Investigation into Intra-LATA Equal Access and Presubscription, Matter of

• Decision Date: 06 June 1995
• Docket Number: INTRA-LATA,Nos. C1-94-2429,C4-94-2439,s. C1-94-2429
• Citation: 532 N.W.2d 583
• Parties: In the Matter of an INVESTIGATION INTOEQUAL ACCESS AND PRESUBSCRIPTION. CONTEL OF MINNESOTA, INC., d/b/a GTE Minnesota, et. al., Relators, v. MINNESOTA PUBLIC UTILITIES COMMISSION, Respondent.
• Court: Minnesota Court of Appeals

Page 583

532 N.W.2d 583

In the Matter of an INVESTIGATION INTO INTRA-LATA EQUAL ACCESS AND PRESUBSCRIPTION CONTEL OF MINNESOTA, INC., d/b/a GTE Minnesota, et. al., Relators, v. MINNESOTA PUBLIC UTILITIES COMMISSION, Respondent.

Nos. C1-94-2429, C4-94-2439.

Court of Appeals of Minnesota.

June 6, 1995.

Review Denied Aug. 30, 1995.

Syllabus by the Court

An agency action is final and reviewable when the agency completes its decisionmaking process and the result of that process directly affects a party. Commission proceedings implementing intra-LATA equal access presubscription were fair, and the Commission did not abuse its discretion by declining to engage in rulemaking. There is no need for an additional contested case hearing where no material facts are in dispute.

David G. Seykora, William M. Ojile, Jr., Richard L. Johnson, U.S. West Communications, Inc., Minneapolis, and Melvin B. Goldberg, St. Paul, for relator U.S. West Communications, Inc.

Charles Hoffman, Maslon, Edelman, Borman & Brand, Minneapolis, and William D. Kolb, James C. Stroo, Wentzville, MO, for relator Contel of Minn., Inc. and GTE, Minn.

Hubert H. Humphrey, III, Atty. Gen., Margaret E. Hendriksen, Asst. Atty. Gen., St. Paul, for respondent Minn. Public Utilities Com'n.

John B. Van De North, Jr., Mark J. Ayotte, Briggs and Morgan, St. Paul, Larry Salustro, AT & T Legal Dept., Chicago, IL, for intervenor-respondent AT & T Communications of the Midwest, Inc.

Amy Klobuchar, Gregory Merz, Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, Edward Washington, II, Chicago, IL, for intervenor-respondent MCI Communications Corp.

Considered and decided by SHORT, P.J., and HUSPENI and JONES, ^* JJ.

OPINION

SHORT, Judge.

In this consolidated appeal, relators US West Communications, Inc. ("US West") and Contel of Minnesota, Inc. d/b/a GTE Minnesota et al. ("GTE") seek review of an order that establishes guidelines for implementing intra-LATA equal access presubscription in Minnesota. The Minnesota Public Utilities Commission (Commission) moves for dismissal and alleges the issues now raised by US West and GTE were decided in prior unappealed orders. MCI Telecommunications Corporation (MCI) and AT & T Communications of the Midwest, Inc. (AT & T) intervene as respondents.

FACTS

This action is a fallout of the antitrust lawsuit filed by the United States Department of Justice against the Bell Telephone Company system. United States v. American Tel. & Tel. Co., 552 F.Supp. 131 (D.D.C.1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983). In that case and subsequent cases, including United States v. Western Elec. Co., Inc., 569 F.Supp. 990 (D.D.C.1983) and United States v. Western Elec. Co., Inc., 569 F.Supp. 1057 (D.D.C.1983), aff'd sub nom. New York State Dep't of Pub. Serv. v. United States, 464 U.S. 1013, 104 S.Ct. 542, 78 L.Ed.2d 719 (1983), the trial court approved a consent decree and ordered: (1) divestiture of AT & T's local operating companies to prevent anticompetitive behavior; (2) reorganization of local Regional Bell Operating Companies (RBOCs), which were given local exchange monopolies and short-haul toll service in proximity to those local exchanges; (3) division of the country into geographic service areas called local access and transport areas (LATAs); (4) maintenance by AT & T of inter-LATA exchange service; (5) prohibition against RBOCs entering the inter-LATA business; and (6) inter-LATA equal access presubscription.

US West is an RBOC and provides telephone service in several states, including Minnesota. GTE provides local telephone service to 116 mostly rural Minnesota exchanges. While GTE is not an RBOC, its operating companies are subject to the same inter-LATA restrictions imposed on US West. United States v. GTE Corp., 603 F.Supp. 730, 732-33 (D.D.C.1984).

There are five LATAs in Minnesota. Inter-LATA service is long-distance toll service across LATA boundaries; Intra-LATA service is service within a LATA, including both local telephone service and short-haul long distance toll service. While the federal courts prohibited the RBOCs and GTE from providing inter-LATA service, the courts left regulation of intra-LATA service to the states. Western Electric Co., Inc., 569 F.Supp. at 1109. Forty-five states have or are in the process of authorizing intra-LATA competition. Petition of MCI Telecommunications, 263 N.J.Super. 313, 622 A.2d 1314, 1316 (A.D.1993).

