Mountain States Telephone & Telegraph Co. v. Public Service Commission

• Decision Date: 25 October 1943
• Docket Number: 6557
• Citation: 105 Utah 230,142 P.2d 873
• Parties: MOUNTAIN STATES TELEPHONE & TELEGRAPH CO. v. PUBLIC SERVICE COMMISSION et al
• Court: Utah Supreme Court

142 P.2d 873

105 Utah 230

MOUNTAIN STATES TELEPHONE & TELEGRAPH CO. v. PUBLIC SERVICE COMMISSION et al

No. 6557

Supreme Court of Utah

October 25, 1943

For opinion on rehearing see 105 Utah 266, 145 P. 2d 790.

Original proceeding in certiorari by the Mountain States Telephone &amp Telegraph Company against the Public Service Commission of Utah and George S. Ballif and others, Commissioners of the Public Service Commission of Utah, to review an order requiring the petitioner to reduce its intrastate toll message rates.

Order set aside, and matter remanded to the commission in accordance with opinion.

W. Q Van Cott, of Salt Lake City, and Brock, Akolt & Campbell, of Denver, Colorado., for plaintiff.

Grover A. Giles, Atty. Gen., Clinton D. Vernon, of Logan, and Warwick C. Lamoreaux, of Salt Lake City, for defendants.

WOLFE Chief Justice. LARSON, McDONOUGH, MOFFAT and WADE, JJ concur.

OPINION

WOLFE, Chief Justice.

Certiorari to the Public Service Commission to review an order requiring the petitioner, Mountain States Telephone and Telegraph Company, to reduce its intrastate toll message rates.

The facts are, for the most part, not in dispute. The Mountain States Telephone and Telegraph Company (hereafter called Mountain States) is a telephone utility company operating in Colorado, Utah, Arizona, Idaho, Montana, New Mexico, Wyoming, and El Paso County, Texas. It is one of twenty-three associated companies in the Bell System which system is controlled by the American Telephone and Telegraph Company (hereafter called A. T. & T.). Mountain States is under the "sole" and "direct" control of A. T. & T., which owns 73.23 per cent of Mountain States voting stock. The remaining stock of Mountain States is divided into 480,497 shares owned by 4,354 stockholders.

The Long Lines Department of A. T. & T. (hereafter called Long Lines) operates toll lines in the territory served by the Associated Bell Companies and has two such lines crossing the State of Utah--one running from east to west and the other from north to south. These A. T. & T. lines make physical connections with Mountain States facilities in Utah at only two points, both lines connecting at Salt Lake City and one connecting at Cedar City. A. T. & T. has no operating personnel in Utah. Its Utah properties are operated by Mountain States employees. Mountain States is by contract licensed to use within its territories all telephone patents owned or controlled by A. T. & T. and it also secures "advice" and "assistance" from said company. Most of the equipment and supplies used by Mountain States in its operations are furnished by Western Electric Company, which company is also owned and controlled by A. T. & T. In addition, Western Electric installs much of the central office equipment owned by Mountain States.

In 1941 Mountain States owned over 95 per cent of total telephones in service in Utah. It furnishes general wire communication including both telephone and non-telephone uses. Non-telephone uses include telegraph, tele-typewriter, program transmission for radio, and others. Telephone uses are primarily designated as exchange and toll. Exchange is use within an exchange, such as within Salt Lake City; toll use is between exchanges, such as between Salt Lake City and Ogden. Both interstate and intrastate toll service is rendered by Mountain States. In rendering interstate toll service within the area in which it operates, Mountain States often uses only its own facilities. But it is often necessary in rendering interstate toll service for it to use, in addition to its own facilities, the facilities of the Long Lines Department of A. T. & T. and other Associated Bell Companies.

The Commission found that separate tariffs are published in Utah covering (1) rates for Utah intrastate toll service and (2) rates for interstate toll service handled jointly with A. T. & T. Its interstate rates for jointly handled toll calls are based upon the tariff of the Long Lines Department of the American Company, known as FCC Tariff No. 132. By virtue of a "concurrence" filed by the Company with the Federal Communications Commission in November, 1941, it formally adopted that tariff as its own tariff for jointly handled interstate message toll telephone service. This latter finding is in accord with the uncontradicted evidence.

