Voicestream Gsm I v. Public Service Com'n
| Decision Date | 29 November 2006 |
| Docket Number | No. 2005-CA-2579.,No. 2005-CA-2578.,2005-CA-2578.,2005-CA-2579. |
| Parties | VOICESTREAM GSM I OPERATING CO., LLC and Cook Inlet/VS GSM IV PSC, LLC v. LOUISIANA PUBLIC SERVICE COMMISSION. |
| Court | Louisiana Supreme Court |
Brian A. Eddington, Baton Rouge, for Appellant.
Eve K. Gonzalez, Brandon M. Frey, Ann B. Hill, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Edward H. Bergin, Ryan E. Johnson, Baton Rouge, Shirley, Ezell, Guarisco & Marionneaux, Paul G. Guarisco, New Orleans, Kyle C. Marionneaux, Baton Rouge, The Boles Law Firm, Janet S. Boles, Baton Rouge, for Appellee.
We granted this writ application to address whether a fee imposed by a general order of the Louisiana Public Service Commission requiring telecommunications service providers to contribute to a state universal service fund constitutes a tax and therefore exceeds the scope of the Louisiana Public Service Commission's constitutional authority and jurisdiction. The Plaintiffs, Voicestream GSM I Operating Co., LLC and Cook Inlet/VS GSM IV PSC, LLC, also known as "T-Mobile," filed a direct appeal to review the lower court's decision, which declared that the state universal service fee was not a tax, and therefore within the Commission's authority and jurisdiction granted by the Louisiana Constitution and the Federal Telecommunications Act of 1996. For the foregoing reasons, we affirm the rulings of the lower court.
Voicestream GSM I Operating Co., LLC and Cook Inlet/VS GSM IV PSC, LLC work together in the State of Louisiana to provide inter alia wireless telecommunications services. The companies jointly conduct business under the more widely known corporate name "T-Mobile." T-Mobile, an independent commercial mobile radio service ("CMRS"), generally referred to as "cellular" service, provides wireless voice and data services to numerous consumers in many states, including Louisiana. In the present case, T-Mobile sought judicial review of the Louisiana Public Service Commission's ("LPSC") General Order, dated April 29, 2005, which established a funding for a State Universal Service Fund ("SUSF") in the amount of $42,2274,141.00, to be funded by all the telecommunications service providers ("TSP")1, including wireless carriers (i.e., T-Mobile) that are operating within the state of Louisiana.
When Congress established the Federal Communications Commission in 1934, it set forth the intent to create a universal service which would provide every person in the United States access to "rapid, efficient, nation-wide and world-wide wire and radio communication service with adequate facilities at reasonable charges." 47 U.S.C. § 151.2
The LPSC is an executive branch of the State of Louisiana with constitutional authority to regulate communication services pursuant to LSA — Const. art. IV, § 21(B), which provides:
(B) Powers and Duties. The Commission shall regulate all common carriers and public utilities and have such other regulatory authority as provided by law. It shall adopt and enforce reasonable rules, regulations, and procedures necessary for the discharge of its duties, and shall have other powers and perform other duties as provided by law.
Historically, the LPSC has been challenged to achieve and maintain a universal service. Because there are fewer customers per mile, larger geographic service areas, and limited demand, the resulting low profitability discouraged companies from providing service to rural customers. To ensure affordable telecommunications services to rural and higher cost areas of the state, in 1989, the LPSC, in their effort "to modernize rural telephone service, to facilitate the flow of information in these areas, and reduce the inequities that result from the application of tolls to intrastate telephone calls of short distances" — stabilize the rates, concluded that the public interest warranted statewide implementation of a "Local Option Service" ("LOS").3 Under the LOS plan, subscribers statewide could take advantage of extended local calling for calls that previously were billed as toll calls. Telephone subscribers would pay, in addition to their monthly phone bill, a flat rate for calls made outside the local calling area, but within twenty-two (22) to forty (40) miles without incurring "toll" charges. The LPSC found that "the implementation of LOS was to be a major step in making such calls more `local' in nature." While the LPSC mandated the implementation of the LOS plan statewide, the LPSC recognized that the rural companies' revenues and earnings would be adversely impacted by this plan. Therefore, the LPSC required South Central Bell (now "BellSouth") to subsidize the costs associated with implementing the LOS plan, which eliminated the financial burden on the rural Independent Local Exchange Carriers (ILEC).
