20110523Intervenors' Post-hearing Brief.pdf

Cynthia A. Melilo, ISB # 5819
GIVENS PURSLEY LLP
601 W. Bannock Street
P.O. Box 2720
Boise, 10 83701
Telephone: [phone]
Facsimile: [phone]
Email: cam~givenspursley.com-.
e: Attorneys for Idaho Telecom Allance
~ Molly O'Leary (ISB No. 4996)
CD Richardson & O'Leary PLLC
_ 515 North 27th Street
0: P.O. Box 7218
o Boise, 1083707Telephone: [phone]
Facsimile: [phone]
E-Mail: mollyCãrichardsonandoleary.com
Attorneys for CTC Telecom, Inc.
RECEIVED
2011 HAY 2~ pv H 3: ~6
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF TRACFONE WIRELESS, INC., FOR )
DESIGNATION AS AN ELIGIBLE TELE- )
COMMUNICATIONS CARRIER )
)
)
)
)
CASE NO. TFW-T-09-o1
INTERVENORS' POST-HEARING
BRIEF ON THE APPLICABILITY OF
THE IDAHO EMERGENCY
COMMUNICATIONS ACT AND THE
IDAHO TELECOMMUNICATIONS
SERVICE ASSISTANCE PROGRAM TO
TRACFONE WIRELESS, INC.
The Idaho Telecom Allance (-ITA-), by and through its attorney of record, Givens
Pursley LLP, and CTC Telecom, Inc., dba CTC Wireless, by and through its attorney of
record, Richardson & O'Leary, PLLC (collectively, -Intervenors-), in accordance with
Order No. 32231 of the Idaho Public Utilities Commission (-Commission-), hereby jointly
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TFW-T-G9-1
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file this post-hearing briefing in the above-captioned matter. The Commission limited
the scope of post-hearing briefing to the single issue of "whether TracFone is legally
obligated to remit certain fees pursuant to the Idaho Emergency Communications Act
(IECA) or the Idaho Telecommunications Service Assistance Program (ITSAP)." Order
No. 32231 at 2 (April 21, 2011).
i. INTRODUCTION.
Post-hearing briefing was ordere to provide the Commission with additional
analysis of whether TracFone Wireless, Inc. ("TracFone") is required to submit fees
pursuant to the IECA and the ITSAP. Although TracFone has requested that this issue
be briefed to the Commission, TracFone has also indicated that it does not consider the
Commission to be the ultimate authority on the applicabilty of the IECA or the ITSAP to
TracFone. Hearing Transcript at 357. If the Commission were to decide that the IECA
and/or the ITSAP apply to TracFone, TracFone has indicated that it would not consider
the decision to be a "final determination" and would continue to litigate the issue or seek
other remedies as it has done in other jurisdictions. Hearing Transcrpt at 335. See
also Rebuttal Testimony of Jose Fuentes at 3 (describing legislative and regulatory
strategies employed in other states).
TracFone asserts that the ITSAP and the IECA are not clearly applicable to
TracFone and its practice is, "Where the law has been vaguely defined or does not
include prepaid as within the law, we do not pay." Hearing Transcrpt at 109. Indeed,
"TracFone has contested the applicability of certain 911 tax laws in a number of
jurisdictions." Hearing Transcript at 110. TracFone believes that, becuse "(t)here has
not been an offcial determination yet that states you must pay 911 fees" in Idaho, the
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Commission should allow TracFone to benefit from the market for wireless
telecommunications services without sharing the burden of providing for universal
access and developing and operating the 911 emergency system. Hearing Transcript
at 166.
TracFone is wrong. The plain and unambiguous language of the IECA and the
ITSAP require all telecommunications carrers - including wireless carrers and not
excluding prepaid wireless carriers - to pay the fees established under those
frameworks. In addition to the clear language of the statutes, the legislative histories of
the IECA and the ITSAP demonstrate the legislature's intent to keep up with evolving
telecommunications technology and ensure that all telecommunications providers and
customers contribute to universal access and emergency services. In spite of the clear
legislative mandates, TracFone argues that its chosen business model makes it
"different" and thus TracFone is outside the scope of the IECA and the ITSAP.
Essentially, TracFone wants to be exempt from the law because compliance with the
applicable laws does not conveniently fit its chosen business modeL.