The present proceeding was instigated in October, 1941, by the Commission to investigate alleged discriminations between Mountain States intrastate toll rates and the toll rates charged by Mountain States for interstate service handled jointly with the A. T. & T. Long Lines Department. The differences between these two schedules of rates will be brought out more fully in the later discussion. It can, however, be noted at this time that both tariffs are based upon airline distances between exchange centers. Long Lines toll rates are generally lower than the Mountain States intrastate toll rates for Utah for comparable distances, but for distances of 16 miles and below the tariffs are the same, aside from certain so-called "exception rates" hereafter mentioned. The inquiry was directed only toward the differences between Mountain States intrastate rates and the rates applicable to interstate toll rates charged on calls handled jointly with A. T. & T. and other Associated Bell Companies. No attempt was made to compare Mountain States' intrastate rates with Mountain States' intracompany interstate rates. The order of the Commission is not at all based upon the differences which exist between Mountain States' intracompany intrastate rates and its intracompany interstate rates for comparable distances. The reasons why this comparison was not made do not appear.

Mountain States contends, and at the hearing attempted to show, that the differences between Mountain States intrastate toll rates and its rates for interstate toll messages handled jointly with A. T. & T. were reasonable and did not constitute unjust or unreasonable discrimination. The Commission, however, found that the practice of.

"charging higher rates for intrastate toll service for distances in excess of 16 miles than it charges for interstate toll service for comparable distances is the maintenance of unreasonable differences as to rates and charges and constitutes the granting of preference or advantage to users of interstate toll service and the subjecting of users of intrastate toll service to prejudicial and disadvantageous treatment in violation of the statute."

On the basis of this finding the Commission ordered Mountain States to reduce its intrastate toll rates for all distances above 16 miles to the level of the A. T. & T. Long Lines rates for comparable distances. It also ordered Mountain States to discontinue the practice of making a report charge on incompleted intrastate person to person toll calls because of the fact that such report charges were not made on such incompleted interstate calls.

Mountain States seeks by a writ of certiorari to have this order vacated on the grounds: (1) That the order is not supported by evidence showing that these differences constitute unlawful discrimination; (2) that if unreasonable discrimination had been shown to exist the commission acted arbitrarily in ordering a reduction to the level of A. T. & T. Long Lines rates without inquiring as to whether such latter rates would be reasonable for Utah intrastate toll service; (3) that the commission unlawfully refused to allow Mountain States to show that any reduction in intrastate toll rates would confiscate the toll plant used in rendering such service; (4) that the commission acted arbitrarily in precluding Mountain States from making a comparison between its intrastate toll rates and the intrastate toll rates of other independent telephone companies operating in Utah; (5) that the commission acted arbitrarily in eliminating differences between the two rate schedules for distances above 16 miles without eliminating the differences in such schedules for distances of 16 miles and under; (6) that the commission was arbitrary in ordering the elimination of report charges; and (7) that the commission did not give Mountain States a fair and impartial hearing.

In attempting to show a reasonable basis for these differences in toll rates, Mountain States produced evidence purporting to show that there were differences in conditions under which it and Long Lines operated which would justify higher rates for its intrastate toll service; that Mountain States had higher operating costs. The evidence thus produced was not contradicted and disclosed the following:

Both concerns base their rates on airline distances. Long Lines rates reflect the average cost of operations over the United States as a whole. Mountain States intrastate rates reflect Utah costs. Two of the more important factors in determining the cost of providing toll service are: (1) Terminal costs and (2) line haul costs. The originating cost and cost of terminal operations for rendering either interstate or intrastate service in Utah would be practically the same because of the fact that Mountain States provides the toll board facilities and the operating personnel for both. Long Lines has no operating personnel or toll boards in Utah. All equipment from the subscriber's station (his home, office, etc.) to the toll board is owned and operated by Mountain States. Thus the same operating personnel and facilities are used in terminal operations both in intrastate and in jointly handled interstate toll calls.

Two principal factors responsible for differences in line haul costs are: (1) Costs per mile of toll circuits i. e., relative investment, and (2) volume of business available to move over the circuit, i. e., density of traffic....