Union Telephone Co., Inc. v. Wyoming Public Service Com'n

• Decision Date: 15 May 1992
• Docket Number: No. 91-110,91-110
• Parties: , Util. L. Rep. P 26,210 UNION TELEPHONE COMPANY, INC., Petitioner, v. The WYOMING PUBLIC SERVICE COMMISSION; John R. Smyth, Bill Tucker, and Nels J. Smith, in their official capacities as Commissioners of the Wyoming Public Service Commission; and Mountain States Telephone and Telegraph Company, d/b/a US West Communications, Respondents.
• Court: Wyoming Supreme Court

Page 473

833 P.2d 473

135 P.U.R.4th 584, Util. L. Rep. P 26,210

UNION TELEPHONE COMPANY, INC., Petitioner, v. The WYOMING PUBLIC SERVICE COMMISSION; John R. Smyth, Bill Tucker, and Nels J. Smith, in their official capacities as Commissioners of the Wyoming Public Service Commission; and Mountain States Telephone and Telegraph Company, d/b/a US West Communications, Respondents.

No. 91-110.

Supreme Court of Wyoming.

May 15, 1992.

Bruce S. Asay, Cheyenne (argued) and V. Anthony Vehar of Vehar, Beppler, Lavery, Rose and Boal, Evanston, for petitioner.

Joseph B. Meyer, Atty. Gen., Michael L. Hubbard, Sr. Asst. Atty. Gen., and Kristin Lee, Asst. Atty. Gen. (argued), for respondent Public Service Com'n.

Paul J. Hickey (argued), and Richard D. Bush of Hickey & Evans, Cheyenne, and Robert L. Connelly, Jr., Denver, Colo., for respondent US West Communications, Inc.

Before URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

CARDINE, Justice.

Union Telephone Company, Inc. (Union Telephone) challenges an order of the Wyoming Public Service Commission (PSC) which set compensation rates for operation of Union's cellular telecommunications service (Union Cellular). Union Telephone complains that the PSC's order does not require access payments to Union Cellular for certain calls terminating on its network through its interconnection with appellee US West Communications (US West). Union Telephone attacks the order for failure to apply the principle of "mutual compensation" to these calls.

We reverse the challenged portion of the PSC's order and remand for further proceedings.

Union Telephone states the issue on appeal as follows:

Issue 1: The decision of the Commission in refusing to recognize the principle of mutual compensation is contrary to law, not supported by substantial evidence, arbitrary and capricious.

Subissue 1(a): The decision of the Commission in rejecting the principle of mutual compensation is not in conformity with the law in that it violated the constitutions of Wyoming and that [of the] United States.

Subissue 1(b): The Commission's rejection of Union's request for mutual compensation is violative of Wyoming Statute.

Subissue 1(c): The decision of the Commission in rejecting the principle of mutual compensation is violative of federal law.

Subissue 1(d): The findings of the Commission in its Order are not supported by substantial evidence.

Subissue 1(e): The decision of the Commission is arbitrary and capricious.

The parties settled a second issue which related to the "calling party pays" principle after appellant's opening brief was filed. Only the issue described above is now before us.

Appellant Union Telephone is an independent telephone company certificated by the PSC to provide exclusive, local exchange telephone service in Eastern Uinta and Southwestern Sweetwater counties. See Union Tel. Co., Inc. v. Wyoming Public Service Comm'n, 821 P.2d 550 (Wyo.1991). Union has recently obtained a license from the Federal Communications Commission (FCC) to operate an exclusive cellular telecommunications service within the area known as "Rural Service Area No. 720 Wyoming 3-Lincoln" (hereafter RSA). The RSA, which is much larger than Union Telephone's certificated local exchange area, includes all of Uinta and Lincoln Counties and parts of Teton, Sublette, Fremont, Sweetwater and Carbon Counties. For purposes of clarity, we shall refer in this opinion to Union Telephone Company, Inc., the company which is the named party in this suit, as "Union Telephone" and to that portion of Union Telephone which operates its cellular service as "Union Cellular."

Appellee US West provides certificated local exchange service in service areas throughout the state of Wyoming. Its wireline service area includes the majority of the more populated areas located outside of Union Telephone's certificated service area but within Union Cellular's RSA. In order to provide its cellular customers with access to customers of US West and other independent telephone companies, Union Cellular sought to interconnect its cellular facilities with US West's landline network. Union Cellular proposed a unique interconnection arrangement which would allow it, by using US West's public-switched network, to avoid constructing many additional facilities to handle the cellular traffic.

