Western Radio Communications, Inc. v. Two-Way Radio Service, Inc.

• Decision Date: 24 April 1986
• Docket Number: No. 84-231,TWO-WAY,84-231
• Parties: WESTERN RADIO COMMUNICATIONS, INC., Petitioner, v.RADIO SERVICE, INC., and Public Service Commission of Wyoming, Respondents.
• Court: Wyoming Supreme Court

Page 15

718 P.2d 15

WESTERN RADIO COMMUNICATIONS, INC., Petitioner, v. TWO-WAY RADIO SERVICE, INC., and Public Service Commission of Wyoming, Respondents.

No. 84-231.

Supreme Court of Wyoming.

April 24, 1986.

Ronald P. Jurovich and Charles K. Moss, Thermopolis, for petitioner.

L. Craig Clayton, Donald R. Winship & Associates, Casper, for respondent Two-Way Radio Service.

A.G. McClintock, Atty. Gen., Steven R. Shanahan, Sr. Asst. Atty. Gen., and Michael L. Hubbard, Asst. Atty. Gen., Cheyenne, for respondent Public Service Com'n.

Before THOMAS, C.J., and ROSE, ^* ROONEY, ^** BROWN and CARDINE, JJ.

THOMAS, Chief Justice.

The major issue presented in this case which was certified for review pursuant to Rule 12.09, W.R.A.P., is whether the applicant for a certificate of public convenience and necessity demonstrated by substantial evidence its financial ability and good faith and the necessity of additional service in the community. There are additional issues raised concerning the propriety of issuing a certificate of public convenience and necessity based upon a contingent event and the filing of exhibits subsequent to the hearing held by the Public Service Commission (hereafter the PSC). We conclude that the applicant met its burden of proof with substantial evidence and that there was no error in the proceedings before the PSC. We affirm the order of the PSC.

Two-Way Radio Service, Inc. (hereafter Two-Way) applied to the PSC for a certificate of public convenience and necessity authorizing it to operate a direct dial automated radio paging system in Casper and in Douglas. A Notice of Application was published in a Casper and a Douglas newspaper, and Custom Radio, Inc. and Western Radio Communications, Inc. (hereafter Western) moved to intervene in the proceedings. These two firms were providing similar paging services in the Casper and Douglas areas, and their respective motions to intervene were granted by the PSC. A public hearing was held on the application, and the PSC then issued to Two-Way a certificate of public convenience and necessity. Western filed a petition for rehearing which was denied by the PSC. Western then filed a Petition for Judicial Review in the district court. After ordering that briefs be filed, the district court ordered that the case be certified to this court pursuant to Rule 12.09, W.R.A.P.

In its brief in this court Western states the following issues:

"1. Did the Public Service Commission err in issuing its decision based upon a subsequent happening.

"2. Whether the Public Service Commission denied Appellant/Petitioner due process when the Public Service Commission allowed the submission of late exhibits.

"3. Whether the Public Service Commission erred in finding that it was not necessary for an Applicant to prove the public interest or Public Convenience necessity in order for the Public Service Commission to issue a Certificate of Public Convenience and necessity."

The respondent, Two-Way Radio Service, Inc., states substantially the same issues in this way:

"ISSUE I. WHETHER THE PSC ERRED IN MAKING ITS ORDER EFFECTIVE UPON RECEIPT OF THE FCC EXTENSION.

"ISSUE II. WHETHER ALLOWANCE OF LATE-FILED EXHIBITS BY THE PSC CONSTITUTES REVERSIBLE ERROR.

"ISSUE III. WHETHER SUBSTANTIAL EVIDENCE SUPPORTS THE PSC'S DETERMINATION."

The PSC in its brief articulated the issues as:

"I. DID THE COMMISSION ERR IN PROVIDING THAT THE CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY WOULD BE EFFECTIVE UPON RECEIPT OF THE FCC EXTENSIONS OF TIME ON THE CONSTRUCTION PERMITS?

"II. WAS WESTERN RADIO DENIED DUE PROCESS WHEN THE COMMISSION ALLOWED WESTERN RADIO'S REQUEST TO HAVE THE APPLICANT'S RULES AND REGULATIONS SUBMITTED AS A LATE-FILED EXHIBIT?

"III. WAS THE COMMISSION'S ORDER ISSUING THE CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY SUPPORTED BY SUBSTANTIAL EVIDENCE?

The material facts relating to these issues will be set forth in connection with the discussion of each issue.

