Petition of New Ulm Telecom, Inc., C0-86-1100
| Decision Date | 13 January 1987 |
| Docket Number | No. C0-86-1100,C0-86-1100 |
| Citation | 399 N.W.2d 111 |
| Parties | In the Matter of the Petition of NEW ULM TELECOM, INC., f.k.a. New Ulm Rural Telephone Company, Minnesota Valley Telephone Company, Winthrop Telephone Company, Clements Telephone Company, and Redwood County Telephone Company for a Certificate of Public Convenience and Necessity to Provide and Operate a Telephone System between and in the Vicinity of St. George, Franklin, Redwood County, Winthrop, and New Ulm, Minnesota. In the Matter of the Petition of SLEEPY EYE TELEPHONE COMPANY for Approval of Microwave Facility. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. The Commission did not err as a matter of law in determining that it had no jurisdiction to grant equitable relief under a theory of estoppel, but rather was limited to weighing equity considerations as one element of public convenience and necessity.
2. Substantial evidence supports the Commission's finding that both the New Ulm Toll Project and Northwestern Bell Telephone Company were at fault for creating an environment of confusion and misunderstanding during negotiations for the inter-exchange network and that Northwestern Bell Telephone Company's carrier authority was not subject to revocation on grounds of equitable estoppel.
3. Substantial evidence supports the Commission's finding that Northwestern Bell Telephone Company's service is adequate and that its carrier authority therefore was not subject to revocation pursuant to Minn.Stat. Sec. 237.16, subd. 5 (1984).
4. The Commission's decision allowing Northwestern Bell Telephone Company to remain the designated "1 + dialing" carrier pending outcome of a statewide proceeding to investigate exchange access issues was not arbitrary and capricious.
5. The Commission's overall conclusion that public convenience and necessity would be served by allowing the New Ulm Toll Project and Northwestern Bell Telephone Company to compete for inter-exchange toll service in the New Ulm area was not arbitrary and capricious.
James R. Olson, Berens, Rodenberg, O'Connor, Olson, Hinnenthal & Tuttle, New Ulm, for Relator New Ulm Telecom.
John B. Van de North, Jr., Briggs and Morgan, St. Paul, for respondent AT & T Communications of Midwest.
Steven D. Emmings, Carey & Emmings, Ltd., Fairfax, for Relators Redwood County Telephone; Winthrop Telephone; Minnesota Valley Telephone and Clements Telephone.
Hubert H. Humphrey, III, Atty. Gen., Dennis D. Ahlers, Sp. Asst. Atty. Gen., St. Paul, for Residential Utilities Division.
Hubert H. Humphrey, III, Atty. Gen., Ann M. Seha, Sp. Asst. Atty. Gen., St. Paul, for Dept. of Public Services.
Richard J. Johnson, Moss & Barnett, Minneapolis, for Relator Sleepy Eye Telephone.
James A. Gallagher, Seth M. Colton, Maun, Green, Hayes, Simon, Johanneson and Brehl, St. Paul, Stephen T. Refsell, Minneapolis, for respondent Northwestern Bell.
Hubert H. Humphrey, III, Atty. Gen., Karl W. Sonneman, Sp. Asst. Atty. Gen., St. Paul, for respondent Minnesota Public Utilities Comm.
Heard, considered and decided by FOLEY, P.J., and SEDGWICK and FORSBERG, JJ.
This is a case involving the right of a group of independently-owned local exchange telephone companies called the New Ulm Toll Project (NUTP) to establish and operate an inter-exchange microwave toll system in the New Ulm area and to replace Northwestern Bell Telephone Company (NWB) as the designated "1 + dialing" carrier.
A petition seeking a certificate of public convenience and necessity to establish and operate the microwave network was originally filed with the Minnesota Public Utilities Commission by New Ulm Telecom, Inc. in July 1984. Sleepy Eye Telephone Company and four local exchange telephone companies comprising NUTP subsequently intervened in the petition. 1 A contested case hearing took place in December 1984. NUTP sought to replace NWB as the provider of telephone service in the New Ulm area, arguing that NWB should be equitably estopped because it either expressly or impliedly consented to construction of the facility and voiced no objection until NUTP was financially committed to the project. NWB countered that NUTP was not entitled to a certificate because it began construction of a duplicate facility without prior Commission approval in contravention of Minn.Stat. Sec. 237.16 (1984).
