20110613Reply Brief, Partial Motion to Strike.pdf

McDevitt & Miller LLP
Lawyers
[phone]
[phone] (Fax)
RECE\V
420 W. Bannock Street 'i OtA 2. 28
P.o. Box 2564-8itik JUN \ oJ r n .
Boise, Idaho 83702
Chas. F. McDevitt
Dean J. (Joe) Miler
June 13, 2011
Via Hand Delivery
Jean Jewell, Secreta
Idaho Public Utities Commssion
472 W. Washigton St.
Boise, Idaho 83720
Re: TFW-T-09-01
Dear Ms. Jewell:
Enclosed for fig in the above matter, please fid an origial and seven (7) copies of Traefone
Wireless, Inco's Reply Brief and Par Motion to Stre.
Kidly retu a fie stamped copy to me.
Very Truy Yours,
McDevitt & Mier I.
~~
DJM/hh
EneL.
ORIGINAL
Dean J. Miler (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Banock Street
P.O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
joe~mcdevitt-miler.com
R'-CFI'IC'-Ui: ~.,\l..
iOli JUN \ 3 PM 2: 28
Mitchell F. Brecher (admitted pro hac vice-DCB No. 210781)
Debra McGuire Mercer
GREENBERG TRAURG, LLP
210 1 L Street, NW
Suite 1000
Washington, DC 20037
Tel: [phone]
Fax: [phone]
brecherm~gtlaw.com
Attorneys for TracFone Wireless, Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF TRACFONE WIRELESS, INC. FOR )
DESIGNATION AS AN ELIGIBLE )
TELECOMMUNICATIONS CARRER )
)
)
)
CASE NO. TFW-T-09-01
TRACFONE WIRELESS,
INC's REPLY BRIEF AN
PARTIAL MOTION TO STRIKE
TracFone Wireless, Inc. ("TracFone"), by its attorneys, hereby submits its reply brief in
accordance with the Commission's Notice of Post-Hearg Briefing Schedule, Order No. 32231,
issued April 21, 2011. In addition, several portions of the initial briefs of Staff and of
Intervenors (the Idaho Telecom Alliance and CTC Telecomd//a CTCWireless) address matters
far beyond the scope of the issues designated by the Commission for briefing in this proceeding.
Accordingly, all portions of those briefs not responsive to the designated issues should be
stricken.
it. -, ." ~ g 'l~ " \ ¡' l ': ¡~ 1:, r- :'u_l l . ,I j ~".' (
,..I I
I.Partial Motion to Strike
In the Commission's April 21, 2011 Notice of Post-Hearng Briefing Schedule (Order
No. 32231), the Commission expressly limited the scope of the briefs to two -- and only two __
issues: 1) whether TracFone is legally obligated to remit certin fees pursuat to the Idaho
Emergency Communcations Act ("IECA"); and 2) whether TracFone is legally obligated to
remit certn fees pursuat to the Idao Telecommuncations Assistace Act ("ITSAP").
Accordingly, paries were invited to brief only the applicabilty of the IECA 911 fee and IT SAP
to TracFone as a matteroflaw. Nothg else was contemplated by the Commission's order.
In contravention of the express limited scope of the Commission's briefing order, Stas
brief addresses such extraneous matters as: 1) the Commission's regulatory authority over
public utilties and the federa and state stadads for designation of Eligible
Telecommunications Cariers (p. 1); 2) TracFone's intentions regarding IECA and ITSAP. fees
and its legal strategies involving other laws in other jursdictions (p. 1,); 3) whether TracFone
should "voluntarly" contrbute to ITSAP if not legally obligated to do so (p. 3); 4) whether
TracFone should contribute to the TRS Fund (pp. 3-4); and 5) cases involving laws of other
states (pp. 4-6). Intervenors' brief is similarly cluttered with matters and assertions well outside
the scope of the designated briefing issues. Examples of such extraneous material in
Intervenors' brief include: 1) speculation of futue TracFone litigation strategy (p.2); 2) the
Federal Communications Commssion's Forbearance Order (p. 4);1 and 3) TracFone's legal
challenges to the applicabilty of 911 laws in other states (p. 2).
