In re MCI Telecommunications Complaint, No. 112363

• Court: Supreme Court of Michigan
• Writing for the Court: MICHAEL F. CAVANAGH, J.
• Citation: 460 Mich. 396,596 N.W.2d 164
• Parties: In re MCI TELECOMMUNICATIONS COMPLAINT Against Ameritech Michigan and GTE North Incorporated Relative To Their Not Making Intralata Equal Access Available To MCI In The State of Michigan. Michigan Public Service Commission, MCI Telecommunications Corporation, AT & T Communications of Michigan, Inc., and Attorney General of the State of Michigan, Appellants, v. Michigan Bell Telephone Company, doing business as Ameritech Michigan, Appellee, MCI Telecommunications Corporation, and AT & T Communications of Michigan, Inc. Plaintiffs-appellants, and Michigan Public Service Commission and Attorney General of the State of Michigan, Intervening Plaintiffs-Appellants, v. Michigan Bell Telephone Company, doing business as Ameritech Michigan, Defendant-Appellee.
• Docket Number: No. 112364, No. 112363, No. Calendar No. 12., No. 112367-112369, No.
• Decision Date: 08 July 1999

596 N.W.2d 164
460 Mich. 396

In re MCI TELECOMMUNICATIONS COMPLAINT Against Ameritech Michigan and GTE North Incorporated Relative To Their Not Making Intralata Equal Access Available To MCI In The State of Michigan.
Michigan Public Service Commission, MCI Telecommunications Corporation, AT & T Communications of Michigan, Inc., and Attorney General of the State of Michigan, Appellants,
v.
Michigan Bell Telephone Company, doing business as Ameritech Michigan, Appellee,
MCI Telecommunications Corporation, and AT & T Communications of Michigan, Inc. Plaintiffs-appellants, and
Michigan Public Service Commission and Attorney General of the State of Michigan, Intervening Plaintiffs-Appellants,
v.
Michigan Bell Telephone Company, doing business as Ameritech Michigan, Defendant-Appellee

Nos. 112363, 112364, and 112367-112369, Calendar No. 12.

Supreme Court of Michigan.

Argued March 11, 1999.

Decided July 8, 1999.

596 N.W.2d 167

Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, J. Peter Lark and Orjiakor N. Isiogu, Assistant Attorneys General, Special Litigation Division, Lansing, for Michigan Public Service Commission and the state of Michigan

Fischer, Franklin & Ford (by George Hogg, Jr., Arthur J. LeVasseur, and Sidney M. Berman ), Detroit, Joan Marsh and John J. Reidy, III, Chicago, of counsel, for AT & T Communications of Michigan Inc.; Dykema, Gossett, P.L.L.C. (by Albert Ernst and Lori M. Silsbury ), Lansing, and MCI Worldcom, Inc. (by William Single, IV, and Mark B. Ehrlich), of counsel, for MCI Telecommunications Corporation, Washington, D.C.

David A. Voges, Henry J. Boynton, and David M. Gadaleto, Assistant Attorneys General, Lansing, for Michigan Public Service Commission.

Dickinson, Wright, P.L.L.C. (by Joseph A. Fink, Peter H. Ellsworth, John M. Dempsey, Jeffery V. Stuckey, and Jennifer L. Frye ), Lansing, and Michael A. Holmes, Detroit, for appellee Ameritech Michigan.

596 N.W.2d 165

596 N.W.2d 166

Opinion

MICHAEL F. CAVANAGH, J.

In these consolidated cases, we are called on to address whether Ameritech must provide intraLATA toll dialing parity regardless of whether it is afforded the opportunity to compete in the interLATA market, and to review the appropriateness of various Michigan Public Service Commission (PSC) orders that were entered to compel Ameritech to provide such parity. For the reasons discussed below, we reverse in part and affirm in part the

596 N.W.2d 168

judgment of the Court of Appeals,¹ affirm several orders of the PSC, uphold the reversal of other orders of the PSC, and reverse the writ of mandamus issued by the Ingham Circuit Court

I

A

We begin our review of the convoluted undertakings that form the basis of these actions with reference to the facts of this case as they were ably presented by Judge Smolenski in his opinion for the Court of Appeals, which we quote below.

This case concerns whether Ameritech is required to provide "intraLATA toll dialing parity" in the absence of "interLATA relief."

Before 1982, American Telephone and Telegraph Company, a provider of both local and long distance telephone service, dominated the telecommunications industry.1 The key to AT & T's domination was its control of local telephone service.2 AT & T provided local telephone service through its numerous Bell operating companies, one of which was Michigan Bell Telephone Company,3 now doing business as Ameritech.