TracFone also suggests that the Commission should confer Eligible
Telecommunications Carrer ("ETC") designation before a "final determination" is
reached as to TracFone's duty to comply with the IECA and the ITSAP. Rebuttal
Testimony of Jose Fuentes at 2-3. In essence, TracFone argues that the resolution of
the IECA and the ITSAP issues are not critical to an ETC designation and thus those
issues can be segmented and decided at a later date in a different forum. TracFone's
request should be denied because compliance with the ITSAP and the IECA are critical
factors in determining whether TracFone should be designated an ETC in Idaho. First,
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failure to comply with all E911 requirements applicable to wireless resellers in those
states where TracFone seeks ETC designation is a failure to meet all the conditions of
TracFone's grant of forbearance from the facilties-based requirements of Section
214(e) of the Telecommunications Act. Federal-State Joint Board on Universal Service
Petition of TracFone Wireless, Inc. for Forbearance from 47 U.S.c. § 214(e)(1)(A) and
47 C.F.R. § 54. 201 (i), 20 F.C.C. Red 15095 (2005). Second, it is nòt in the public
interest to grant ETC status in Idaho to any telecommunications provider that is not in
compliance with fundamental Idaho Laws regarding the offering of telecommunications \ì
services in the state.
II. THE PLAN LANGUAGE OF THE IECA AND THE ISTAP DOES NOT EXCLUDE PREPAID
WIRELESS COMPANIES LIKE TRACFoNE FROM THE STATUTORY SCHEMES.
The issue is a matter of statutory interpretation. The Idaho Supreme Court has
established the legal framework for interpreting a statute:
The object in interpreting a statute is to derive the intent of
the legislative body that adopted the act. Such analysis
begins with the literal language of the enactment. If the
statutory language is unambiguous, the clearly expressed
intent of the legislative body must be given effect, and there
is no occasion for a court to consider rules of statutory
construction.
Canty v. Idaho State Tax Commission, 138 Idaho 178, 182, 59 P.3d 983, 987 (Idaho
2002) (internal quotation marks and citations omitted). All "(w)ords must be given their
plain, usual and ordinary meaning, and the statute must be construed as a whole."
Hoskins v. Howard, 132 Idaho 311, 315, 971 P.2d 1135, 1139 (Idaho 1999) (internal
quotation marks and citations omitted).
Here, the IECA and the ITSAP establish requirements that unambiguously apply
to prepaid wireless services like TracFone's.
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A. The ITSAP requires telecommunications carriers to remit the
assistance surcharge and allows such telecommunications carriers
to be reimbursed by collecting the surcharge from end users. No
exceptions are established.
The ITSAP exists to "provide eligible recipients with a reduction in costs of
telecommunications services to promote universal service" and seeks to "maximize
federal 'lifeline' and 'link-up' contributions to Idaho's low income customers." Idaho
Code § 56-901(1). To effectuate this program, the Commission is authorized to impose
an "assistance surcharge" on each end usets service; telecommunications carrers are
required to remit the surcharge to the fund administrator; and such carrers are entitled
to reimbursement by collecting the surcharge from the end user. ld. § 56-904. As
explained by Commission Staff,
Idaho Code § 56-904( 1) states that all wireline and wireless
companies are obligated to collect the ITSAP surcharge from
its customers and remit these funds to the program
Administrator. The only customers who are not assessed
this surcharge are those customers who are eligible to
receive the ITSAP discunt. Not assessing ITSAP-eligible
customers, however, does not excuse TracFone from paying
into the ITSAP fund.
Direct Testimony of G. Seaman at 8.
1. The definition of "telecommunications carriet' is inclusive and
does not exclude prepaid wireless carriers.
Prepaid wireless companies like TracFone are not excluded from the plain
language of the ITSAP's inclusive definition of "telecommunications carrers." For the
purposes of the ITSAP's assistance surcharge, a "telecommunications carret' is "a
telephone corporation providing telecommunications services for compensation within
this state, and shall include . . . telecommunication corporations providing wireless . . .
services for compensation." Idaho Code § 56-901 (2). The statute makes no distinction
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between wireless providers that provide prepaid services and those who provide post-
paid services. The question is whether the wireless service provider provides wireless
services for compensation, which TracFone clearly does. Thus, TracFone is a
telecommunications carrer within the scope of the ITSAP, regardless of TracFone's
chosen means of collecting such compensation.
