Committee for Toll-Free Tel. Serv. v. GTE North Inc. - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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OPINIONS OF THE SUPREME COURT OF OHIO
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Wadsworth, Sharon Center, and Montrose Committee for Toll-Free
Telephone Service et al., Appellants, v. GTE North
Incorporated; Public Utilities Commission of Ohio, Appellee.
[Cite as Committee for Toll-Free Tel. Serv. v. GTE North Inc.
(1993), Ohio St.3d .]
Public Utilities Commission -- Telephone companies --
Commission's determination denying flat-rate extended area
service not unreasonable or unlawful, when.
(No. 93-153 -- Submitted October 19, 1993 -- Decided
December 15, 1993.)
Appeal from the Public Utilities Commission of Ohio, No.
92-311-TP-PEX.
Appellants, numerous subscribers of the Wadsworth, Sharon
Center, and Montrose telephone exchanges of GTE North
Incorporated ("GTE"), filed a petition with appellee, Public
Utilities Commission of Ohio, alleging that their existing
local telephone service was inadequate to meet their daily
calling needs. As to the relief sought, appellants requested
that two-way, flat-rate extended area service ("flat-rate EAS")
be implemented between the Sharon Center, Montrose, and
Wadsworth exchanges. Implementation of flat-rate EAS would
replace existing message toll service (traditional long
distance service) with toll-free local calling. Because
toll-free calling already existed between the Sharon Center and
Wadsworth exchanges, the commission processed this case as a
request for EAS between the Sharon Center and Montrose
exchanges and between the Montrose and Wadsworth exchanges.
The commission held a hearing on the petition pursuant to
R.C. 4905.26 and under the guidelines established by Ohio Adm.
Code 4901:1-7-03.1 At the hearing, several subscribers of the
involved exchanges offered testimony as to their need to
telephone the requested exchanges, as well as to the
availability of services, products and activities within their
existing local calling areas to meet their daily calling
requirements. See Ohio Adm. Code 4901:1-7-03(B)(3). This
testimony established that the subscribers' need to place calls
to the requested exchanges generally arose from sharing a
school district and places of employment. Although the

testimony indicated that the petitioning subscribers placed
calls to the requested exchanges for other products, services,
and activities (e.g., to health care providers and to various
shops), it also reflected that comparable products, services,
and activities were available within the existing local calling
areas on a toll-free basis. (The Sharon Center local calling
area currently contains 227,301 access lines and includes the
Akron, Medina, and Wadsworth exchanges; the Wadsworth local
calling area contains 213,520 access lines and includes the
Akron, Rittman, and Sharon Center exchanges; and the Montrose
local calling area contains 209,328 access lines and includes
the Akron exchange.)
In addition, GTE provided information as to the relevant
calling statistics between the exchanges. See Ohio Adm. Code
4901:1-7-03(B)(1). The calling rate and distribution of
calling, respectively, were 3.72 and 52.04 percent from Sharon
Center to Montrose; 1.46 and 33.17 percent from Montrose to
Wadsworth; and 1.54 and 33.18 percent from Wadsworth to
Montrose.
GTE also presented testimony as to the costs to implement
EAS and the revenues it would lose if flat-rate EAS, or the
alternative usage-sensitive ("measured-rate") EAS, were
implemented. See Ohio Adm. Code 4901:1-7-03(C). Under
measured-rate EAS, subscribers who place calls to the involved
exchanges are charged based upon the duration, distance and
time of day of their calls. The charges equate to an
approximate seventy percent savings over existing toll rates.
GTE's net annual revenue loss would be $104,566 if flat-rate
EAS were implemented between the Sharon Center and Montrose
exchanges, compared to $32,139 if measured-rate EAS were
implemented. Its net annual revenue loss would be $252,408 if
flat-rate EAS were implemented between the Montrose and
Wadsworth exchanges, and $59,588 if measured-rate EAS were
implemented.
Upon consideration of the guidelines set forth in Ohio
Adm. Code 4901:1-7-03, the commission determined that the
community-of-interest testimony, the low calling statistics,
and the costs involved did not warrant any form of relief
between the Montrose and Wadsworth exchanges. However, it
granted two-way, measured-rate EAS between the Sharon Center
and Montrose exchanges, primarily due to the relatively higher
calling statistics and also due to the slightly more
significant community of interest exhibited between the
exchanges. Appellants subsequently filed an application for
rehearing, alleging that the commission erred by not ordering
flat-rate EAS between all exchanges. The application was denied
and the cause is now before this court upon an appeal as a
matter of right.