In March 1985, the Administrative Law Judge (ALJ) recommended that NUTP be granted the certificate and that NWB be estopped from continuing to provide telephone service between the local exchanges. In October 1985, the Commission issued a decision in Re Consolidated Proceeding to Investigate the Provision of Intrastate Intercity Telecommunication Services Within the State of Minnesota, MPUC No. P-442/NA-84-212 ("212 Order"), a case initiated by several toll telephone companies to provide statewide competitive toll service. The Commission concluded in that case that competitive toll service in Minnesota was in the public interest and granted the competing applications.
In December 1985, oral arguments in the instant case were heard by the Commission. In an order issued in March 1986, the Commission determined that NUTP's estoppel argument was rendered moot by the "212 Order," that NWB should be allowed to continue toll service, and that NWB should remain the designated "1 + dialing" carrier in the New Ulm area pending outcome of another statewide proceeding to investigate exchange access issues. In its June 1986 order denying reconsideration, the Commission found that neither NWB or NUTP officials were forthright in their dealings with one another and that both companies were at fault for creating an environment of confusion and misunderstanding.
On appeal from the March 1986 order and the June 1986 order, NUTP claims that the Commission erred as a matter of law in concluding that its decision in the "212 Order" was determinative of the issues in this case and in failing to exercise its equitable powers to estop NWB from continuing as a provider of toll service in the New Ulm area. NUTP additionally claims that the Commission acted in an arbitrary and capricious manner in allowing NWB to remain the designated "1 + dialing" carrier in the New Ulm area and by failing to attach significance to NWB's misconduct as found by the ALJ. AT & T Communications of the Midwest (AT & T) and the Commission join NWB as respondents in this appeal. We affirm.
The companies comprising NUTP collectively provide local exchange service to 15 communities in southwestern Minnesota. Following the divestiture of AT & T, geographical areas called LATA's were created which normally encompass several local exchanges, but only one area code. 2 Within these LATA's, a local exchange company, such as NWB, is authorized to provide toll service, but prohibited from providing toll service between LATA's.
Prior to the "212 Order," NWB was the only authorized provider of intraLATA toll services or toll service between the local exchanges owned by companies now part of NUTP. AT & T and other long distance carriers provided interLATA toll service or toll service between LATAs to the remainder of Minnesota and to inter state points. The "212 Order," however, authorized interLATA competition within Minnesota.
The NWB toll system is analog in nature which means that the independent tributaries are connected by a series of buried cables or N-2 carriers, with repeaters spaced along the cable route and housed above ground. N-2 carrier equipment is no longer manufactured. NUTP's proposal sought to upgrade toll facilities by replacing the analog system with a combination of digital radio (or T-carriers) and microwave towers. Digital carriers provide better transmission than analog N-2 carriers and can transmit high speed data, while an analog system cannot.
Of particular significance to this appeal is the "1 + dialing" feature which connects customers within the LATA to the designated toll carrier, in this case NWB. Under the present arrangement for providing local exchange access to toll telephone companies, only one company--the designated or preferred carrier--may connect to its customers by "1 + dialing." All other toll companies serving the exchange must connect with either five or seven digit access codes. The problem is not unique to the local exchanges in the New Ulm area and affects all Minnesota local exchange telephone companies and their customers. In this case, the Commission concluded that NWB should remain the designated toll carrier in the New Ulm area pending outcome of a statewide proceeding to determine equal access issues, Re Summary Investigation Into IntraLATA Toll Access Compensation for Local Exchange Carriers, No. P-999/CI-85-582 ("582 Proceeding").
In order to build the proposed network, either NWB had to agree to coordination of or withdrawal from its services under Minn.Stat. Sec. 237.12 (1984), or NUTP had to receive authority from the Commission to duplicate NWB's system under Minn.Stat. Sec. 237.16, subd. 1 (1984). These issues form the basis of this appeal.
The concept of NUTP and its contemplated microwave network was first presented to NWB in September 1981. NUTP proposed to purchase related toll equipment from NWB and suggested rerouting several local exchanges. NWB rejected the proposal in December 1981, stating at the time that it did not anticipate transfer of any toll facilities until sometime after 1985.
The prospect of installing an independently-owned digital toll network was again raised during a meeting between New Ulm Telecom, Inc. and its tributaries in 1982. CC & I, an engineering firm, was hired to formulate a preliminary study on replacement of NWB's analog system. The study prepared by CC & I recommended that the analog system be replaced by a combination of T-carriers and microwave towers. This was presented to NUTP representatives and several other telephone...
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