Initially, in Minnesota, US West (then Northwestern Bell Telephone Company) was the sole authorized provider of intra-LATA toll service. In 1984, AT & T and other long distance carriers requested intra-LATA service authority. The Commission consolidated those requests with other service issues in Docket 212. After a contested case hearing, in which US West and GTE participated, the Commission found "competition in the intra-LATA market as well as the inter-LATA market is in the public interest," and authorized AT & T and other long distance carriers to compete in Minnesota's intra-LATA market. After that decision, subscribers could reach AT & T (inter-LATA) and US West (intra-LATA) by dialing one or zero plus the telephone number and could reach other carriers by dialing an access code plus the telephone number. There was no appeal from the order in Docket 212.

In 1985, the Commission again considered the intra-LATA competition issue in Docket 582. In the hearing notice, the Commission asked whether intra-LATA equal access presubscription should be required by a certain date, whether and how exceptions could be allowed, and how upgrade costs should be recovered. After a contested case hearing, in which US West and GTE participated, the Commission found US West, as the sole one plus toll carrier, held virtually all of the intra-LATA toll service. In Docket 582, the Commission ordered that intra-LATA equal access presubscription was necessary so the subscriber could reach a preselected intra-LATA long distance carrier by dialing only the prefix one or zero plus the telephone number. Although the Commission concluded equal access presubscription was necessary for effective competition, it recognized two problems:

First, the technology has yet to be developed which would allow for the provision of intra-LATA equal access presubscription at a reasonable cost. * * * Second, a method to pay for the development and installation of intra-LATA equal access presubscription has not been established by this Commission.

To address these issues, the Commission initiated a study committee in Docket 697. However, the Commission cautioned:

[T]his study group will not address the policy of whether equal access presubscription should be provided, but rather should address itself to how the technical and economic barriers to equal access can be overcome.

In denying reconsideration of its order in Docket 582, the Commission specifically: (1) denied US West's request to reserve decision on intra-LATA equal access presubscription until completion of Docket 697; and (2) said that it would not revisit whether equal access presubscription was required. No one appealed from that order.

In 1987, the RBOCs asked a federal court to lift all restrictions on their provision of inter-LATA toll service. Finding that the RBOCs' exchange monopoly still existed and that competitors were still disadvantaged, the federal court denied the request to lift the prohibition against inter-LATA service. United States v. Western Electric Co., Inc., 673 F.Supp. 525, 538 (D.D.C.1987), aff'd in part, rev'd in part, 900 F.2d 283 (D.C.Cir.1990), and cert. denied, 498 U.S. 911, 111 S.Ct. 283, 112 L.Ed.2d 238 (1990). In addition, the RBOCs have lobbied for legislation to lift the restrictions on inter-LATA competition, or at least, to preclude states from requiring dialing parity prior to inter-LATA relief. See, e.g., Telecommunications Competition and Deregulation Act of 1995, S. 652, 108th Cong., 1st Sess. (1995); Brooks-Dingell Bill, H.R. 3626, 103rd Cong., 2d Sess. (1993). To date, such legislation has not been enacted.

The investigation in Docket 697 took almost two years. The study committee conducting the investigation included representatives from US West and GTE. US West requested an expedited hearing or, in the alternative, a contested case, to determine whether the implementation of intra-LATA equal access presubscription was in the public interest. The Commission denied US West's request, concluding it had previously decided intra-LATA equal access presubscription service was in the public interest and should be implemented. In July 1994, the Commission issued an order in Docket 697 which established guidelines for implementing intra-LATA equal access presubscription. The Commission denied US West's petition for reconsideration. Both US West and GTE petitioned for review by writ of certiorari.

ISSUES

I. Should this appeal be dismissed because it raises issues which were decided in prior appealable orders?

II. Did the Commission abuse its discretion or otherwise act unfairly by failing to engage in rulemaking prior to issuing its guidelines?

III. Did the Commission engage in unlawful procedure when it issued orders in Docket 697 without holding a contested case hearing?

ANALYSIS

On writ of certiorari, we determine whether the Commission violated the constitution, exceeded its authority, engaged in unlawful procedure, erred as a matter of law, issued a decision unsupported by substantial evidence, or acted arbitrarily or capriciously. Minn.Stat. § 14.69 (1992). We defer to the agency's expertise in fact finding, and will affirm the agency's decision if it is lawful and reasonable. Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 824-26 (Minn.1977); see Mammenga v. State, Dep't of Human Servs., 442 N.W.2d 786, 789 (Minn.1989) (an agency's decision is presumed to be correct). When reviewing questions of law, however, we are not bound by the...