1 Intervenors' brief
cites to Federal-State Joint Board on Universal Service: Petition of TracFone
Wireless, Inc. forForbearance from 47 U.S.C. § 214(e)(i)(A) and 47 C.F.R.§ 54.201 (i), 20 FCC
Rcd 15095 (2005) for the proposition that compliance with state 911 requirements is a condition
of the FCC's grant of forbearance to TracFone. That is factualy incorrect. The FCC's
Forbearance Order does not address state 911 requirements.
2
In ths reply brief, TracFone will respond to the substantive arguents of Staf and
Intervenors which address the two designated legal issues noted in the Commission's April 21
Notice of Prehearg Briefing Schedule. However, all matters contained in those briefs which do
not address TracFone's legal obligations, if any, to remit 911 and ITSAP fees should be stricken.
II. Nothing in Either Staffs or Intevenors' Brief Support a Conclusion That the
Applicable Laws Obligate TracFone to Remit 911 and/or ITSAP Fees
In determining the applicabilty of statutes, it is necessar to parse the statutory languge
enacted by the Legislature. As Intervenors properly acknowledge, Idao cours, like cours of
virtualy all jursdictions, follow the "plain meaning" rue of statutory constrction. Indeed, as
noted in Intervenors' brief, under Idao case law, analysis of statutory language "begins with the
literal languge of enactment. If the literal language is unambiguous, the dearly expressed intent
of the legislative body must be given effect, and there is no occasion for a cour to consider rues
of statutory constrction." Canty v. Idaho State Tax Commission, 138 Idaho 178, 182, 59 P.3d
983, 987 (2002)?
Application of the command of the. cour in Canty leads to the conclusion that the literal
languge of the applicable statutes does not extend to the prepaid service of TracF one -- servce
which is neither providedöna biled basis nor on a monthly basis. The 911 fee remittce
requiement is codified at Idaho Code § 31-4804(2). Pursuant to that statute, the 911 fee is
imposed on and collected from: 1 ) purchasers of access lines or interconnected VoIP lines; 2)
with a service address or place of primar use within the county or 911 service area; 3) on a
monthy basis, by all telecommuncations providers of such services. TracFone does not dispute
that its service meets the first. two prongs of the statutory language: 1) it provides' services to
purchasers of access lines and 2) those purchasers have service addresses within the county or
2 Intervenors' Brief at 3.
3
911 service area. However, TracFone is outside the all-importt thrd prong. Its service is not
provided on a monthy basis. Unless a service is provided on a monthly basis, it canot be
subject to a statutory ta to be collected on a monthy basis.
Some, including Intervenors, might find this statutory limitation frstrating. Indeed,
Intervenors have even described it to be a "100phole.,,3 Whether the statutory limitation to
services provided on a monthy basis should be modified or amended so as to encompass non-
monthly services is a matter for the Legislatue; it is not for the Commission to rewrte
legislative language to suit the wishes of its Staf, Intervenors, or anyone else.
Similarly, the language enacted by the Legislature governing remittance of ITSAP
charges may not reflect.the curent preferences of the Commission or paries to ths proceeding.
Idaho Code § 56-904(1) clearly and unequivocally contains the following qualification: "The
surcharge shaU be specifically stated on end user bilings." It is hornbook law of statutory
construction that the word "shall" is the language of command. The statute does not provide that
ITSAP charges may be stated on end user bilings; neither does it provide that ITSAP charges
might be stated on end user bilings. It says specifically that such charges shall be assessed on
end user bilings.4 If there are no end user bilings, there is no way to.assess surcharges on such
non..ex:istent end user billngs. By its. terms, the statute requires' tht ITSAP charges be stated on
3 Id, at 10.
4 The statutory language "shall be specifically stated on end user bilings" contradicts
Intervenors' assertion at p. 6 of its Brief that "the ITSAP does not mandate amonthly customer
biling." Whle the statute authorizes the Commission to allow less frequent than monthly
bilings (Idaho Code § 56~904(3), the statute does not authorize the Commission to eliminate or
waive the requirement that the ITSAP surcharge "be specifcally stated on end user bilings.".