Oberholtzer, Filous & Young, John C. Oberholtzer and
Theodore J. Lesiak, for appellants.
Lee I. Fisher, Attorney General, James B. Gainer and Paul
A. Colbert, Assistant Attorneys General, for appellee.

Per Curiam. We have recognized that EAS cases are
essentially adequacy-of-service proceedings subject to R.C.
4905.22, 4905.26, and 4905.381. Arcadia Tel. Co. v. Pub. Util.

Comm. (1979), 58 Ohio St.2d 180, 12 O.O.3d 182, 389 N.E.2d
498. Although appellants raise several arguments in their
brief, the basic premise of their appeal is that Ohio Adm. Code
4901:1-7-03, and particularly the commission's consideration of
the calling statistics thereunder, is inconsistent with the
adequacy-of-service determination which the commission must
make under R.C. 4905.26. They argue that the petitioning
subscribers' testimony alone establishes that existing service
in the petitioning exchanges is inadequate and thus that the
commission was compelled to order flat-rate EAS implemented
between the involved exchanges pursuant to R.C. 4905.381. For
the reasons which follow, we reject appellants' arguments and
affirm the commission's order.
We have recognized the commission's authority under R.C.
4901.13 to adopt Ohio Adm. Code 4901:1-7-01 et seq. to aid its
inquiry in EAS cases. Norwalk v. Pub. Util. Comm. (1982), 1
Ohio St.3d 107, 1 OBR 140, 438 N.E.2d 425. We find that the
calling statistics provided for therein, which measure the
frequency and distribution of calling to other exchanges, are
probative not only of the adequacy of service for a given
exchange, but also as to whether a community of interest exists
between that exchange and other exchanges. Clearly, it is
reasonable for the commission to consider the calling patterns
between the petitioning and requested exchanges, and thus the
degree of reliance on the exchange to which toll-free service
is requested, in determining whether EAS should be ordered and,
if so, its form. Moreover, we reject appellants' assumption
that the subscribers' testimony, if considered alone, would
demonstrate that existing service is inadequate. The record
clearly reflects that the local calling areas are sufficient to
meet much of the petitioning subscribers' day-to-day calling
needs. Indeed, it would appear that, absent consideration of
the calling statistics of which appellants complain, denial of
all relief between the exchanges would have been well within
the commission's discretion.
Appellants further claim that it was inconsistent for the
commission to deny relief as between the Montrose and Wadsworth
exchanges, while granting measured-rate service between the
Sharon Center and Montrose exchanges. We find that the
commission's determination is supported by the relatively
higher calling statistics between the latter two exchanges as
well as by the slightly greater community of interest exhibited
between the exchanges from the community-of-interest
testimony.
Appellants next argue that service between Sharon Center
and Montrose was found inadequate because a toll charge was
incurred for calls placed between the exchanges. They contend
that the existing service cannot be rendered adequate merely by
reducing that charge through the seventy-percent discount
provided by the measured-rate service ordered. Appellants
would prefer that flat-rate EAS be instituted and that its
costs be spread over GTE's subscriber base. We have
acknowledged that R.C. 4905.381 provides the commission with
wide discretion in fashioning remedies in EAS proceedings.
Morrow Chamber of Commerce v. Pub. Util. Comm. (1993), 67 Ohio
St.3d 147, 616 N.E.2d 880. Here, noting the limited reliance
between the two exchanges, we cannot find it unreasonable that

the commission, by ordering measured-rate EAS, required the
cost of the service to be borne by those subscribers actually
using it - - at significant savings over their previous message
toll service.
Finally, appellants argue that toll charges subsidize
local service and should be abolished as being discriminatory.
The record does not support appellants' broad proposition as it
relates to this particular proceeding, or as to its farreaching
implications for telecommunication services in this state.
The commission's order, made in accordance with the
applicable statutes and rules, is supported by the record in
this proceeding, is neither unreasonable nor unlawful and,
accordingly, must be affirmed. MCI Telecommunications Corp. v.
Pub. Util. Comm. (1988), 38 Ohio St.3d 266, 268, 527 N.E.2d
777, 780.
Order affirmed.
Moyer, C.J., A.W. Sweeney, Douglas, Wright, F.E. Sweeney
and Pfeifer, JJ., concur.
Resnick, J., not participating.

