In re Union Tel. Co.

• Decision Date: 20 May 2010
• Docket Number: Nos. 2009–168,2009–432.,s. 2009–168
• Citation: 999 A.2d 336,160 N.H. 309
• Court: New Hampshire Supreme Court
• Parties: Appeal of UNION TELEPHONE COMPANY d/b/a Union Communications (New Hampshire Public Utilities Commission).

160 N.H. 309

999 A.2d 336

Appeal of UNION TELEPHONE COMPANY d/b/a Union Communications (New Hampshire Public Utilities Commission).

Nos. 2009–168

2009–432.

Supreme Court of New Hampshire.

Argued: Jan. 20, 2010.

Opinion Issued: May 20, 2010.

Murtha Cullina LLP, of Boston, Massachusetts (Olga L. Bogdanov and Robert J. Munnelly, Jr. on the brief, and Mr. Munnelly orally), for petitioner MetroCast Cablevision of New Hampshire, LLC.

IDT America, Corp., filed no brief.

Rothfelder Stern, L.L.C., of Westfield, New Jersey (Martin C. Rothfelder on the brief and orally), for Union Telephone Company d/b/a Union Communications.

Michael A. Delaney, attorney general (Glenn A. Perlow, assistant attorney general, on the brief and orally), for the State.

Devine, Millimet & Branch, P.A., of Concord (Frederick J. Coolbroth and another on the brief), for Bretton Woods Telephone Company, Inc., Dixville Telephone Company, Dunbarton Telephone Company, Inc., Granite State Telephone, Inc., Kearsarge Telephone Company, and Merrimack County Telephone Company, as amici curiae.

DALIANIS, J.

In these consolidated appeals, Union Telephone Company d/b/a Union Communications (Union) appeals orders of the New Hampshire Public Utilities Commission (PUC) denying Union's motions to rescind the PUC's grants of authority to the petitioners, MetroCast Cablevision of New Hampshire, LLC (MetroCast) and IDT America, Corp. (IDT), to operate as competitive local exchange carriers in Union's service territory. We reverse and remand.

The record reveals the following facts. Union is a small incumbent local exchange carrier that operates in Alton, Barnstead, Center Barnstead, Farmington, Gilmanton, New Durham and Strafford. On September 19, 2008, MetroCast applied to the PUC to amend its certification as a competitive local exchange carrier to include Union's service territory in addition to its existing service in the territory of Northern New England Telephone Operations LLC, d/b/a FairPoint Communications (FairPoint). On September 30, 2008, the PUC granted MetroCast's application. See RSA 374:22–g (2009); N.H. Admin. Rules, PUC 431.01.

IDT provides telecommunications services jointly with MetroCast. On February 27, 2009, IDT applied to amend its certification as a competitive local exchange carrier to include Union's service territory in addition to the existing service it provides in FairPoint's territory. The PUC granted IDT's application on March 3, 2009.

Union filed motions with the PUC to rescind the authority granted to MetroCast and IDT to operate in its service territory, which the PUC denied. These appeals followed.

I. Standing

We first address MetroCast's assertion that Union lacks standing to appeal the PUC's orders. To have standing to appeal an administrative agency decision to this court, a party must demonstrate that its rights "may be directly affected by the decision, or in other words, that [it] has suffered or will suffer an injury in fact." Appeal of Richards, 134 N.H. 148, 154, 590 A.2d 586 (quotations and citations omitted), cert. denied, 502 U.S. 899, 112 S.Ct. 275, 116 L.Ed.2d 227 (1991) ; see RSA 541:3 (2007).

MetroCast argues that Union lacks standing because it has failed to show a direct injury from the PUC's decisions. MetroCast contends that "[t]he potential for increased competition in ... Union['s] territory, even if true, is insufficient to establish injury." We hold that, because Union will face competition in its service area as a result of the PUC's orders, Union has standing to appeal them. See New Hampshire Bankers Ass'n v. Nelson, 113 N.H. 127, 129, 302 A.2d 810 (1973).

II. Standard of Review

A party seeking to set aside an order of the PUC has the burden of demonstrating that the order is contrary to law or, by a clear preponderance of the evidence, that the order is unjust or unreasonable. RSA 541:13 (2007); see Appeal of Verizon New England, 153 N.H. 50, 56, 889 A.2d 1027 (2005). Findings of fact by the PUC are presumed prima facie lawful and reasonable. RSA 541:13 ; see Appeal of Verizon New England, 153 N.H. at 56, 889 A.2d 1027. Moreover, we deferentially review PUC orders such as the ones at issue. See Appeal of Verizon New England, 158 N.H. 693, 695, 972 A.2d 996 (2009). "When we are reviewing agency orders which seek to balance competing economic interests, or which anticipate such an administrative resolution, our responsibility is not to supplant the PUC's balance of interests with one more nearly to our liking." Id. (quotation, ellipsis and brackets omitted).

