Payphone Assn. v. Pub. Util. Comm.

• Citation: 109 Ohio St.3d 453,849 N.E.2d 4,2006 Ohio 2988
• Decision Date: 28 June 2006
• Docket Number: No. 2004-2128.,2004-2128.
• Parties: PAYPHONE ASSOCIATION of Ohio, Appellant and Cross-Appellee, v. PUBLIC UTILITIES COMMISSION OF OHIO, Appellee; SBC Ohio, Intervening Appellee and Cross-Appellant.
• Court: United States State Supreme Court of Ohio

849 N.E.2d 4

109 Ohio St.3d 453

2006-Ohio-2988

PAYPHONE ASSOCIATION of Ohio, Appellant and Cross-Appellee, v. PUBLIC UTILITIES COMMISSION OF OHIO, Appellee; SBC Ohio, Intervening Appellee and Cross-Appellant.

No. 2004-2128.

Supreme Court of Ohio.

Submitted October 25, 2005.

Decided June 28, 2006.

COPYRIGHT MATERIAL OMITTED

Vorys, Sater, Seymour & Pease, L.L.P., Philip F. Downey, and Stephen M. Howard, Columbus, for appellant and cross-appellee Payphone Association of Ohio.

Bailey Cavalieri, L.L.C., William A. Adams, and Dane Stinson, Columbus; and Jon F. Kelly and Mary Ryan Fenlon, for cross-appellant and intervening appellee SBC Ohio.

Jim Petro, Attorney General, and Duane W. Luckey, Thomas G. Lindgren, and Werner L. Margard III, Assistant Attorneys General, for appellee Public Utilities Commission of Ohio.

Thompson Hine, L.L.P., Thomas E. Lodge, and Carolyn S. Flahive, Columbus, urging affirmance for amicus curiae, Ohio Telecom Association.

PFEIFER, J.

INTRODUCTION

{¶ 1} Appellant and cross-appellee, Payphone Association of Ohio ("PAO"), and cross-appellant and intervening appellee, SBC Ohio,¹ appeal as of right from orders of appellee Public Utilities Commission of Ohio ("PUCO") that establish rates charged by SBC Ohio to its competitors for pay-phone services. We conclude that the PUCO did not commit reversible error, we reject all claimed errors, and we affirm the orders.

BACKGROUND

{¶ 2} The Telecommunications Act of 1996, Section 151 et seq., Title 47, U.S.Code (the "1996 Act"), which significantly restructured the telecommunications industry, included a provision addressing pay-phone services. Section 276, Title 47, U.S.Code ("Section 276"). Section 276 was intended to ensure that a local exchange carrier ("LEC") did not subsidize its own pay-phone service, either directly or indirectly, and did not discriminate in favor of its own pay-phone service. On September 20, 1996, the Federal Communications Commission ("FCC") released In re Implementation of the Pay Tel. Reclassification & Comp. Provisions of the Telecommunications Act of 1996 (1996), 11 Fed. Communications Comm. Record 20541 (Pay Tel.), to implement Section 276. The FCC's order established procedures to insure that LECs provided pay-phone services to competitors under the same terms and conditions that they provided services to their own pay-phone operations. Id.

{¶ 3} On reconsideration, the FCC required LECs to provide independent pay-phone-service providers the option of using either "smart" pay phones, which are instrument-implemented,² or "dumb" pay phones.³ Pay Tel., 11 Fed. Communications Comm. Record 21233. The order also required LECs to file cost-based tariffs for both types of pay-phone service with their state commissions. If an LEC already had filed tariffs for these services, a state commission could conclude that the tariffs complied with the requirements of Section 276 and the FCC's orders. In that event, further filings were not required. Id.

{¶ 4} On December 9, 1996, the PUCO initiated the proceedings below to implement Section 276 and the FCC's decisions regarding pay-phone services. Shortly thereafter, the PUCO directed all LECs operating within Ohio to file tariffs with the requisite access-line provisions for smart and dumb pay phones. The same entry noted that the PUCO had recently approved a pay-phone tariff for dumb pay phones for then Ameritech Ohio.

{¶ 5} In May 1997, the PUCO instructed each Ohio LEC to review its pay-phone tariff to ensure that it was consistent with the requirements of Section 276 and the FCC decisions. LECs were ordered to file proposed tariff amendments by June 22, 1997. SBC Ohio filed a letter verifying that its previously approved pay-phone tariffs complied with the requirements. The PUCO issued an entry on September 25, 1997, stating that the pay-phone tariffs of SBC Ohio and numerous other LECs complied with all federal and state requirements.

{¶ 6} On January 28, 1999, the PUCO granted the PAO's request for an evidentiary hearing. The PUCO also stated that all approved tariffs would remain in effect. The hearing date, which was originally scheduled in 2000, was indefinitely continued while discovery disputes were resolved.

{¶ 7} Before the hearing was held, on January 31, 2002, the FCC released In re Wisconsin Pub. Serv. Comm. (2002), 17 Fed. Communications Comm. Record 2051 ("Wisconsin PSC"). This order revised and clarified the previous FCC decisions regarding pay-phone services. In Wisconsin PSC, the FCC determined that Bell Operating Companies ("BOCs") were required to set pay-phone-line rates in compliance with a cost-based, forward-looking "new services test" ("NST"). The NST set the direct cost of providing a new service as a price floor and then allowed a reasonable amount of overhead to arrive at the overall price of the new service. The FCC also determined that it did not have jurisdiction over the pay-phone-line rates of LECs that were not BOCs.