4
end user bilings. Absent end user bilings, the statutory command of Section 56-904(1) is
simply inapplicable.
5
TracF one does not disagree that the growt of telecommuncations services provided on
prepaid, non-biled bases such as prepaid wireless service provided by TracFone and others may
render the "shall be established on end user billngs" language of Section 56-904(1) less
inclusive than some would prefer. Again, however, changes in statutory language to
accommodate changes in technology or changes in market strategies are a matter for the
Legislatue, not for the Commission, and certinly not for its Staff and Intervenors.
Intervenors' brief attempts to explain away the disconnect between their interpretation of
the applicable statutes and the plain meanng of the statutory languge though a detailed
sumarization of their view of the statutes' legislative history. Beginning at p. 12 of their brief,
Intervenors trace the changes to the statutes over the years in response to technological and
market developments. However, Intervenors disregard the unassalable fact that the critical and
relevant portions of the statutes have not changed over the years. The.monthy biling provision
applicable to 911 fees ("biled on a monthly basis") remains in Section 31-4804(2) without
modification. So too does the requirement that the ITSAP surcharge "be specifically stated on
end user billngs" remain unchanged in Section 56-904(1). Given the history of changes to the
statutes to accommodate. changes in how.services are provided.as described by Intervenors, it
5 Curiously, Intervenors' Brief ignores that statutory language of Section 56-904(1) and instead
cites to Sta witness's oral description of the statute. Intervenors' Brief, at 5. Intervenors'
decision to base their explanation of the statute on Ms. Seaman's testimony father than on the
statutory language itself is unexplained and unexplainable, except that Ms. Seaman's description
of the statute is more supportive of Intervenors' arguent than is the language of the statute
itself. Not surrisingly, Ms. Seaman's testimony relied upon by Intervenors totally ignores the
critical statutory requirement that the ITSAP surcharge "shall be specifically stated on end user
bilings." Neither Ms. Seaman nor the Commission are empowered to disregard that express
statutory requirement.
5
strains credulity to suggest that the unchanged statutory language of those sections does not
accurately reflect legislative intent.
A relevant analogy involves the federal excise tax on telephone service. The U.S.
Internal Revenue Code imposes an excise ta on cert types of telephone service.6 Among the
categories of telephone service subject to the federal excise ta is ''toll telephone service." The
Internal Revenue Code defines ''toll telephone service" in relevant par, as
(I) a telephonic quaity communication for which
(A) there is a toll charge which varies in amount with the
distance and elapsed transmission time of each individual
communcation and
(B) the charge is paid with the United States
7
Inclusion of the words "vares in amount with the distace" in the statutory defintion of
toll telephone'service'reflects the fact that at the time of the statute's.enactment, providers'oftoll
services (sometimes referred to as long distace services) priced their services on a distance
sensitivebasis.8 For example, calls between Boise, Idaho and Denver, Colorado would cost less
than calls of the same duration between Boise, Idao and New York City. Subsequent to
enactment of that statutory definition, as a result of increasing competition in. the toll services
market and. changes. in transmission technology, virly all providers of toll services modified
their rate strctures to eliminate distace as a factor in pricing. Carers now use postalized rates.
The rate is the same fora toll call from anywhere in the United States to anywhere in the United
States. In short, charges for toll calls no longer vary in amount with distance.
626 U.S.C.§ 4251.
726 U.S.C. §4252(b)(emphasisadded).
8 When' the
definition of toll' telephone service' was added to . the Internal Revenue Code in themid-1960s, AT&T provided long distace (toll) telephone service on a monopoly basis
throughout the United States.