On April 25, 1996, the LPSC ordered the ILECs to implement a new form of intrastate long distance calling, "1+ presubscription" for the intraLATA toll call in Louisiana.4 The implementation of this plan terminated BellSouth's funding of the LOS plan for the benefit of local/rural telephone companies. Absent further actions by the LPSC, this plan would have caused the rural companies to continue to offer the LOS calling plans at revenue loss and without the receipt of the needed subsidy. As a result, the rural companies filed a petition asking the LPSC to establish a SUSF to preserve the LOS calling plan. Cognizant of the potential financial burden for the local rural telephone companies, the LPSC, BellSouth, and the local telephone companies reached a Settlement Agreement on November 18, 1998, which insured that both plans (LOS and "1 + presubscription") would be maintained.
The 1998 Agreement was known as the "Interim LOS Preservation Plan."5 This Settlement Agreement excluded cellular providers, Competitive Local Exchange Carriers and independent companies from the requirement of contributing to the Interim LOS Preservation Plan. BellSouth was the primary contributor of the funds for this interim plan. The interim plan was designed to remain in effect for only three (3) years; BellSouth filed a Motion with the LPSC requesting that it replace the Interim LOS Preservation Plan with a permanent fund supported by all TSPs. This would carry out the mandate of the Telecommunications Act which was enacted by Congress in 1996.
The Telecommunications Act of 1996 ("the Act"), allowed states to establish universal service funds to advance the availability of telecommunications services in low income, rural, and high cost areas at reasonable rates comparable to the rates charged for similar services in urban areas. See, 47 U.S.C. § 254(b)(3).6 The specific purpose of the Act is to "promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies." Pub.L. No. 104-104, 110 Stat. 56 (1996).7 Under the Act, the incumbent local exchange carriers ("ILEC") are required to provide access to their facilities to requesting telecommunications carriers, known as "competitive local exchange carriers." 47 U.S.C. § 251. According to 47 U.S.C. § 253, the Act was created to foster competition by removing barriers to entry by an entity seeking to provide interstate or intrastate telecommunications service.8 While seeking to promote competitive markets, Congress also sought to preserve the goal of "universal service," therefore, Congress directed the Federal Communications Commission ("FCC") to establish a federal-state joint board to assist in implementing the universal service principles found in the Act. Simply put, the Act was intended to deregulate the telecommunications industry, open local and long distance telecommunications markets to competition, and ensure universal telephone service for all citizens at affordable rates.
Accordingly, Congress explicitly authorized the collection of funds to support universal service programs. AT & T Corp., et al. v. Public Utility Commission of Texas, 373 F.3d 641, 643 (5th Cir.2004). All interstate telecommunications service providers contribute to the federal universal service fund, which is an equitable and nondiscriminatory fee paid to preserve and advance the universal service. 47 U.S.C. § 254(d).9 Congress empowered the States to collect funds from carriers providing intrastate telecommunications services. AT & T, id. As with the federal universal service fund, the assessment of state universal funds must be equitable, nondiscriminatory, and not burdensome to the federal universal service system. 47 U.S.C. § 254(f).10 In other words, the State may adopt regulations consistent with the Federal rules to preserve and advance universal service. This permits the FCC to access interstate service providers to fund the federal universal service programs and permits the States to assess intrastate providers to fund the state universal service programs. AT & T, at 644.
In August 2004, the LPSC began taking the necessary procedural steps (i.e., the rulemaking process) in order to implement the Telecommunications Act of 1996 and consider the creation of a SUSF. The universal fund would assume the function(s) of the "Interim LOS Preservation Plan," but for the first time required contributions from all TSP (including wireless carriers).
On April 29, 2005, the LPSC issued a General Order which converted the "Interim LOS Preservation Plan," to a SUSF to subsidize the LOS functions. The validity of this Order is at issue in this present case before this Court. This Order mandated that all TSPs, including wireless carriers such as T-Mobile, contribute to the SUSF. This Order also provided that each TSP be allowed to recover the amounts contributed from its customers (i.e. "end users") either by a surcharge (i.e. a line item charge on the customer's bill) or by...
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