Complaint of Rovas v. Ameritech Michigan

Citations: 740 N.W.2d 523; 276 Mich. App. 55Docket: Docket 264862

Court: Michigan Court of Appeals; October 11, 2007; Michigan; State Appellate Court

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SBC Michigan appeals an order from the Michigan Public Service Commission (PSC) that clarified SBC's obligations regarding its maintenance of telecommunications infrastructure. The order followed a previous ruling where the PSC found SBC violated MCL 484.2502(1)(a) by misleading customers about the source of their telecommunication issues, specifically concerning a $71 service charge for problems attributed to customers' inside wiring. The PSC's revised order indicates that while SBC is not required to enter customer premises for all service calls, it must maintain and repair its network facilities up to the customer interface without additional charges. SBC may not charge customers for inspecting or diagnosing issues covered by its tariff obligations unless these relate to nonregulated inside wiring problems. The PSC directed SBC to cease violations of the Michigan Telecommunications Act. On appeal, SBC argues that the PSC unlawfully restricted its ability to impose customer charges for nonregulated services. The standard of review for PSC orders is narrow, requiring the challenging party to demonstrate that the order is unlawful or unreasonable.

A reviewing court must defer to the Public Service Commission's (PSC) expertise and not substitute its judgment. While courts can review statutory interpretation de novo, they should heavily weigh the PSC's reasonable constructions of regulatory schemes it administers. In 1986, the Federal Communications Commission (FCC) precluded state regulation of inside wiring services by telephone companies, classifying them as nonregulated activities. Consequently, when telephone service issues arise from nonregulated inside wiring, the associated costs and activities of the telephone company in diagnosing the problem fall outside the PSC's regulatory authority. However, the FCC does not prevent PSC regulation of outside wiring or the company's own network activities.

The PSC's February 25, 2002 order clarifies that SBC does not need to enter customer premises for every service request but cannot impose charges for diagnosing and repairing issues covered by its tariff obligations, including routine checks of its facilities. The order's restriction against SBC imposing charges for diagnosing problems related to its own facilities aligns with FCC rulings. However, the PSC's directive that SBC cannot charge for services that exclude its facilities as a cause of disruption contradicts FCC determinations regarding inside wiring. A correct exclusion of SBC's facilities as a cause of disruption indicates the issue arose from the customer's inside wiring, which must be treated as a nonregulated matter.

Additionally, the PSC referenced MCL 484.2205(2), which allows it to mandate changes in telecommunication services if they violate regulatory standards or public interest. This statute, however, only grants authority over regulated services, reinforcing the conclusion that the PSC's directive regarding SBC's charges for diagnosing issues related to inside wiring violates FCC regulations.

Under FCC authority, problems arising from a customer's nonregulated inside wiring are deemed a nonregulated service when detected by SBC. The authority granted under MCL 484.2205(2) does not apply to costs associated with excluding SBC's facilities as a service disruption cause, as it would improperly regulate the nonregulated service of diagnosing inside wiring issues. Even if the statute were interpreted to allow authority over deregulated inside wiring problems, such authority would be subordinate to FCC determinations due to Full Faith and Credit and Supremacy Clause principles. The case of Michigan Gas Utilities v. Pub. Service Comm. supports this position.

SBC references In re Complaint of Pelland against Ameritech Michigan to argue the PSC's lack of authority over deregulated services. However, the Pelland ruling, which held the PSC lacked jurisdiction over issues unrelated to service provision, is deemed inapplicable to the current case as the PSC's order directly addresses SBC's handling of service disruptions. Furthermore, SBC's claim that the PSC order improperly mandates physical entry into customer premises for service-visit charges is incorrect; the order does not impose such a requirement.

While acknowledging the PSC's broad deference, it is concluded that the PSC order partially violates FCC determinations, prompting a remand for a revised order that excludes regulation of costs or services tied to SBC’s identification of problems with nonregulated inside wiring. SBC also disputes the existence of substantial evidence supporting the PSC's finding of systemic issues with its service-visit charges. Although the PSC did not revisit the evidence on remand, it is determined that sufficient evidence exists to support the finding of systemic problems related to incorrect billing for service disruptions attributed to inside wiring when the actual issues lay within SBC's network.

Tom Dunning, a dispatch control manager at SBC, testified that SBC service technicians generally assume that issues with a customer's phone service arise from the customer's inside wiring if they find a good dial tone at the network interface device. Dunning explained that technicians would test the network interface and, if they detect a dial tone, they would typically conclude that the problem lies within the customer's premises without further investigation. He noted that intermittent dial tone issues are particularly challenging to diagnose, often caused by environmental factors like humidity or physical breaks in the conductor. 

Bruce Downey, another SBC official, stated that technicians are instructed to charge $71 if a service issue is traced back to the customer's wiring. He confirmed that SBC did not present measures to avoid charging customers when testing indicates a dial tone, even if an intermittent issue might still be present in SBC's network. This suggests a potential systemic issue where technicians might incorrectly attribute service disruptions to customer wiring, leading to unjustified service charges.

The court found substantial evidence supporting the Public Service Commission's (PSC) conclusion regarding these systemic problems. The court noted that SBC's affidavit submitted after remand was not considered, as the PSC had not been instructed to reopen the factual record. On remand, the court directed the PSC to modify its order to eliminate regulation of costs related to correctly identifying problems in customer nonregulated inside wiring. However, the PSC's directive preventing SBC from charging customers for diagnosing issues in its own facilities was upheld, as it did not conflict with federal regulations. The court affirmed the PSC's findings without retaining jurisdiction.