{¶ 8} In compliance with Wisconsin PSC, the PUCO dismissed all non-BOC LECs from the proceeding. The PUCO then revised the issues to be considered at hearing. The PUCO also issued interim rates that became effective January 30, 2003.

{¶ 9} The evidentiary hearing began on January 29, 2004. After briefing by the parties, the PUCO issued its decision on September 1, 2004. The PUCO accepted the cost studies offered by SBC Ohio, except for the proposed overhead loadings,⁴ and found that it was appropriate to apply unbundled-network-element ("UNE")⁵ overhead loadings rather than those obtained by SBC Ohio's use of the Physical Collocation Tariff Order ("PCTO") June 28⁶ methodology. This appeal followed.

PAO'S APPEAL

First Claimed Error

{¶ 10} PAO argues that the PUCO did not comply with federal and state law when it approved SBC Ohio's pay-phone tariff without the telephone company ever filing a tariff that complied with the NST.

{¶ 11} PAO is correct in stating that SBC Ohio did not file new tariffs following the PUCO's December 19, 1996 entry. A new filing was unnecessary, however, because SBC Ohio had already filed tariffs for smart pay phones on April 9, 1985, in case No. 84-834-TP-ATA, and for dumb pay phones on September 19, 1996, in case No. 96-844-TP-ATA. The PUCO recognized that SBC Ohio had filed tariffs for dumb pay phones when it issued the December 19, 1996 entry. In Finding Five of that entry, the PUCO stated: "In addition, the Commission observes that it has recently approved an Ameritech application to provide payphone access lines to dumb payphones (Case No. 96-844-TP-ATA)."

{¶ 12} The FCC had previously determined, however, that when LECs had already filed tariffs for pay-phone-line rates, the state commissions could conclude that those existing tariffs were consistent with the requirements of Section 276 and other FCC requirements and that no further tariff filing would be required. Pay Tel., 11 Fed. Communications Comm. Record 21233, ¶ 163. Because Ameritech Ohio, the predecessor of SBC Ohio, had previously filed pay-phone-line rates that were consistent with Section 276 and other FCC requirements, no further tariff filing was required.

{¶ 13} On May 22, 1997, the PUCO issued an entry indicating that the pay-phone-line tariffs of all LECs, including SBC Ohio, had become effective on or before April 15, 1997. In the same entry, the commission ordered all LECs to review their pay-phone-line tariffs for compliance with Section 276 and with other requirements of the FCC and the PUCO. SBC Ohio made a directed tariff review and submitted its review to PUCO staff for approval. PUCO staff recommended approval. On September 26, 1997, the PUCO found that SBC Ohio's pay-phone tariffs that were in effect in 1997 satisfied the requirements of Section 276 and the FCC's orders, stating: "The Commission's Staff has reviewed the proposed tariff filings of the carriers identified in Finding (4); has concluded that they are consistent with the requirements of the 1996 Act, the FCC's decisions in CC Docket No. 96-128, and the Commission's May 22, 1997 Entry in this proceeding, and recommend their approval by the Commission.

{¶ 14} "The Commission concurs in Staff's recommendation and, therefore, finds these applications shall be approved."

{¶ 15} Because the PUCO had already reviewed SBC Ohio's tariffs and found them to be consistent with the 1996 Act, no further pay-phone-tariff filings needed to be made at that time. We reject the first claimed error.

Second Claimed Error

{¶ 16} PAO asserts that when the PUCO determined in January 2004 that SBC Ohio's existing pay-phone-tariff rate had to be reduced because it failed to meet the reasonableness standard of the NST, the PUCO was required to expressly find that the pay-phone tariff in effect in 1997 violated the FCC pricing standard and its own standard and was inconsistent with the 1996 Act. The PUCO refused to address the issue of refunds for any period before the interim tariff rates were approved in 2003, finding that the issue had been previously considered in the proceedings and that PAO had not presented any new facts or questions of law. The PUCO's conclusion is reversible on appeal only if manifestly against the weight of the evidence. Baltimore & Ohio RR. Co. v. Pub. Util. Comm. (1986), 22 Ohio St.3d 275, 22 OBR 447, 490 N.E.2d 888, syllabus. See MCI Telecommunications Corp. v. Pub. Util. Comm. (1988), 38 Ohio St.3d 266, 268, 527 N.E.2d 777. Moreover, this court will not substitute its own opinion for that of the PUCO on questions of fact. Pennsylvania RR. Co. v. Pub. Util. Comm. (1933), 126 Ohio St. 260, 262, 185 N.E. 49. Accord Consumers' Counsel v Pub. Util. Comm. (1983), 4 Ohio St.3d 111, 112, 4 OBR 358, 447 N.E.2d 749; Consumers' Counsel v. Pub. Util. Comm. (1987), 32 Ohio St.3d 263, 264, 513 N.E.2d 243. With respect to this claimed error, we conclude that the determination by the PUCO is not manifestly against the weight of the evidence. We...