State ex rel. Utilities Com'n v. Southern Bell Tel. & Tel. Co., s. 861OUC427
| Decision Date | 22 December 1987 |
| Docket Number | Nos. 861OUC427,861OUC610,s. 861OUC427 |
| Citation | 363 S.E.2d 73,88 N.C.App. 153 |
| Court | North Carolina Court of Appeals |
| Parties | STATE of North Carolina ex rel. UTILITIES COMMISSION, MCI Telecommunications Corporation and U.S. Sprint Communications Company v. SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY; the Public Staff; AT & T Communications, Inc.; Central Telephone Company; Alltel Carolina, Inc.; General Telephone Company of the Southeast; Carolina Telephone Company; Telecommunications Systems, Inc.; Carolina Utility Customers Association; Attorney General of the State of North Carolina; and North Carolina Long Distance Association. STATE of North Carolina ex rel. UTILITIES COMMISSION, MCI Telecommunications Corporation and U.S. Sprint Communications Company v. SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY, the Public Staff; Central Telephone Company; Alltel Carolina, Inc.; General Telephone Company of the Southeast; Carolina Telephone Company; Telecommunications Systems, Inc.; Carolina Utility Customers Association; Attorney General of the State of North Carolina; and North Carolina Long Distance Association. |
Sanford, Adams, McCullough & Beard by Charles C. Meeker and Gary S. Maines, Raleigh (Michael M. Ozburn, of counsel), Atlanta, Ga., for plaintiff-appellant, MCI Telecommunications Corp.
Rita A. Barmann, Reboul, MacMurray, Hewitt, Maynard & Kristol by Deborah A. Dupont, Washington, D.C. and Poyner & Spruill by J. Phil Carlton and Nancy Bentson Essex, Raleigh, for plaintiff-appellant, U.S. Sprint Communications Co.
Hunton & Williams by Edward S. Finley, Jr., and Grady L. Shields, Raleigh, and Gen. Counsel J. Billie Ray, Jr., Charlotte, for appellee, Southern Bell Tel. and Tel. Co.
Tharrington, Smith & Hargrove by Wade H. Hargrove and Gene V. Coker, Raleigh, for appellee, AT & T Communications of the Southern States, Inc.
Sr. Atty. Jack H. Derrick and Vice President-Gen. Counsel & Secretary Dwight W. Allen, Tarboro, for appellee, Carolina Tel. and Tel. Co.
General Counsel John Jordan, Raleigh, and Walter E. Daniels and Linda Markus Daniels, RTP, for North Carolina Long Distance Association.
These appeals arise from orders of the North Carolina Utilities Commission introducing The two orders appealed from came to this Court as separate cases. We granted a motion to have the cases scheduled for argument on the same day. Because some of the same parties appear in both cases and many of the pertinent issues are related, we have consolidated the cases for the purposes of this opinion.
competition into the North Carolina intrastate long distance telecommunications market following the [88 N.C.App. 157] federal court ordered breakup of the American Telephone and Telegraph Company. The specific orders appealed from (1) directed certain long distance carriers to pay compensation for the unauthorized transmission of some long distance calls; and (2) directed local companies to file tariffs setting the access charges resellers of long distance services must pay on certain types of calls. We affirm the orders of the Commission.
The orders appealed from were issued by the North Carolina Utilities Commission pursuant to a federal court ordered breakup of the American Telephone and Telegraph Company, hereinafter "AT & T." Because of the complexity of the issues presented, we shall begin with a review of the history of the telecommunications market, the federal court actions, and the business relationships of the parties to this appeal.
HISTORY AND EVOLUTION OF THE NATION'S TELECOMMUNICATIONS MARKET.
During the past century our nation's telecommunications system has increasingly become a more important part of our business, social, and personal existence. AT & T grew with the national system to the point of essentially engulfing it. As AT & T strengthened its hold on national telecommunications, its competition and the federal government sought ways to loosen AT & T's grip.
The first benchmark in legal actions aimed at AT & T was filed by the United States Government on 14 January 1949. See U.S. v. AT & T, 552 F.Supp. 131, 135- 39 (D.D.C.1982), aff'd sub nom, Maryland v. U.S., 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983). This antitrust litigation which sought an end to AT & T's virtual monopoly did not produce that result. 552 F.Supp. at 138-39. Consequently, a separate antitrust action was filed by the Justice Department in 1974. Id. at 139. 1
Prior to the 1974 antitrust filing, the Federal Communications Commission (F.C.C.) had attempted to provide freer access to the telecommunications market which would have theoretically assisted in opening those mediums to competition. See Above 890, 39 F.C.C. 650 (1959). Because of the strength of the Bell System and the failure of previous litigation, little progress in implementing competition was achieved. A review of the service available at that time will help explain the lack of progress.