6
However, Congress never amended the statutory definition of "toll telephone servce" to
reflect the fact that toll charges no longer var in amount with the distance of the calL. As a
result, challenges to the applicabilty of the federal excise tax to toll telephone services were
brought by consumers of such services. Those consumers argued that services the charges for
which do not var with distance are not toll telephone. servce within the statutory defition
codified at 26 U.S.c. § 4252(b). The Internal Revenue Servce contested those cases and
asserted that the fact that toll services no longer were provided on a distace sensitive basis did
not detract from Congress's intent to subject long distace callng to the excise ta. In short, the
IRS, like Staff and Intervenors in the instant case, asserted that the literal languge of the statute
should not be strictly followed in light of market changes in how services were provided.
Not surrisingly, every federal appeals cour which considered the issue rejected the
IRS's expansive view of the statute. Each of those appeals cours agreed that long distance
services whose rates do not. var with distace. are not toll telephone service within the . existing
statutory definition, . and therefore are not subject to the federal excise tax. See American
Baners Ins. Group v. United States, 408 F.3d 1328 (lith Cir.2005); Office Max; Inc. v. United
States, 428 F.3d583 (6th Cir. 2005); National R.R.Passenger Corn. v.United States, 431 F.3d
374 (D.C. Cir, 2005); Fortis v. United States, 2006 U.s. App. LEXIS 10749 (2nd Cir. 2006);
Reese Bros.v. United States, 2006 U.S. App. LEXIS 11468 (3rd Cir. 2006).9
The cours were not persuaded by claims of the U.S. Governent that Congress meantto
include all long distance services or that it was irrational to exclude toll charges which did not
var with distace. Each cour applied the statute as it was enacted without regard to whether
9 After every cour concluded that servces whose charges did not var with distace were not
toll telephone service, the Deparent of the Treasur ceased efforts to enforce the federal excise
tax against users of such services. See Deparent of the Treasur Notice 2006-50.
7
Congressional intent would suggest an interpretation which deviated from the statutory languge.
The cours resisted pleas by the governent to rewrte the statute to cover services outside the
statutory definition. So too should the Commssion resist requests by Staff and Intervenors to
wrte out of the IECA the statutory "on a monthy basis" provision and to eliminate from the
ITSAP statute the statutory requirement that the surcharges be explicitly stated on end user
bilings.
III. The Commission Is Not Empowered to Subject a Telecommunications
Provider to Otherwise Inapplicable Laws as a Condition of ETC Designation
As noted above, the Commission has directed briefing of two issues -- whether the 911
fee law is applicable to TracFone, and whether the ITSAP fee law is applicable to TracFone. As
explained in TracFone's initial brief and in ths reply brief, neither law as curently enacted is
applicable to TracFone. However, Stas brief goes beyond those legal questions and asks the
Commission to require TracFone to subject itself to those laws without regard to whether they
are applicable. For example, at p. 3, Stas brief states: "If TracFone's telecommuncations
services are trly in the public interest then the Company should be required to make a good
faith demonstration of its willngness to provide critical funding support for programs that will
ensure that its services wil reach all Idahoans in an effective maner."lO Later, Sta insists that
as a condition of ETC designation TracFone should volunteer to contrbute to the IT SAP fund.
Specifically, Staff brief states ". . . if TracFone is unwillng to voluntarily contribute to the
ITSAP Fund then the Company's Amended Application should be denied."ll
Conspicuously absent from Staff's brief is any supporting authority for its novel
proposition that ETC designations may be withheld uness companies volunteer to contrbute to
fuds to which they are not otherwse legally obligated to contribute. This absence of any
10 Staff
Brief at 3 (emphasis in original).llId (emphasis added).
8
supporting authority is not surrising. No such statutory or case law authority exists -- not in
Idaho, not in any other state. To date, TracFone has been designated as an ETC in not fewer than
37 states. Not one of those states has required TracFone as a condition of ETC designation to
contribute to any fud to which it is not required to contrbute by applicable law.