US West's traditional arrangement with cellular carriers calls for a "Type 1," "Type 2," or "Type 2A" interconnection. In a Type 1 interconnection, the cellular carrier routes its cellular traffic to a mobile telephone switching office. This office, which operates like a private branch exchange, interconnects directly to the public-switched network through a US West end office switch. The cellular carrier is assigned blocks of telephone numbers which have the characteristics of the US West end office in which they are housed. See Appendix 1 to this opinion for a diagram illustrating a typical Type 1 interconnection.

In a Type 2 or 2A interconnection, the cellular carrier's mobile telephone switching office itself takes on the characteristics of an end office switch. The cellular carrier is assigned a unique prefix and trunk groups are established directly to the public-switched network local and toll-access tandems. Auxiliary functions are handled by a separate connection with a US West end office. See Appendix 2 to this opinion for a diagram illustrating a typical Type 2A interconnection.

The interconnection Union Telephone requested on behalf of Union Cellular did not correspond exactly with either a Type 1 or a Type 2 interconnection. Instead, Union Telephone's proposed arrangement allowed Union Telephone to itself provide the interconnection between its cellular and landline operations. This arrangement would require the cellular mobile traffic to be blended directly into the public-switched network and routed from there through Union Telephone's existing facilities, rather than being delivered to Union Cellular over a US West trunk group provided for that purpose. Thus, Union Cellular could avoid some of the cost of acquiring extra facilities between its mobile telephone switching office and its cell sites in US West's exchange areas. Union Telephone's proposed arrangement is illustrated in Appendix 3 to this opinion.

US West consented to Union Telephone's proposed interconnection plan. However, the parties could not agree how this arrangement should be priced. On March 27, 1990, Union Telephone wrote US West a letter requesting information relating to the interconnection. When the parties still could not reach agreement, this letter became the basis of a complaint by Union Telephone to the PSC. On July 5, 1990, Union Telephone designated the following issues to be considered at a PSC hearing:

1. How should Union and U.S. West be compensated for wireline traffic originated on U.S. West's wire-line system and terminated on Union's cellular system?

2. How should Union and U.S. West be compensated for cellular traffic originated on Union's cellular system and terminated on U.S. West's wire-line system?

3. Should cellular air time be paid by the originating customer only, by the originating and receiving customers, or by the cellular customer only?

The PSC held hearings on July 11, 1990, and again on August 20, 1990, at which both Union Telephone and US West presented testimony and exhibits on these questions. US West took the position that it was entitled, on local calls within its territory, to originating access charges for a call placed by a US West subscriber to a Union Cellular customer, and to terminating access charges for a call placed from a Union Cellular subscriber to a US West customer. ("Originating access charges" refer to charges paid to a telephone company whose customer initiates a call terminated by another carrier; "terminating access charges" refer to charges paid to a telephone company which completes a call initiated by another carrier's customer.) This plan differed from US West's typical local service arrangement with cellular carriers, in which it charged them only for terminating access. US West considered the additional charge justified because of the unique interconnection agreement it had reached with Union Cellular. The plan was also consistent with US West's interconnection policies in that Union Cellular would not be paid terminating access for local calls made to a cellular customer located outside Union Telephone's wireline service area.

For toll (intrastate, inter-carrier long distance) calls, US West's plan called for payment of terminating access charges to the company completing the call in its wireline service area. Thus, Union Cellular would be responsible for paying US West terminating access payments for toll calls which US West completed, in its territory, from a Union Cellular subscriber. However, US West would only pay Union Cellular for completion of toll calls which terminated in Union Telephone's certificated area. In other words, Union Cellular would receive no terminating access payments when it completed a toll call in areas where it was the cellular carrier but US West was the wireline carrier. A witness for US West stated this price proposal was consistent with its policy of paying compensation to other local exchange carriers but not to any alternate providers, including cellular carriers.

Union Cellular took the position that, as a "co-carrier," it was entitled to "mutual compensation" for terminating any call, local or toll, made by a US West subscriber to a Union Cellular subscriber. Mutual compensation would require that US West and Union Cellular be paid their costs for switching all calls which pass through the interconnection and are terminated either on Union Cellular's grid or on US West's landline network. James Woody, executive vice-president of Union Telephone, explained that Union Cellular has no ability to prevent calls being made to its customers. Under US...