Ohio Bell Tel. Co. v. Pub. Util. Comm.

• Decision Date: 08 July 1992
• Docket Number: No. 91-1761,91-1761
• Citation: 64 Ohio St.3d 145,593 N.E.2d 286
• Parties: , 134 P.U.R.4th 96 OHIO BELL TELEPHONE COMPANY et al., Appellants, v. PUBLIC UTILITIES COMMISSION OF OHIO et al., Appellees.
• Court: Ohio Supreme Court

Page 145

64 Ohio St.3d 145

593 N.E.2d 286, 134 P.U.R.4th 96

OHIO BELL TELEPHONE COMPANY et al., Appellants, v. PUBLIC UTILITIES COMMISSION OF OHIO et al., Appellees.

No. 91-1761.

Supreme Court of Ohio.

Submitted April 14, 1992.

Decided July 8, 1992.

SYLLABUS BY THE COURT

Before the Public Utilities Commission of Ohio may order a change in utility rates upon policy grounds, the procedural requirements of R.C. 4905.26 for notice and a public hearing must first be satisfied. (MCI Telecommunications Corp. v. Pub. Util. Comm. [1988], 38 Ohio St.3d 266, 527 N.E.2d 777, construed and followed.)

The history of these proceedings, although somewhat extended, may be summarized for purposes of this opinion. Appellants are several local exchange telephone companies ("LECs"). Prior to AT & T's divestiture, the LECs held a monopoly over pay telephone services within their respective franchised, exchange areas. For some time, appellee, the Public Utilities Commission of Ohio ("commission"), has required the LECs to supply directory assistance to public pay phones free of charge. This policy is founded primarily upon a concern for transient phone users in need of help in emergency situations.

In 1984, as part of the divestiture effort, the Federal Communications Commission removed impediments to competition in the pay phone market. The commission, in turn, authorized customer-owned, coin-operated telephones ("COCOTs") within the Ohio intrastate network. All COCOTs were required, consistent with the traditional practice, to supply directory assistance free of charge. In the Matter of the Commission Investigation into the Regulation of Customer-Owned, Coin-Operated Telephone Service (Jan. 29, 1985), PUCO No. 84-863-TP-COI. As regular business-line customers, COCOT providers, it appears, were charged by some LECs, but not all, for the directory assistance calls placed by the phone users.

The commission reexamined its COCOT policies in the following year. COCOT providers requested at that time that they be relieved of their burden of reimbursing the LECs for directory assistance calls. This proposal was denied. In the Matter of the Commission Investigation into the Regulation of Customer-Owned, Coin-Operated Telephone Service (Mar. 17, 1987), PUCO No. 84-863-TP-COI, at 8-10.

In 1988, the commission again undertook a reevaluation of the COCOT issue. Interested parties were invited to file comments and an "informal workshop" was conducted. The commission thereafter reaffirmed its requirement that directory assistance be provided to pay phone users without charge. However, the commission went on to direct that the LECs would no longer be permitted to bill the COCOT providers for such calls. This reversal was predicated upon a suspicion that the LECs were recouping the costs of their own directory assistance service through the general ratepayers. Meanwhile, the COCOT providers--who compete with the LECs in the pay telephone market--had to bear the expense of directory assistance themselves. The order reasoned that:

" * * * [T]he Commission believes that there is a legitimate controversy on the issue of whether the LEC ratepayers are subsidizing the provision of pay station service by the LECs. The controversy exists because it cannot be determined, with certainty, on the basis of the record in this case whether the LECs have appropriately included the costs associated with the provision of directory assistance service when they determined their charge for pay station service. Similar treatment of the costs associated with providing pay station service is necessary if the COCOT providers are to have the ability to compete with the LECs in a manner which is fair and just to all concerned. The Commission believes that the resolution of this issue can best be resolved in a rate case or a similar regulatory proceeding in which the cost of an individual company can be thoroughly examined."

The commission stressed that it was merely adopting "an interim policy position" which would continue while further investigation was pursued. In the Matter of the Investigation Relative to the Compliance of Customer-Owned, Coin-Operated Telephones with Commission-Ordered Guidelines (May 8, 1991), PUCO No. 88-452-TP-COI. Ensuing applications by the LECs for a rehearing were denied on July 3, 1991.

The cause is now before this court upon an appeal as a matter of right.

Michael J. Karson, William H. Hunt and Charles S. Rawlings, Cleveland, for appellant Ohio Bell Telephone Co.

Frost & Jacobs and Mark H. Longenecker, Cincinnati, for appellant Cincinnati Bell Telephone Co.

Joseph R. Stewart, Columbus, for appellant GTE North Inc. Thomas L. Jacobs, Mansfield, Jones, Day, Reavis & Pogue and Helen L. Liebman, Columbus, for appellant United Telephone Co. of Ohio.

Schneider & Prohaska and J. Raymond Prohaska, Columbus, for appellant Ohio Telephone Ass'n.

Lee I. Fisher, Atty. Gen., James B. Gainer and Ann E. Henkener, Columbus, for appellee Public Utilities Comm'n.

Hahn Loeser & Parks, Janine L. Migden and Randy J. Hart, Columbus, for intervening appellee Ohio Public Communications Ass'n.

JOHN W. REECE, Judge.

The scope of review applicable to these proceedings is set forth in R.C. 4903.13 which states, in part:

"A final order made by the public utilities commission shall be reversed, vacated, or modified by the supreme court on appeal, if, upon consideration of the record, such court is of the opinion that such order was unlawful or...