2. The ITSAP establishes a monthly remittnce and distribution
scheme but does not allow telecommunications providers to
avoid remittnce by choosing not to bil its customers on the
same monthly schedule.
The ITSAP requires all telecommunications service carriers to remit the
assistance surcharge revenues to the fund administrator on a monthly basis, although a
less frequent remittance schedule may be authorized by the Commission.
ld. § 56-904(3). The ITSAP then requires the fund administrator to distribute the
revenues to eligible telecommunications carrers monthly. ld. Given this monthly
schedule of remittance and distribution, it would make sense for a telecommunications
provider to bil its customers monthly as well; however, the ITSAP does not mandate a
monthly customer billng. The ITSAP's scheme simply establishes the surcharge on
each end usets access line; sets the surcharge at a price that wil "reimburse each
carret'; authorizes each carrier to state the surcharge on customer billngs; and
instructs the carrers to remit the surcharge to the fund administrator. The ITSAP
neither states explicitly nor indicates implicitly that a telecommunications carrer can
avoid the ITSAP's system merely by choosing to bil its customers other than monthly or
because its "end users" choose to pre-pay for wireless servces.
Also note that Section 56-9043) allows the Commission to authorize "less
frequent remitances" than monthly remittances. Thus, if TracFone is concerned that its
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lack of a monthly biling cycle puts it at risk for noncompliance with the ITSAP, TracFone
could request from the Commission an annual remitance or some other remittnce
schedule that would accommodate its prepaid business model. It is disingenuous for
TracFone to argue that the ITSAP is inapplicable to prepaid wireless models.
3. The ITSAP created only one special rule for wireless carrers -
to limit collection to customers with a place of primary use in
Idaho.
As applied to wireless carriers, the ITSAP only applies the surcharge to wireless
access lines for customers with a "place of primary use in Idaho." ld. § 56-904(4). If the
legislature had intended to create another special rule for mobile wireless carriers -
particularly a special rule so extreme as a complete exception for prepaid wireless - it
would have made such a special rule clear. But, no other special rules exist. All
wireless service providers are subject to the ITSAP requirements, and it is only wireless
customers with a place of primary use outside of Idaho that are exempt from the
surcharge.
B. The IECA does not exempt users or providers of prepaid wireless
services from the emergency communications fee requirements.
The IECA was enacted to provide a "consolidated emergency communications
system" and to provide a means "to finance the initiation, maintenance, operation,
enhancement and governance of consolidated emergency communications systems."
Idaho Code § 31-4801. The findings of the legislature recognize the insuffciency of
collecting fees only from wireline customers and express the need for the system to
ensure that the emergency communications system is properly financed by all types of
users of all types of telecommunications technologies. Id. §§ 31-4801(1)(b), (d), (e).
The IECA's corresponding intent and purpse clauses express the intent to require
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each type of user of each type of telecommunications service to contribute to the
emergency communications system and to reimburse telecommunications providers for
their role in implementing such system. ld. §§ 31-4801 (2)(a), (c).
1. Once approved by the voters, the IECA emergency
communications fee is to be collected from the customers and
remitted by the telecommunications providers.
The IECA authorizes counties and 911 service areas to seek voter approval to
implement a consolidated emergency communications system financed by the
emergency communications fee. ld. § 31-4803. Once approved, the collection and use
of the emergency communications fee is governed by Section 31-404. Like the ITSAP
access surcharge, the IECA emergency communications fee is imposed upon the
users, collected by telecommunications providers, and remitted to the county or 911
service area. ld. § 31-4804.
2. Users and providers of prepaid wireless services like
TracFone's are not excluded from the imposition of the
emergency communications fee on each user of a
telecommunications access line.
The emergency communications fee is imposed upon and collected frm
purchasers of access lines. ld. §§ 31-4804(1)-2). An "access line" is "any telephone
line, trunk line, network access register, dedicated radio signal, or equivalent that
provides switched telecommunications access to a consolidated emergency
communications system from either a service address or a place of primary use within
this state." ld. § 31-402(1). "In the case of wireless technology, each active dedicated
telephone number shall be considered a single access line." ld. Therefore, prepaid
wireless services like TracFone's are subject to the emergency communication fee
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requirements because the customers of such prepaid wireless services are provided
with a dedicated telephone number and thus use an "access line."