We address first the issue of whether there was a failure to establish the financial ability and good faith of Two-Way and the necessity of additional service in the community by substantial evidence at the hearing. The essence of Western's argument is that the evidence submitted by Two-Way and upon which the PSC relied is insufficient to demonstrate those statutory criteria; that the PSC indicates in a portion of its findings that Western had a burden of establishing the absence of the statutory criteria; and that the decision of the PSC is arbitrary, capricious or characterized by an abuse of discretion because it is not a rational decision based upon a consideration of relevant factors. Two-Way and the PSC contend that under the usual standards for appellate review there is substantial evidence supporting the findings of fact made by the PSC, and for this reason under the precedents extant in Wyoming the decision of the PSC must be affirmed.

In addressing the statutory criteria found in § 37-2-205(c), W.S.1977, as follows:

"* * * The commission shall have power, after hearing involving the financial ability and good faith of the applicant and the necessity of additional service in the community, to issue said certificate, as prayed for, * * * "

the PSC made the following findings of fact:

"12. The Commission finds that Two-Way Radio has shown by substantial evidence that it has the technical, organizational and financial ability to provide paging service as proposed. Applicant has shown that it has a skilled operation of many years' duration with solid financial backing. The Commission recognizes that Applicant may be optimistic in its projections, however, these projections are merely educated guesses as to the course of future events. The Commission does not find these matters fatal to Two-Way's application. The more important factor, which was amply demonstrated at the hearing, is the overall financial condition of the operation and the commitment of its principals to its success. Therefore, the Commission finds Two-Way Radio to have the financial ability necessary to implement paging operations.

"13. The issue of whether there exists a public need for another paging service in Casper and Douglas was perhaps the most contested issue in the hearing and the briefs. This issue has several aspects: (a) whether there is a need for a fifth paging service in the Casper area and a second in the Douglas area; (b) whether the respective Casper and Douglas markets can support another carrier; and (c) the extent to which the Commission must or should seek to protect the market integrity of the existing carriers.

"The question of whether there is a need for a fifth paging service in the Casper area and a second one in the Douglas area is closely related to the question of whether the respective markets can support another system. Two-Way Radio produced a market survey indicating that out of a small percentage of potential customers included in the survey, 45% of them would be interested in their service. The survey also showed that 70% of the persons surveyed had not been solicited by other paging services.

"The Intervenors offered numerous criticisms of the design of the survey and objections to its admission, but they had no evidence to rebut its results. The survey itself did not pretend to be a scientific survey with statistical validity, but was clearly conducted for the purpose of aiding the Applicant in deciding whether to undertake the paging business. Moreover, the fact that both Intervenors testified to having substantial advertising budgets suggests that they too believe there is an untapped market.

"The issue here is not so much the validity of the market survey, however, but whether this Commission has an obligation to protect existing carriers. In keeping with this Commission's firmly established policy of regulated competition, it is clear that this Commission will not deny an application for certification absent a showing that certification would be unjustified. Mere assertions, without evidence in support, that there is no additional market and that harm to existing carriers will result, are insufficient.

"It is the conclusion of this Commission that there is sufficient evidence to support a finding that: (a) there is a need for a fifth carrier in the Casper area and a second carrier in the Douglas area; (b) the communications markets in both areas are capable of supporting an additional carrier; and (c) the Commission is not obligated to protect the market integrity of the existing carriers."

At the hearing the PSC received financial statements prepared by Two-Way's accountants. Those documents as explained by testimony disclose substantial net profits before taxes for the two years prior to the application. They show substantial retained earnings as of the end of the most recent fiscal year, and reflect total assets of more than $200,000 including more than $50,000 cash as of the end of the preceding fiscal year. Total liabilities were a little more than $100,000 with a net worth of more than $113,000. In addition, since its inception as a business in 1965, Two-Way has shown a net profit for every prior year.

Through its officers and employees, Two-Way had considered the cost of the radio paging service operations and had anticipated income. It had planned a method for financing the purchase of equipment necessary for the radio paging service, and the principal shareholder, who also is an officer of the corporation, testified that he was prepared to commit additional personal assets to the operation of the venture if that were necessary. He testified that he did not perceive that the commitment of his personal assets would be required.

The PSC recognized that the projection of Two-Way of attracting 100 paging service customers in the first year was optimistic. Western contends that it is unrealistic. Western's position, however, simply is an expression of concern that certain events which...