12 Whle
TracFone does not dispute that state commissions are required to make public interest
determinations in ETC designations, there is no legal basis upon which to condition a public
interest determination on commtments by ETC applicants to comply with inapplicable legal
requirements.
13
iv. References to Litigation of Fee-Related Issues in Other States Are
Inappropriate; Reliance on Cases Construing Other States' Laws Is
Misplaced; Staff and Intervenors Conceal from the Commission the Fact
That Other States Have Designated TracFone as an ETC Notwithstanding
Pending Fee Litigation
Staf and Intervenors each expend significant portions of their briefs discussing 911 and
other fee-related laws from other states and describing challenges to such laws which have been
brought by TracFone.14 As noted in Section I of this reply brief, other states' laws and
TracFone's litigation decisions in other states are not relevant to the issues before the
Commission in this ETC proceeding and are far outside the scope of the two issues which the
Commission has directed the paries to brief. For that reason, all discussion of other state laws
and other state cases should be stricken. However, since Stafandlntervenors are so desirous of
burdenig the Commission with their respective interpretations of other states' legal
12 Some states have requied TracFone to contrbute to certn fuds following a legal
determination by a deparent or cour of competent authority that the contrbution requirements
were applicable to TracFone. No state has imposed such a volunta contrbution obligation as
suggested by Staff.13 Staffs suggestion that TracFone should "voluntaly" remit fees asa condition of being
designated as an ETC is contrar to its own testimony in this proceeding. When asked by
Commissioner Smith whether TracFone should pay the fees if not legally required to do so, Sta
witness Seaman responded unequivocally, "No." Tr. at 350.
14 See, e.g. , Staff Brief, at 5-6; Intervenors' Brief, at 17-21.
9
requirements and TracFone's litigation strategies in other states, TracFone is compelled to
briefly address those assertions.
At the outset, states' telecommuncations ta and fee laws differ from each other. As
described in the preceding sections of ths reply brief and in TracFone's initial brief, the "on a
monthy basis" language in the 911 fee law and the requirement that IT SAP surcharges be
"explicitly stated on end user bilings" are provisions specific and unque to Idaho. Accordingly,
reliance on other state decisions would be relevant only if those states' laws had the same
statutory requirements. Neither Staff nor Intervenors have made any such showing.
Moreover, Staffs and Intervenors' reliance on other state fee dispute cases disregards
what the instat proceeding is about -- whether TracFone should be designated as an ETC for the
limited purose of providing Lifeline service to low-income Idao households. Staff and
Intervenors note the existence of disputes and, in some cases, judicial proceedings, brought by
TracFone in other states challenging the applicabilty of those states' laws. In SOme states,
including, e.g., Washington and Kentucky, TracFone's legal challenges were not completely
successfuL. 15 In other sttes, including, for example, Michigan, the court of appeals agreed with
TracFone that the 911 fee law was not applicable on the basis that the Michigan law tied the
obligation to collect andremit911 charges on customers having a "biling address" and that,. by
15 In the Kentucky case, Commonwealth of Kentucky CommerciaL
Mobile Radio Servce
Emergency Telecommunications Board v. TracFone Wireless, Inc., 735 F.Supp. 2d 713 (W.D.
KY2010),the court concluded that TracFone was subject to a prior, no longer in effect version
of that state's 91l fee law, but that it could not be required to contribute 911 fees under the
curent version of the law until such time as the Commercial Mobile Radio Service Emergency
Telecommuncations Board complied with a statutory directive to develop and implement a
collection method for prepaid services.
10
definition, customers of prepaid services do not receive bils and therefore do not have biling
addresses.
16
Importantly, in all of those states, the state commissions have designated TracFone as an
ETC. Notwthstading the fee-related disputes noted by Sta and Intervenors, TracFone has
been designated as an ETC in Washington, Kentucky, Michigan, Maine, Ohio, Arizona, and
Iowa -- all states referenced in the briefs of Staf and/or Intervenors.