In addition, providers of prepaid wireless services like TracFone are
"telecommunications providers" that are required to remit the emergency
communications fee. ld. § 31-4804(3). The definition of "telecommunications providet'
includes "(a)ny wireless carrier providing telecommunications service to any customer
having a place of primary use within this state" and "(a) provider of any other
communications service that connects an individual having either a service address or a
place of primary use within this state to an established public safety answering point by
dialing 911." Id. §§ 31-4801(12)(b), (d). Prepaid wireless providers like TracFone fall
within both of these categories.
3. The lack of a monthly billng cycle for customers and
providers of prepaid wireless systems does not eliminate the
IECA's duties.
TracFone argues that because it does not issue monthly bils, its services "don't
fit neatly into the statutory scheme" which purportedly "assumed that there wil be a bil
and a monthly remittance and monthly pass-back to government." Hearing Transcript at
332. Presumably, TracFone bases its position on the few places in Section 31-404
that use the term "month" or "monthly" when discussing the imposition, collection,
remitance and reimbursement of the emergency communications fee. None of these
sections operate to exclu,de any customer or provider simply because bils are not
issued monthly. At most, the terms are used in recognition that historically the most
common biling method is monthly. Granting TracFone's request to create an artifcial
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loophole is contrary to the clear, express statutory language of the IECA and would
create absurd results.
Section 31-4804(1) requires that the emergency communications fee "not exceed
one dollar ($1.00) per month per access or interconnected VolP service line." This
section does not limit the applicabilty of the fee to those who pay monthly but instead
establishes a cap on the amount of the fee - no more than $1.00 per month per access
line, or in other terms, no more than $12.00 per year per access line. Section 31-4801
is silent on how many times per year such fee can or must be collected from the
customers.
Section 31-4804(4) states, "Telecommunications providers wil be allowed to list
the surcharge as a separate item on the telephone subscribets bil." ld. § 31 4804(4)
(emphasis added). This section allows telecommunications providers to inform
customers why the surcharge is being charged (i.e., to shift the "blame" for the extra
fee), but it does not operate as an exemption from the IECA for a telecommunications
provider that chooses not to send bils to its customers.
Section 31-4804(2) appears to be the source of TracFone's professed confusion,
but on balance it cannot be fairly read to exclude users or providers of prepaid wireless
services from the IECA's requirements. This section states,
The fee shall be imposed upon and collected from
purchasers of access lines or interconnected VolP service
lines with a service address or place of primary use within
the county or 911 service area on a monthly basis by all
telecommunications providers of such services. The fee may
be listed as a separate item on customers' monthly bils.
ld. § 31-404(2). Presumably, TracFone reads this section as an implicit exclusion for
certain telecommunications providers that choose not to bil their customers monthly.
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Such an implicit exclusion cannot be harmonized with the context of the IECA provided
in the stated findings and broad purpse and intent clauses; the substantive breadth in
the inclusive definitions of "access line" and "telecommunications providet'; and/or the
lack of a direct exception for customers that are not biled monthly.
Furthermore, such an interpretation would lead to absurd results. If a
telecommunications provider could eliminate the requirement to remit the fees simply by
biling on any basis other than monthly, then all telecommunications carriers could
choose to change their biling practices and cease paying into the IECA system. Surely
the legislature did not intend to create such an easy way for customers and
telecommunications carrers to avoid their statutory obligations. "Constructions of a
statute that would lead to an absurd result are disfavored." State v. Harvey, 142 Idaho
727,730,132 P.3d 1255, 1258 (Ct. App. Idaho 2006).
4. The legislature crafted one narrow exception to the IECA's
requirement for prepaid callng cards and explicitly excludes
prepaid wireless from such exception.
"When a statute's language is broad enough to include a particular subject
matter, an intent to exclude it from a statute's operation must be specifically expressed."
State v. Michael, 111 Idaho 930,933, 729 P.2d 405, 407 (Idaho 1986). The legislature
crafted one and only one exception to the IECA's requirements. Section 31-4813
states, "The imposition of the emergency communications fee shall not apply to the
prepaid callng cards for all forms of access fees. Prepaid wireline, wireless and VolP
phones with a service address or place of primary use within Idaho are not considere
prepaid callng cards." Idaho Code § 31-413 (emphasis added). Thus, prepaid
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wireless services like TracFone's are explicitly excluded from the one narrow exception
to the IECA's requirements.