FOOTNOTE
1 Ohio Adm. Code 4901:1-7-03 provides in part as follows:
"(A) EAS is not a substitute for message toll service,
but rather a service designed to meet the day-to-day calling
requirements of subscribers which cannot properly be met with
local calling confined to the local calling area of a
particular exchange. Requests for EAS are not evaluated by a
formula, but rather by the facts and circumstances of each
case. While the factors which determine whether EAS should be
provided in a given situation are sometimes difficult to
evaluate and quantify, the commission shall consider the
factors set forth below. However, the commission is not
precluded from considering other relevant circumstances not set
forth in these rules.
"(B) Community of interest factors:
"(1) The involved local exchange company(s) must submit
the following calling data for at least one representative
month, unless compelling circumstances exist to warrant the
submission of data for other than the representative month and
the commission directs the company(s) otherwise:
"(a) The calling rate between the involved exchanges
['"Calling rate" means the average number of message toll calls
placed per access line per month from one exchange to another
exchange,' 4901:1-7-01(D)];
"(b) The distribution of calling (to determine whether
the traffic is originated by the subscribers generally or by
only a relatively few subscribers) ['"Distribution of calling"
means the ratio, expressed as a percentage, of access lines
placing at least one message toll call per month from one
exchange to another exchange compared to the total number of
access lines in the exchange,' 4901:1-7-01(E)];
"(c) With reference to paragraphs (B)(1)(a) and (B)(1)(b)
of this rule, the commission will consider the calling rate and
distribution of the calling in both the exchange requesting EAS
and the exchange being requested, unless the access lines of
the requesting exchange number less than forty percent of the
total of the access lines in both exchanges. In that instance,

the commission shall consider the calling data from the
requesting exchange to the requested exchanges(s) only;
"(d) Under normal circumstances and in the absence of
other compelling considerations:
"(i) A calling rate of less than three from the
requesting exchange to the requested exchange is insufficient
to support the approval of EAS;
"(ii) In situations where the calling rate is at least
three, but less than five from the requesting exchange to the
requested exchange, no presumption for or against the
establishment of EAS shall exist. However, in any such case,
only usage sensitive service shall be considered, unless the
company does not provide a usage sensitive service and can
demonstrate that it is not technically or economically feasible
for it to do so;
"(iii) In situations where the calling rate is at least
five, but less than eight from the requesting to the requested
exchange, no presumption for or against the establishment of
EAS shall exist. However, in any such case, if EAS is
appropriate, usage sensitive service shall be the preferred
option, unless the company does not provide a usage sensitive
service and can demonstrate that it is not technically or
economically feasible for it to do so, or unless those seeking
EAS can demonstrate a need for flat-rate service; and
"(iv) In situations where the calling rate is at least
eight from the requesting exchange to the requested exchange, a
rebuttable presumption shall exist that some form of EAS,
either flat-rate service or usage sensitive service, is
warranted.
"***
"(3) The location of various services, products, and
activities, including, but not limited to, the following shall
be considered:
"(a) Population movement and other demographic
considerations;
"(b) Commercial development;
"(c) School activities;
"(d) Police and fire services;
"(e) Other governmental services, including the county
seat;
"(f) Medical, dental, and veterinarian services;
"(g) Religious institutions;
"(h) Agricultural organizations and services;
"(i) Shopping and service centers;
"(j) Employment centers; and
"(k) Social, cultural, and recreational activities.
"(C) Investment, cost, and revenue considerations:
"(1) It would not be in the public interest for a local
exchange company to enter into exceptionally heavy investments
in facilities and incur exceptionally high costs in situations
where the EAS requirement is not substantial. Therefore, each
of the factors must be evaluated in relation to all other
factors. Timing is an important cost consideration and
substantial weight must be given to plans for instituting the
service in the most economical manner and at the most
economical time."