17
Each of those state commissions concluded that designation of TracFone as an ETC
would serve the public interest and would benefit that state's consumers despite the existence of
unesolved disputes regarding obligations to remit certain 911 and other public purose fees. As
a result, low-income consumers in those states (including, Washington, Kentucky, Michigan,
Maine, Ohio, Arzona, and Iowa) as well as nearly 30 other states are enjoying the benefits of
SafeLink Wireless(l Lifeline service. More than thee milion such quaified low-income
consumers are receiving free handsets and up to 250 minutes perffonth of wireless airtime with
a nationwide "local calling area" -- benefits which no curently-designated ETC in Idao,
including Intervenors, can or has chosen to match.I8
16 Just as consumers of
prepaid, non-biled services do not have biling addresses, neither do they
receive end user billngs.17 Of the other states referenced in Staff s and Intervenors' briefs, TracFone has not sought ETC
designation in Nebraska; it withdrew its petition for ETC designation in Colorado for reasons not
related to fee issues; it has completed a hearing in Indiana on its ETC application where there are
no curent fee disputes and the Indiana Utilty Reguatory Commssion is expected to issue an
order designating TracFoneas an ETC in that state not later than June 30, 2011.
18 The undisputed fact
that no Idaho ETC in general and no Idao wireless ETC in paricular is
willing to provide a Lifeline service to low-income Idaho households comparable to TracFöne's
SafeLinkWireless(l service may explain why Intervenors have invested such signficant
resources to oppose TracFone's designation as an ETC in Idaho and resulting entr into the
emerging competitive market for Lifeline services.
11
Conclusion
For the reasons described herein as well as in TracFone's initial brief, the 911 fee
remittce requirement codified at Idaho Code § 31-4804(2) and the ITSAP remittce
requirement codified at Idaho Code § 56-901, as curently enacted, are not applicable to
TracFone's pay-as-you go non-monthy, non-biled prepaid wireless services. Any modification
of those laws to encompass such services must be implemented though legislation, not though
regulatory fiat. Moreover, the record in ths proceeding conclusively demonstrates that
designation of TracFone as an ETC for the limited purose of providing Lifeline service to
qualified low-income households would serve the public. interest by makng the security and
convenience of ful - featured mobile telecommunications available to all Idahoans îrrespective of
their economic circumstances. For these reasons, TracFone respectfuly urges the Commission
to designate it as an ETC expeditiously so that Idao consumers, like those of more than thrty
other states, may soon enjoy the benefits of Lifeline-supported SafeLink Wireless(l service.
Dean J. Miler (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Banock Street
P.O. Box 2564-83701
Boise, Idaho 83702
Tel: 208.,343-7500
Fax: [phone]
joe~mcdevitt-miler.com
June 13,2011
Mitchell F. Brecher (admitted pro hac vice)
Debra McGuire Mercer
GREENBERGTRAURIG, LLP
2101 L Street, NW, Suite 1000
Washigton, DC 20037
Tel: [phone]
Fax: [phone]
brecherm~gtlaw.com
Attorneys for TracFone Wireless, Inc.
12
CERTIFICATE OF SERVICE
I hereby certify that on the IÔ~y of June, 2011, I caused to be served, via the
methode s) indicated below, tre and correct copies of the foregoing document, upon:
Jean Jewell, Secreta
Idaho Public Utilties Commission
472 West Washigton Street
P.O. Box 83720
Boise,ID 83720-0074
iiewell~puc.state.id. us
Neil Price, Esq.
Idaho Public Utilties Commission
472 West Washington Street
P.O. Box 83720
Boise,ID 83720-0074
Neii.Price~puc.idaho. gov
Molly O'Lear, Esq.
Richardson & O'Lear, PLLC
P.O. Box 7218
Boise, ID 83707
molly~richardsonandolear.com
Cynthia A. Melilo, Esq.
Givens Pursley LLP
601 N. Banock Street
P.O. Box 2720
Boise, ID 83701
cam~givenspursley.com
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