II. THE LEGISLATIVE HISTORY OF THE ITSAP AND THE IECA CONFIRMS THE
LEGISLATURE'S INTENT TO INCLUDE PREPAID WIRELESS COMPANIES LIKE TRACFoNE.
A. Examination of the legislative history is not necessary to the
analysis because the statutes are not ambiguous.
"If the language (öf the statute) is clear and unambiguous, there is no occasion
for the court to resort to legislative history or rules of statutory interpretation." Harvey,
142 Idaho at 730,132 P.3d at 1258. Here, the plain and unambiguous language of the
ITSAP and the IECA create no exemptions for prepaid wireless services like
TracFone's. TracFone's suggestion that it is exempt because its chosen business
model is unique does not create an ambiguity in the ITSAP or the IECA. "A statute is
ambiguous where the language is capable of more than one reasonable construction.
Ambiguity is not established merely because different interpretations are presented to a
court; otherwise, all statutes subject to litigation would be considered ambiguous."
Porter v. Board of Trustees, Preston School, 141 Idaho 11, 14, 105 P.3d 671, 674
(Idaho 2004) (internal quotation marks and citations omitted).
Nevertheless, an examination of the legislative history confirms the legislature's
intent for the IECA and the ITSAP to apply to all providers of wireless
telecommunications. Thus, any alleged ambiguity should be resolved against
TracFone.
B. The legislative history shows that prepaid wireless carrers like
TracFone were not intended to be excluded.
The ITSAP and the IECA have been amended several times since their original
enactments. As the statutes evolved, the scope of customers and telecommunications
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carriers that were required to comply with the fee collection and remittance schemes
was repeat~dly clarified to be inclusive. While diferences between wireless and
wireline technologies were recognized and accommodated, at no time was an
exemption created for prepaid wireless companies like TracFone.
In 1987, the Telecommunications Service Assistance Program was "established
within the department of health and welfare to provide eligible recipients with a
reduction in costs of telecommunications services." 1987 Idaho Sess. Laws 686. The
stated purpose of the legislation was to "provide a 'lifeline' credit of $4.00 (four) per
month on the telephone bil of Senior Citizens over age 60 who participate in the low
income home energy assistance program." Statement of Purpose, House Bil 298
(1987). The first version of Section 56-904( 1) ("Recovery of Telecommunications
Service Revenue Reductions") imposed a "company specific" surcharge on business
and residential access lines only.
The Idaho public utilties commission shall determine and
impose a company specifc uniform monthly surcharge on
each business and residential access line in an amount
suffcient to reimburse each provider of residential basic
local exchange service for the total amount of telephone
assistance discounts provided and the expense of
administering the plan. Such surcharge shall be effective
concurrent with the discounts given eligible subscribers. The
surcharge shall not be imposed on eligible subscribers.
1987 Idaho Sess. Laws 687 (emphases added).
One year later, the Emergency Communications Act was enacted. 1988 Idaho
Sess. Laws 1027. The original Section 31-4804 established that the "telephone line
user fee" which was to "be collected from customers on a monthly basis by all
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telecommunications entities which provide local telephone line service within the county,
and may be listed as a separate item on customers' monthly bils." ld. at 1028.
Ten years later, amendments to both the ITSAP and the IECA clarified the
applicabilty of the programs and incorporated wireless technologies. 1998 Idaho Sess.
Laws 157. A definition of "telecommunications carret' was added to the ITSAP: '''a
telecommunications carret means a telephone corporation providing
telecommunication services for compensation within this state, and shall include
municipal, cooperative, or mutual nonprofit telephone companies, and
telecommunication corporations providing wireless, cellular, personal communications
services and mobile radio services for compensation." ld. at 163. Amendments to the
IECA's Section 56-904 changed the "company specific uniform monthly surcharge on
each business and residential access line" to a "uniform statewide monthly surcharge
on each end usets business, residential, and wireless access service." ld. at 164. A
new sentence claried the inclusive scope of the requirement: "All carriers of
telecommunications services shall remit the assistance surcharge revenues to the fund
administrator designated by the commission on a monthly basis, unless less frequent
remittances are authorized by order of the public utilties commission." ld. (emphasis
added).
In 2002, Section 56-904(4) was added in response to federal legislation
governing the taxation of wireless communications. Statement of Purpse, Senate Bil
1477 (2002). This new section clarified that the ITSAP surcharge, when "collected from
customers of mobile wireless carrers," could only be collected from those "customers
with a place of primary use in Idaho." 2002 Idaho Sess. Laws 885.
