Public Utility Commission of Texas v. Southwestern Bell Telephone Co.

112 S.W.3d 221, 2003 Tex. App. LEXIS 5928, 2003 WL 21554308
CourtCourt of Appeals of Texas
DecidedJuly 11, 2003
DocketNo. 03-02-00602-CV
StatusPublished
Cited by1 cases

This text of 112 S.W.3d 221 (Public Utility Commission of Texas v. Southwestern Bell Telephone Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Public Utility Commission of Texas v. Southwestern Bell Telephone Co., 112 S.W.3d 221, 2003 Tex. App. LEXIS 5928, 2003 WL 21554308 (Tex. Ct. App. 2003).

Opinion

OPINION

DAVID PURYEAR, Justice.

This is an appeal from a final judgment granting appellees Southwestern Bell Telephone Company (“SWBT”)1 and [223]*223Southwestern Bell Communications Services, Inc. d/b/a Southwestern Bell Long Distance (“SBCS”) (collectively, the “SWB Companies”) declaratory, injunctive and mandamus relief prohibiting the Public Utility Commission of Texas (the “Commission”) and AT&T Communications of Texas, L.P. (“AT&T”) from conducting or participating in certain hearings and taking certain administrative actions pursuant to a complaint filed by AT&T against the SWB Companies. The Commission and AT&T appeal by three issues. We will affirm the judgment of the district court.

PROCEDURAL HISTORY

This dispute arose when AT&T, a competitor of the SWB Companies, filed a complaint with the Commission alleging that SWBT, a local exchange carrier, and SBCS, a SWBT affiliate offering long-distance service in Texas, were engaging in anti-competitive and discriminatory conduct in violation of the Public Utility Regulatory Act. Tex. UtiLCode Ann. §§ 11.001-64.158 (West 1998 & Supp.2003) [hereinafter PURA]. AT&T’s complaint alleged that SBCS is offering intrastate long distance telephone service at prices too low for AT&T to compete and claimed that the remedy was for the Commission to reduce the level of SWBT’s switched-access rates. The Commission initiated a hearing to consider AT&T’s complaint. SWBT sought declaratory, mandamus and injunctive relief against the Commission on the ground that the Commission was acting beyond its statutory authority in conducting a hearing on AT&T’s complaint. SWBT contended that the level of its switched-access rates had been specifically authorized by the legislature in PURA sections 58.301 and 58.302 and that an electing company under chapter 58 is not subject to a complaint or hearing regarding the reasonableness of its rates under any circumstances. See id. §§ 58.025(a), .301, .302 (West 1998 & Supp. 2003). SBCS intervened in support of SWBT and AT&T intervened in opposition.

The district court denied SWBT’s request for a temporary injunction, but this Court held that the Commission should be temporarily enjoined from conducting a hearing pending trial on the merits. Southwestern Bell Tel. Co. v. Public Util. Comm’n, 72 S.W.3d 23 (Tex.App.-Austin 2001, pet. dism’d w.o.j.). No temporary injunction was issued on remand because the Commission’s proceedings were abated pending a decision by the district court on the merits of SWBT’s claims. In cross motions for summary judgment, AT&T sought denial of all of SWBT’s claims; SWBT sought a declaratory judgment that the Commission was acting without authority, together with ancillary mandamus and permanent injunctive relief; and SBCS sought declaratory judgment that the Commission had no jurisdiction over it. The Commission supported AT&T. The district court granted summary judgment in favor of SWBT and SBCS. The Commission and AT&T appeal by three issues, claiming that (1) the Commission has jurisdiction to consider AT&T’s allegations against SWBT because it was given an oversight role to ensure the development of a competitive telecommunications market in Texas when the legislature adopted chapters 58 and 60 of PURA; (2) the Commission has jurisdiction over SBCS under section 52.108; and (3) in exercising its oversight authority, the Commission may reduce switched-access rates if necessary to remedy anti-competitive or discriminatory conduct.

THE CONTROVERSY

SWBT is a local-exchange company which provides telecommunications ser[224]*224vices in a specified “local access and transport area” (“LATA”). Because it is a local-exchange company, it may not provide long-distance service between a point within the area and a point outside the area. This long distance service is provided by AT&T and SBCS, who are competitors. SBCS is an affiliate of SWBT but is a separate legal entity, as required. See 47 U.S.C.A. §§ 271, 272 (West 2001). In order to connect an intrastate long-distance call to SWBT’s local network, long-distance carriers such as AT&T and SBCS must pay SWBT a “switched-access charge.”

AT&T complained to the Commission that SWBT and SBCS were engaging in anti-competitive and discriminatory conduct by virtue of their affiliation. Specifically, AT&T complained that the SWB Companies had set the prices of their long-distance telephone service at levels designed to force competitors out of the Texas market for intrastate long-distance telephone calls. AT&T claims that SWBT and SBCS engaged in intra-corporate cross-subsidization to facilitate a price squeeze that was anti-competitive, predatory, discriminatory, and unreasonably preferential.

According to AT&T, the SWB Companies could take the money made by collecting above-cost switched-access rates from AT&T and use it to subsidize the long-distance service offered by SBCS. This permitted SBCS to sell long-distance at a rate so low it would cause a stand-alone company to lose money, but in combination with the access charges would permit the SWB Companies as a whole to make money. AT&T requested that the Commission order SWBT to reduce the amount of its current switched-access charges to equal SWBT’s costs for providing the service.

The Commission docketed AT&T’s complaint and referred the matter to the State Office of Administrative Hearings (“SOAH”) to conduct a contested-case proceeding. The Commission bifurcated the proceedings into two phases. The first phase was to determine if there had been a violation of PURA. If a violation were found, the Commission would determine an appropriate remedy in the second phase. The Commission’s preliminary order specified the following five issues to be addressed in phase one:

(1) Are SWBT and [SBCS] engaging in intra-corporate cross-subsidization, which facilitates a price squeeze for interLATA and or intraLATA telecommunications services that is unreasonably preferential, prejudicial, and/or discriminatory as applied?
(2) Is [SBCS] engaging in predatory pricing in violation of PURA § 52.107?
(3) Has either SWBT or [SBCS] priced intrastate long distance services in an anti-competitive manner?
(a) What are the costs incurred by [SBCS] to provide intrastate long-distance?
(b) What is the long-run incremental cost to SWBT to provide intra-state switched access service?
(4)Has either SWBT or [SBCS] priced intrastate long distance services in a manner that has resulted in the subsidization of competitive services with revenue from monopoly services in violation of P.U.C. Subst. R. 26.226?
(5)Are SWBT and [SBCS] engaged in conduct regarding the pricing of intraLATA and interLATA telecommunications services or switched access rates that is in violation of the imputation requirements of PURA §§ 60.061, 60.063 and P.U.C. Subst. R. 26.274?

[225]*225Both SWBT and SBCS filed motions to dismiss AT&T’s complaint, which the Commission denied. SWBT then filed suit in district court seeking to enjoin the proceedings at SOAH.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
112 S.W.3d 221, 2003 Tex. App. LEXIS 5928, 2003 WL 21554308, Counsel Stack Legal Research, https://law.counselstack.com/opinion/public-utility-commission-of-texas-v-southwestern-bell-telephone-co-texapp-2003.