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04/14/88 Mci Telecommunications v. the Illinois Commerce

April 14, 1988

MCI TELECOMMUNICATIONS CORPORATION, PETITIONER-APPELLANT

v.

THE ILLINOIS COMMERCE COMMISSION ET AL., RESPONDENTS-APPELLEES



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

523 N.E.2d 143, 168 Ill. App. 3d 1008, 119 Ill. Dec. 675 1988.IL.533

Petition for review of order of Illinois Commerce Commission.

APPELLATE Judges:

JUSTICE McMORROW delivered the opinion of the court. JIGANTI, P.J., and LINN, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCMORROW

Upon review, MCI argues that the Commission's order should be reversed because (1) the Commission erroneously interpreted the Act to permit reclassification of a service as competitive where an equivalent or substitute to AT&T's long distance service is reasonably available from other carriers to a majority, rather than all, access line customers in the State; and (2) the substantial evidence of record does not support the Commission's determination that an equivalent or substitute to AT&T's long distance service is reasonably available from other carriers to a majority of access line customers throughout the State.

We affirm.

Background

On January 7, 1986, AT&T filed its application and supporting documents with the Commission for reclassification of its long distance service as competitive in the entire State of Illinois and approval of its proposed competitive tariff for that service. In support of its application, AT&T stated that long distance customers in Illinois had functionally equivalent or substitute service that is "reasonably available" from other carriers in accordance with section 13-502(b) of the Act (Ill. Rev. Stat. 1987, ch. 111 2/3, par. 13-502(b)). AT&T proposed to continue to provide long distance service in accordance with its uniform, statewide pricing schedule so that long distance service customers would receive equal economic and technological benefits of competition. AT&T contended that its proposed tariff would reduce an average customer's current monthly bill by over 6% and requested that such reductions become effective on February 6, 1986.

In response to AT&T's application, other long distance telecommunications carriers, including MCI, filed requests for a hearing and petitions to intervene. On February 5, 1986, the Commission entered an interim order in which it found AT&T's proposed service tariff to be competitive for purposes of that order and authorized AT&T to file its proposed tariff to be effective February 6, 1986, on an interim basis. Thereafter the Commission allowed the petitions to intervene, held a hearing on AT&T's application, and took the matter under advisement. The following summarizes the evidence produced at the hearing.

Evidence presented by AT&T showed that as of December 1985, long distance service was available from more than one provider through local access to, at a minimum, approximately 70% of the 5.7 million access lines in Illinois; by June 1986, this percentage would increase to over 75% of the access lines in the State; and by December 1986, the percentage would be at least 86%. In addition, four long distance companies provided customers with access to their service on a statewide originating basis by means of 800 numbers, thus making service from more than one provider available throughout Illinois. Also, certain large local telecommunications companies had either undertaken or substantially completed the process of converting to equal access, so that competitors to AT&T would be able to provide long distance service of similar quality and ease to that of AT&T without the burdens associated with non-equal access. AT&T's evidence further showed that the long distance toll market was competitive throughout the State because choices in the market were potentially available due to easy market entry. In view of this ease in market entry, many consumers in Illinois currently had actual and potential substitutes available from other common carriers who provided long distance services, as well as wide-area telecommunications services and private lines.

Evidence presented by the intervenors disputed that produced by AT&T. The intervenors' witnesses testified to the effect that the long distance service of AT&T was not competitive on a statewide basis, because there were several towns, villages, and nonurban areas where, because of nonequal access, competitors were hampered by technological burdens not encountered by AT&T (e.g., dialing of several extra digits in order to access the competitor's long distance service or a variability of transmission quality with inferior connections). Witnesses also testified to the effect that the long distance markets in these areas were not characterized by ease of entry, because capital was not readily available to AT&T's competitors.

Staff witnesses of the Commission testified that the public would benefit from the allowance of AT&T's application, provided AT&T retains its statewide rate averaging for basic long distance service and maintains charges for other long-distance-related services at rates no greater than those applicable in the Federal jurisdiction. Staff observed that AT&T's competitors would continue to enjoy several competitive advantages over AT&T even if AT&T's application were granted, since these competitors were not forced to average their rates, had fewer regulatory restrictions than AT&T, had the ability to pursue competitive status for all services (not just long distance service), and were not rate-base regulated.

The Commission determined that AT&T's application should be allowed, finding that "a majority of access line customers presently have the ability to obtain long distance service from more than one provider." The Commission also determined that AT&T's long distance service "should be provided under a statewide pricing schedule . . . [to] ensure that all of AT&T's Long Distance Service customers will receive equal economic and technological benefits of competition." The Commission further determined that the rates for optional long distance services provided by AT&T should ...


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