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In 2003, the legislature took action to confirm that wireless providers should be
subject to the same requirements as land line providers. The IECA was amended to
"impose the same requirements currently imposed by state law on land line telephone
companies to wireless providers." Statement of Purposes, House Bil 363 (2003). In
this amendment, the legislature explained that "(c)hanges in technology and the rapid
growth of communications media have demonstrated that financing such systems solely
by a line charge on subscribers to wire-line services does not reflect utilzation of
emergency communications systems by subscribers to wireless and other forms of
communications systems." 2003 Idaho Sess. Laws 785. The legislature also explained
that "(u)tilzation of cellular telephones to access emergency communications systems
has substantially increased citizen access to emergency services while at the same
time increasing demands upon the emergency response system." ld.
The 2003 amendments added inclusive definitions for "telecommunications
providet' and "wireless carrers" to the IECA. '''Telecommunications providet means
any person providing exchange telephone servce to a service address within this state
or any wireless carrer providing telecommunications service to any customer having a
place of primary use within this state." ld. at 787. "'Wireless carret means a cellular
licensee, a personal communications service license, and certain specialized mobile
radio providers designated as covered carrers by the federal communications
commission in 47 CFR 20.18 and any successor to such rule." ld.
The framework for reimbursing wireless carrers was established in 2003, as well.
Section 31-4804 was amended to "provide for the reimbursement of wireless carrers for
implementing enhanced consolidated emergency systems", and Section 31-4804A was
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added to "(p)rovide for an agreed-to level of reimbursement for telecommunications
providers for the costs of wireless carriers resulting from their implementation and
operation of enhanced emergency communications systems." ld. at 788-90. Soon after
these amendments were approved, the legislature made a technical correction and
replaced "wireless carrers" in Section 31-4804 with "telecommunications providers."
2003 Idaho Sess. Laws 854.
Perhaps the most enlightening part of the 2003 amendments was the addition of
Section 31-4813, which creates an exemption from the imposition of the emergency
communications fee for "prepaid callng cards." 2003 Idaho Sess. Laws 791. The
legislature obviously recognized that prepaid callng cards (which are not tied to a
dedicated access line and can generally be purchased and used by anyone, on any
phone, and in any state) did not belong within the IECA scheme. The legislature did not
choose to exempt any other products or services, including prepaid wireless servces
like TracFone's.
The legislative intent to exclude only prepaid callng cards and no other products
or services was confirmed in 2007. House Bil 123 made many changes that claried
the broad applicabilty of this fee requirement to all telecommunications providers. In an
action specifically eliminating any suggestion that prepaid wireless services were
exempt for the IECA requirements, Section 31-4813 (the section that exempts prepaid
callng cards) was amended to add the following sentence: "Prepaid wi reline, wireless
and VolP phones with a servce address or place of primary use within Idaho are not
considered prepaid callng cards." 2007 Idaho Sess. Laws 999.
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In addition, Section 31-4801 (2)(a) was amended to specify that counties and 911
service areas could impose the emergency communications fee to all communications
"services that connect an individual dialing 911 to an established public safety
answering point." ld. at 996. Section 31-4804(2) was also amended to clarify that the
fee "collected from customers" was to be "imposed upon and collected from purchasers
of access lines or interconnected VolP service lines with a service address or place of
primary use within the county or 911 service area." ld. at 998.
In sum, the legislative history demonstrates a concerted effort to adapt to
changes in telecommunications technology and ensure universal access to emergency
communications services. TracFone's attempt to secure an exception for its chosen
business model flies in the face of the legislature's clear intent.
iv. OTHER JURISDICTIONS APPLYING SIMILAR PROVISIONS HAVE DETERMINED THT
PREPAID WIRELESS COMPANIES LIKE TRACFoNE ARE NOT EXEMPT.
TracFone has argued that it is not required to pay into the IECA and the ITSAP
type funds in other states. Intervenors agree with TracFone's counsel that "analogies or
experiences in other states are always a litle bit dangerous because every state
operates differently, every state's law is a little bit different." Hearing Transcript at 191.
Nevertheless, a brief summary of how other states have handled similar arguments
under similar statutory schemes is helpful in confirming the failures of TracFone's
arguments in Idaho.
