do not, however, affect the validity of the definitions of technical terms contained in this court's opinion in GTE MTO.)

On December 22, 1986, respondent MCI Telecommunications Corporation (MCI) filed with the Illinois Commerce Commission (ICC) an application for modification of its intra-MSA certificate of interexchange service authority, requesting it be authorized to provide facility-based intra-MSA interexchange telecommunications services throughout Illinois. MCI's application noted the ICC had previously found MCI possesses sufficient technical and operational competence, and possesses the legal authority and financial ability to be entitled to authority to provide inter-MSA service in Illinois. MCI further noted that on May 16, 1986, the ICC had granted it authority to provide resold intra-MSA interexchange telecommunications services throughout Illinois.

In orders not included in the record, the Illinois Independent Telephone Association (IITA) and GTE North, Inc. (GTE), were apparently granted leave to intervene in this proceeding.

An evidentiary hearing on MCI's application for modification of its certificate of interexchange service authority was held on May 26, 1987. Robert M. Barry, a senior analyst for MCI, presented prepared testimony. Barry stated MCI possesses the technical and managerial ability to provide intra-MSA service. He stated, "the evidence used to support MCI's qualifications to provide inter-MSA service is identical to that needed to support an application to provide intra-MSA service." Barry also testified MCI's ability to provide intra-MSA service is further demonstrated by its continued provision of inter-MSA service.

Barry also stated MCI is financially qualified to provide intra-MSA service. It is the second largest interexchange telephone company in the nation, with substantial assets and a demonstrated ability to secure funds in the capital market. Barry further stated MCI's customers will use carrier-specific access codes when using MCI's dial one/direct dial service on an intra-MSA basis.

On cross-examination, Barry stated the services which MCI seeks to provide on an intra-MSA basis are the same as those it currently provides on an inter-MSA basis--dial one/direct dial service, credit card service, dedicated leased line service, and WATS service. There are presently no plans to provide services other than these.

Barry stated according to MCI's tariff, WATS customers must originate calls via dedicated facilities between their premises and MCI's terminal location, and such calls are terminated via a combination of MCI provided intercity facilities, local business telephone lines, and the resold facilities of other carriers. According to Barry, MCI is not certified to provide any facility-based local exchange service in Illinois. It might technically be possible for users of MCI's WATS, credit card, and dial one/direct dial services to use the services to make calls within a local exchange, but such use of these services is not cost effective. This is not "the service that MCI involves in the market place" and is not a service that MCI promotes. Sophisticated WATS users would have "very little incentive to give of a cost associated with tying up of a WATS line to make local exchange calls."

Carrier-specific access codes are not applicable to dedicated leased line service, and Barry believed they are also not applicable to WATS service. In some instances, MCI uses equipment and services provided by local exchange carriers in providing dedicated facilities between the users' premises and MCI's terminal location. Thus, use of dedicated facilities does not always permit the bypassing of local exchange carriers. Barry further stated the majority of WATS customers are "sophisticated telecommunications customers which are in most instances business customers."

To Barry's knowledge, the blocking of local calls is very difficult, and he does not feel MCI has the capability of doing this. Barry did not know if MCI's WATS service involves different technology from that involved in dial one/direct dial service.

Also submitting prepared testimony at the evidentiary hearing was Madelon A. Kuchera, who is director of the Telecommunications Program of the ICC's Policy Analysis and Research Division. Kuchera stated it was not necessary MCI demonstrate its financial, managerial, and technical standing to the ICC in this proceeding, since it had already demonstrated these matters in previous inter-MSA and reseller of service certificate of service authority proceedings. When asked if the introduction of facilities-based intra-MSA competition is in the public interest, Kuchera responded:

"Yes, the introduction of competition into the intraMSA market will yield more efficient pricing. Competition will ensure that prices better reflect the economic cost of providing the service. In the long run the public will benefit from facilities-based intra-MSA interexchange competition through increased choices of service offerings and the potential for lower prices brought about from increased competition."

Kuchera recommended MCI be granted authority to modify its existing certificate of interexchange service authority "to include the provision of intraMSA interexchange facilities based certificate of service authority."

On cross-examination, Kuchera stated she has done no studies to determine the impact on the primary toll carrier plan of granting MCI an intra-MSA certificate of interexchange service authority. Nor has she done any studies concerning the impact of MCI being granted such a certificate on access charges by local exchange carriers or local exchange rates.

At the evidentiary hearing, MCI, in response to a request of the IITA, agreed to provide a nontechnical description of dialing requirements for the various services contained in MCI's intrastate tariff. In a document filed June 3, 1987, MCI indicated the dialing of access codes is not necessary with respect to dedicated leased line service and WATS service. The dialing of access codes is necessary with respect to the credit card and dial one/direct dial services, except a user of dial one service need not dial an access code if the customer is presubscribed to the service, i.e., has chosen MCI as a its "1+" carrier.

In a supplemental order entered September 30, 1987, the ICC granted MCI a modification of its certificate of interexchange service authority, thereby permitting MCI to provide facilities-based intra-MSA interexchange telecommunications service.

The IITA filed an application for rehearing on November 5, 1987, and GTE filed a petition for rehearing on the same day. On November 24, 1987, the ICC denied both of the above motions.

The IITA and GTE appeal the ICC's September 30, 1987, supplemental order. They assert the order is erroneous and contrary to State law because: (1) it permits...

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