"The statutory presumption, and the corresponding obligation of judicial deference are the more acute when we recognize that discretionary choices of policy necessarily affect such decisions, and that the legislature has entrusted such policy to the informed judgment of the [PUC] and not to the preference of reviewing courts." Appeal of Conservation Law Foundation, 127 N.H. 606, 616, 507 A.2d 652 (1986) (quotation omitted). While we give the PUC's policy choices considerable deference, we review the PUC's statutory interpretation de novo . See Appeal of Verizon New England, 158 N.H. at 695, 972 A.2d 996.

III. Union's Arguments

Union argues that the PUC erred when it processed the applications of MetroCast and IDT pursuant to New Hampshire Administrative Rules, PUC 431.01 and failed to afford Union prior notice and a hearing as required by RSA 374:26 (2009) and the Due Process Clause of the Federal Constitution. See U.S. CONST. amends. V, XIV. We address these arguments in turn.

A. Rule 431.01

The PUC processed the applications of MetroCast and IDT to serve as competitive local exchange carriers in Union's territory pursuant to Rule 431.01, which provides that "[b]efore commencing operations as a [competitive local exchange carrier] in New Hampshire, the entity proposing to provide [this] service shall register with the [PUC]" by filing certain materials and forms. N.H. Admin. Rules, PUC 431.01(b), (c). Unless the PUC denies the request, the PUC "shall issue a[n] ... authorization number which authorizes the applicant to provide competitive local exchange service in the territory of non-exempt [incumbent local exchange carriers]." N.H. Admin. Rules, PUC 431.01(d).

Rule 402.33 defines a non-exempt incumbent local exchange carrier as a carrier "that is not exempt pursuant to 47 U.S.C. § 251(f)." N.H. Admin. Rules, PUC 402.33. Union is an exempt incumbent local exchange carrier within the meaning of Rules 431.01(d) and 402.33. Accordingly, Union contends that the PUC erred by applying the process under Rule 431.01 to it.

To place Union's arguments in context, we believe that a brief summary of federal law is warranted. "Until the 1990's, local phone service was thought to be a natural monopoly." AT & T Corp. v. Iowa Utilities Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999). "States typically granted an exclusive franchise in each local service area to a local exchange carrier ..., which owned, among other things, the ... wires connecting telephones to switches[ ], the ... equipment directing calls to their destinations [ ], and the ... wires carrying calls between switches[ ] that constitute a local exchange network." Id. When technological advances made competition among providers of local service seem possible, Congress enacted the Telecommunications Act of 1996 (the Telecommunications Act), of which 47 U.S.C. § 251(f) (2006) is a part, to "end[ ] the longstanding regime of state-sanctioned monopolies," AT & T Corp., 525 U.S. at 371, 119 S.Ct. 721, and "to ... create a national telecommunications policy that strongly favor[s] competition in the local market." Global NAPs, Inc. v. Verizon New England, 444 F.3d 59, 61–62 (1st Cir.2006) (quotation omitted); see Verizon Maryland Inc. v. Public Serv. Comm'n of Maryland, 535 U.S. 635, 638, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002). To achieve these goals, the Telecommunications Act fundamentally restructured local telephone markets. AT & T Corp., 525 U.S. at 371, 119 S.Ct. 721.

Pursuant to the Telecommunications Act, "incumbent [local exchange carriers] are subject to a host of duties intended to facilitate market entry." Id. Chief among them is the local exchange carrier's obligation "to allow competitive local exchange carriers ... to interconnect with their networks." Global Naps, 444 F.3d at 62; see 47 U.S.C. § 251(a)(1). By imposing such duties upon incumbent local exchange carriers, the Act "neutraliz [es] the competitive advantage inherent in incumbent carriers' ownership of the physical networks required to supply telecommunications services." Pacific Bell v. Pac–West Telecomm, Inc., 325 F.3d 1114, 1118 (9th Cir.2003). As a "rural telephone company," 47 U.S.C. § 153(37) (2006), Union is exempt from some of these duties. See 47 U.S.C. § 251(c) (2006), (f) (exempting rural telephone companies from duties set forth under paragraph (c)). "By granting rural and small [local exchange carriers] relief from interconnection obligations instead of an outright prohibition on competition, ... Congress demonstrated its intent to open all markets to potential competitors—even markets served by rural or small [local exchange carriers] that may qualify for interconnection relief." In the Matter of Silver Star Telephone Company, Inc., 12 F.C.C.R. 15,639, 15,659 (1997) (emphasis added), aff'd by RT Communications, Inc. v. F.C.C., 201 F.3d 1264 (10th Cir.2000).

Union's exemption from some of these interconnection requirements, however, is not absolute. The PUC must "terminate the exemption" within 120 days of receiving notice that a carrier has made a bona fide request for interconnection "if the request is not unduly economically burdensome, is technically feasible," and is consistent with certain other provisions of the Act. 47 U.S.C. § 251(f)(1)(B). Under the federal scheme, the party requesting interconnection with a rural telephone company must submit a notice of its request to the state commission, and the...