In Washington, the statute at issue "imposed a county and state E-911 tax on 'all
radio access lines whose place of primary use is located within the state.'" TracFone
Wireless, Inc. v. Washington Department of Revenue, 170 Wash.2d 273, 280, 242 P.3d
810, 813 (Wash. 2010) (quoting RCW 82.14B.030(2), (4)). TracFone argued that th
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tax could not be imposed on prepaid wireless cellular telephone services. ld. at 277,
242 P.3d at 812. The court characterized TracFone's contentions as essentially
"seeking a decision that whether the tax is owed depends upon how a company decides
to market and charge for its service or, to put it another way, whether the tax must be
paid depends entirely upon the company's business mode!." ld. at 283, 242 P.2d at
815. The court rejected TracFone's argument. "Whether prepaid or not, cell phone
service is what is involved in this case. The plain language of the controllng statutes
requires payment of the state E-911 excise tax on TracFone's prepaid wireless service."
ld. The court would not imply an exemption for TracFone's business model because
"(t)he fact that TracFone does not send monthly biling statements is a consequence of
the way in which it chooses to conduct its business. It does not relieve TracFone of its
obligations under the taxing statutes nor does it convert a plainly taxable event into a
nontaxable event." ld. at 290, 242 P.3d at 819. The court concluded its rejection of
TracFone's arguments by stating,
(R)egardless of the particular plan a subscriber buys, the
legislature intended that cell phone service must be taxed to
help fund the enhanced 911 servce. The subject of taxation
remains the same, regardless of whether paid for through a
monthly contract plan or through a prepaid plan like those
that TracFone offers. The benefits of the E-911 service are
equally available to those who prepay as it is to those who
pay on a monthly basis.
ld. at 297-98,242 P.3d at 822.
In Kentucky, the statute specifed a method of collecting the 911 service fee in a
way that the court acknowledged "does not comport with TracFone's chosen business
mode!." Commonwealth of Kentucky Commercial Mobile Radio Service Emergency
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Telecommunications Board v. TracFone Wireless, Inc., 735 F.Supp.2d 713, 722 (W.O.
Kentucky 2010). The statute in dispute stated,
Each CMRS provider. . . shall, as part of the provider's
normal monthly billng process, collect the CMRS service
charges levied upon CMRS connections under KRS
65.7629(3) from each CMRS connection to whom the billing
provider provides CMRS. Each biling provider shall list the
CMRS service charge as a separate entr on each bil which
includes a CMRS service charge.
ld. (quoting KRS § 65.7635(1) (emphasis in original)). At issue was whether TracFone
was required to collect and remit these fees for its prepaid wireless services. The
federal district court noted that a Kentucky state court had previously characterized an
identical argument from another wireless provider as "the equivalent of a request for an
exemption from a generally applicable tax." ld. That judge found that while the
"statute's specific guidance on how to collect the fees (was) admittedly in conflict with
prepaid providers' chosen business model, (it) did not clearly create an implicit
exemption to the general duty to collect the service fee." ld. Taking the state court's
"convincing, well-reasoned and most thorough" analysis into consideration, the district
court rejected TracFone's argument.
The clear intent and language of the statute requires "each
CMRS provider," which would include TracFone, to collect
the service fees from each customer to whom they provide
service. To interpret the statute to apply only to post-paid
providers would, indeed, create an exemption from prepaid
providers. Because such exemption is not clearly required
by the statute's plain language, the Court cannot grant one.
ld. at 723.
In Nebraska, the 911 surcharge explicitly applied to "all users of prepaid wireless
services" and instructed the Nebraska Public Service Commission ("PSC") to "develop
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methods for collection and remittance of surcharges from wireless carrers offering
prepaid wireless services." TracFone Wireless, Inc. v. Nebraska Public Service
Commission, 279 Neb. 426, 428, 778 N.W.2d 452, 455 (Neb. 2010). The PSC
published an order providing three preapproved methods and allowing prepaid wireless
carriers that wished to utilze a different method to seek individual approval. ld. at 428-
29,778 N.W.2d at 456. TracFone's first and second suggested methods were rejected.
ld. at 429-30, 778 N.W.2d at 456. In challenging the rejections, TracFone also
challenged the applicabilty of the requirement itself because "it is impossible for it to
collect surcharges directly from its customers" and "if it cannot collect a surcharge
directly from its customers, it is not required to collect the surcharge." ld. at 432, 778
N.W.2d at 458. The court rejected TracFone's argument.