1 United States v. American Telephone & Telegraph Co., 552 F.Supp. 131, 222 (D.D.C., 1982).

2 Id., n. 1 at 223.

3 Id., n. 2 at 139, n. 19, 228, 232.

In 1982, AT & T agreed to the entry of a consent decree entitled "Modification of Final Judgment" in federal court (the AT & T consent decree). See, generally, United States v. American Telephone & Telegraph Co., 552 F.Supp. 131 (D.D.C., 1982). For the purpose of ending AT & T's monopoly over local telephone service, the AT & T consent decree provided that AT & T would divest itself of its Bell operating companies.4 The AT & T consent decree provided that the Bell operating companies would be authorized to provide telephone service only within certain defined geographic regions generally corresponding to telephone area code regions called "local access transport areas." 5 (LATAs.)6 This service, called intraLATA service, includes local calls, i.e., typically telephone calls within a city or town, as well as toll calls, i.e., calls covering a distance beyond local calls but within the same LATA (intraLATA toll calls).7 However, the AT & T consent decree provided that the Bell operating companies were prohibited from providing interLATA service, i.e., telephone service between LATAs.8 The AT & T consent decree further provided that the interLATA prohibition could be removed when a Bell operating company showed that there was no substantial possibility that it could use its monopoly power to impede competition in the market it sought to enter.9 As a result, at least in part, of the AT & T consent decree, during the 1980s in Michigan a customer's intraLATA toll calls were carried by a local carrier such as Ameritech while a customer's interLATA calls were carried by an interexchange (long distance) carrier such as AT & T of Michigan or MCI.10

4 Id., at 141, 223, 226.

5 Id. at 141, 224, 227; see also Bell Atlantic-New Jersey, Inc. v. Tate, 962 F.Supp. 608, 611 (D.N.J., 1997); United States v. Western Electric Co., Inc., 569 F.Supp. 990, 993-994 (D.D.C., 1983); GTE North Inc. v. Public Service Comm., 215 Mich.App. 137, 140, 544 N.W.2d 678 (1996).

6 There are five LATAs in Michigan. GTE North, n. 5 supra.

7 Bell Atlantic-New Jersey, see also Western Electric, n. 5 supra.

8 AT & T Co., supra at 227; see Bell Atlantic-New Jersey, n. 5 supra; Western Electric, n. 5 supra; GTE North, n. 5 supra.

9 AT & T Co., supra at 195, 231.

10 Bell Atlantic-New Jersey, n. 5 supra; GTE North, n. 5 supra.

In the late 1980s, the PSC authorized AT & T of Michigan and MCI to begin

596 N.W.2d 169

competing in the Michigan intraLATA toll market.11 However, in order for an interexchange carrier such as AT & T of Michigan or MCI to provide service for a customer's intraLATA toll call, the customer must dial a five-digit "10xxx" prefix to the number to be called, with the "xxx" being a three-digit identification code assigned to each interexchange carrier. The PSC allowed local carriers such as Ameritech to retain the use of what is termed "1 +" or "0 +" dialing, meaning that Ameritech provides service for a customer's intraLATA toll call when the customer adds only a single digit prefix (either a "1" or "0") to the number to be called.

11 GTE North, n. 5 supra.

These dialing arrangements are the root of this case. MCI and AT & T of Michigan do not like these dialing arrangements for intraLATA toll calls because they believe "1 +" and "0 +" dialing gives Ameritech a substantial competitive advantage in the intraLATA toll market. MCI and AT & T of Michigan want "intraLATA toll dialing parity," i.e., "uniform 1 + dialing arrangements for all intraLATA service by all providers...." However, Ameritech's position has always been that it should not be required to provide intraLATA toll dialing parity until it has been accorded "interLATA relief," i.e., the authority to compete in the interLATA market.

In July 1992, MCI commenced this proceeding in the PSC, U-10138, by filing a complaint alleging, in part, that Ameritech was violating various provisions of the Michigan Telecommunications Act, 1991 P.A. 179, M.C.L. § 484.2101 et seq.; MSA 22.1469(101) et seq. (Act 179 or the MTA), by failing to make intraLATA toll dialing parity available to MCI. At some point, the Attorney General and AT & T of Michigan intervened in this proceeding. Although finding that Ameritech's failure to provide intraLATA toll dialing parity did not violate Act 179, the PSC ultimately determined that implementation of intraLATA toll dialing parity was in the public interest and, in a February 1994 decision, ordered Ameritech to implement intraLATA toll dialing parity in Michigan "no later than January 1, 1996." The decision also provided that a task force would be established to work out the procedures for implementing intraLATA toll dialing parity. Ameritech moved for a rehearing and reconsideration, which was denied by the PSC in a July 1994 decision.

After the task force submitted a report to the PSC containing certain recommendations and noting certain disputed issues, the PSC issued a March 1995 decision in which it ordered Ameritech to begin implementing intraLATA toll dialing parity on January 1, 1996, in those offices in which it was technically possible to do so and to adopt a firm schedule for converting to intraLATA toll dialing parity for those offices in which it was not technically possible to do so by January 1, 1996. The decision also provided that a fifty-five percent discount on access charges would be imposed on those offices that did not meet the schedule for converting to intraLATA toll dialing parity. Access charges apparently are paid by an interexchange carrier such as AT & T of Michigan and MCI to a local carrier such as Ameritech for the interexchange carrier's use of the local carrier's local network during the initial and final link of an intraLATA toll call serviced by the interexchange carrier. In imposing the discount, the PSC rejected the contention that the discount was a penalty. The PSC reasoned that the discount was warranted because nonconverted access services whereby customers would have to continue to dial five-digit access codes plus the number to be called in order for an interexchange carrier to service an intraLATA toll call were of lesser quality than converted access services

596 N.W.2d 170

whereby an interexchange carrier would service the call simply when customers dialed a one-digit prefix plus the number to be called.

Effective November 30, 1995, the Legislature enacted 1995 P.A. 216, M.C.L....