Local telephone service was provided in North Carolina and in other states by Local Exchange Companies (LECs). These LECs were either one of two types: local independent companies, or Bell Operating Companies (BOCs), which were, in effect, local subsidiaries of AT & T. Appellee Carolina Telephone Company is an example of the former, while appellee Southern Bell is an example of the latter. In North Carolina these companies operated without competition in specific geographically defined territories pursuant to state authorization. They were, simply put, legal monopolies in their respective regions. They provided origination and termination facilities and services in their areas. When a customer in one of these areas made a telephone call to another person who was also a customer in the same area, an "exchange" call, the LEC would be responsible for the connection When the local customer sought a connection with a person outside of the geographic area serviced by the LEC, the traffic was described as "interexchange." 3 An "interexchange" call would leave the local area of origination and be picked up by the "interexchange carrier" (IXC) who would route the call to the LEC that serviced the area where the call was to terminate. This IXC service was almost without fail provided by AT & T. The terminating LEC would then handle the traffic until the intended connection was completed when the terminating LEC's local customer lifted the receiver.
from start (origination) to finish (termination) and everything in between. 2 See AT & T, 552 F.Supp. at 141 n. 37 and accompanying text. In other words, from the time the caller dialed a number on his telephone until the intended recipient of the call lifted the receiver, the transmission never left the LEC's network
The problem with attempting to introduce competition to the "interexchange" market during these pre-divestiture years was that many, if not most, of the nation's LECs were owned and operated by the Bell System. See AT & T, 552 F.Supp. at 139 n. 19. See also, GTE Sprint v. AT & T, 230 Va. 295, 298, 337 S.E.2d 702, 704 (1985). ("GTE Sprint" is now known as "U.S. Sprint.") Potential IXC competitors of AT & T could therefore be effectively hindered or denied in their attempts to gain access to all local customers. If, for example, a caller's intended termination point on an interexchange call happened to be within a geographic monopoly serviced by a Bell-operated LEC, an IXC competitor of AT & T had to rely on the good graces of AT & T to be afforded complete and equal access. Without such complete and equal access, the public, as consumers, would be reluctant to do business with an AT & T IXC competitor because the IXC competitors of AT & T were competing with a system that could complete calls anywhere in the country. The AT & T system had unlimited access to all local exchanges in the nation. In addition, local independent LECs were hesitant to jeopardize any working relation with AT & T, the dominant "interexchange" carrier, by becoming too cozy with AT & T's IXC competitors, because they too wanted their customers to be able to terminate connections in foreign local service areas that were served by Bell-operated LECs.
Thus, AT & T handled practically all "interexchange" telephone traffic. Local access had become the critical component for any national telecommunications company.
Access to this crucial link in long distance dialing, the local connection, was the basis of the filing of the 1974 antitrust action. The government's contention in that filing was that AT & T so tightly controlled access to so much of the local exchange network through its BOCs that potential competitors of AT & T were shut out of those local markets. The complaint contended that AT & T in reality enjoyed a monopoly in the "interexchange" telecommunications market. It was not until 1982, eight years after the second antitrust suit was filed, that the relief sought by the government became a reality. See AT & T, 552 F.Supp. at 131.
In an interim decision in the case, District Judge Harold H. Greene denied an AT & T motion to dismiss the 1974 filing pursuant to Rule 41(b) of the Federal Rules of Civil Procedure. U.S. v. AT & T, 524 F.Supp. 1336 (D.D.C.1981). After this published As a result of the MFJ, AT & T retained two subsidiaries, Western Electric Company, Inc., and Bell Telephone Laboratories, Inc. GTE Sprint, 230 Va. at 298, 337 S.E.2d at 704; AT & T, 552 F.Supp. at 139 n. 19. The twenty-two BOCs were divested from AT & T and divided into Local Access and Transport Areas (LATAs). 4 A LATA U.S. v. Western Electric Co., 569 F.Supp. 990, 993 nn. 4 and 9 and accompanying text. (D.D.C.1983).
denial, the parties tendered a proposed settlement...
To continue reading
Request your trial
-
Dennis v. Duke Power Co.
...will not be upheld if error is found based on one of the enumerated grounds of G.S. 62-94(b). State ex rel. Utilities Comm. v. Southern Bell, 88 N.C.App. 153, 177, 363 S.E.2d 73, 87 (1987); Utilities Comm. v. Bird Oil Co., 302 N.C. 14, 20, 273 S.E.2d 232, 235 (1981) ("judicial reversal of a......
-
STATE EX REL. UTILITIES COM'N v. Thrifty Call, Inc.
...the Commission has or may hereafter be given jurisdiction by law." N.C. Gen.Stat. § 62-60 (2001). In State ex. rel. Utilities Comm. v. Southern Bell, 88 N.C.App. 153, 363 S.E.2d 73 (1987), this Court held that a Commission-ordered compensation plan did not constitute money damages or a pena......
-
IN RE PETITION OF UTILITIES, INC., COA00-606.
...§ 62-94 (1999) prescribes the scope of appellate review of a decision by the Commission. State ex rel. Utilities Comm'n. v. Southern Bell Tel. & Tel. Co., 88 N.C.App. 153, 165, 363 S.E.2d 73, 80 (1987). According to the section, the reviewing (b) ... may affirm or reverse the decision of th......
-
State ex rel. Utilities Com'n v. Empire Power Co.
...the Commission unless we find error based on one of the enumerated grounds of section 62-94(b). State ex rel. Utilities Comm. v. Southern Bell, 88 N.C.App. 153, 177, 363 S.E.2d 73, 87 (1987). The issues raised by petitioner relate to subsections (1) and (2), i.e., whether the Commission's a......