In sum, TracFone's argument is that if a wireless carrier is
unable to collect a surcharge directly from a customer, the
Legislature intended for neither the carrer nor the customer
to pay for it. This is contrary to the stated intent of the 911
Act, and to a commonsense reading of the statutory modeL.
TracFone's choice of business model does not give it license
to throw up its hands and pay nothing.
!
Id. at 434-35,778 N.W.2d at 459-60 (emphasis original).
In Michigan, TracFone was successful in obtaining a determination that it was not
required to pay the 911 fee because the statute at issue "requires CMRS providers and
retailer to collect a monthly fee from their customers for 'each CMRS connecion that
has a biling address in this state.''' TracFone Wireless, Inc. v. Department of Treasury,
2008 WL 2468462, *1 (Mich. App. 2008) (unpublished). TracFone argued "that
because it does not have biling addresses or monthly bils for its customers, the 9-1-1
fee does not apply, so it was not required to collect or remit the fees." ld. Because the
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court interpreted "billng address" to require actually sending bils (which TracFone did
not do) as opposed to knowing where the customer lived (which TracFone knew or
could have known), the court agreed that the 911 fee did not need to be collected from
TracFone's prepaid wireless customers. ld. at *4. Unlike Michigan's statute, the IECA
does not include a "biling address" requirement, so that portion of the analysis is not
useful. The court's rejection of TracFone's "monthly biling cycle" argument, however, is
instructive:
We find it irrelevant that plaintiff does not have a monthly
billng cycle. The plain language of the statute requires the
fees to be computed on a monthly basis, but not necessarily
collected on a monthly basis. There is no inherent restriction
on having only one bil, or having a biling cycle of either
longer or shorter than one month. The plain language of the
statute does not mandate at least one "bil," but most
importantly, it requires a "biling address."
ld. at *3.
While case law from other jurisdictions may not serve as binding precedent
regarding the interpretation of the IECA, the rationale of other adjudicators in rejecting
TracFone's argument that its prepaid biling model excuses it from compliance with
similar laws is instructive. As the Washington Court noted, TracFone chose its business
model and cannot invent implied exemptions to shield that model from otherwise
applicable requirements.
V. CONCLUSION
Oespite TracFone's attempts to characterize the statutory schemes as
inapplicable to TracFone's business model, neither the IECA nor the ITSAP exclude
prepaid wireless carrers from the statutory schemes. Accordingly, TracFone must remit
the IECA and the ITSAP fees if TracFone is to provide prepaid wireless servces in
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Idaho. Contrary to TracFone's position, to the extent TracFone's obligation to remit the
ITSAP and the IECA fees are unresolved legal questions, TracFone must fully resolve
such questions, as well as all of the other deficiencies in its Application and propose
service offering before ETC designation may be conferred. Thus, Intervenors
encourage the Commission to find that TracFone's failure to comply with the
requirements of the IECA and the ITSAP is tantamount to a per se failure to meet the
public interest requirement under Section 214(e) of the Telecommunications Act of 1996
and this Commission's ETC Requirements Order.
OATEO this 23rd day of May 2011.
By:CbtJU
ynthia A. Melilo
GIVENS PURSLEY LLP
Attorneys for Idaho Telecom Allance
By: ~ag lf f
RICHAROSON & O'LEARY, PLLC
Attorneys for CTC Telecom, Inc.,
dba CTC Wireless
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CERTIFICATE OF SERVICE
I hereby certify that on this 23rd day of May 2011, I caused to be served a true
and correct copy of the foregoing by the method indicated below, and addressed to the
following:
Jean Jewell
Idaho Public Utilties Commission
472 West Washington Street
Boise, 10 83702
jean.jewelltâpuc.ldaho.gov
Neil Price
Idaho Public Utilties Commission
472 West Washington Street
Boise, 10 83702
Neil.pricecæpuc.ldaho.gov
Mitchell F. Brecher
Oebra McGuire Mercer
GREENBERG TRAURIG, LLP
2101 L Street, NW, Suite 1000
Washington, DC 20037
brechermtâgtlaw.com
mercerdmtâgtlaw.com
Oean J. Miler
McDEVITT & MILLER LLP
420 West Bannock Street
Boise, 10 83702
joetâmcdevitt-miller.com
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flaì!Cy hia A. Melilo
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