Illinois Consolidated Telephone Co. v. Illinois Commerce Commission

Citations: 99 Ill. App. 3d 462; 54 Ill. Dec. 670; 425 N.E.2d 535; 1981 Ill. App. LEXIS 3184Docket: No. 16905

Court: Appellate Court of Illinois; August 20, 1981; Illinois; State Appellate Court

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Aircall Communications, Inc. (Aircall) applied for a certificate of public convenience and necessity from the Illinois Commerce Commission (Commission) to operate tone-only and tone-and-voice radio paging services in the Charleston-Mattoon area. Illinois Consolidated Telephone Company (Illinois Consolidated), already providing paging services in that area, intervened in the proceedings. The Commission granted Aircall the certificate, but Illinois Consolidated's rehearing request was denied, leading to an appeal to the circuit court of Coles County, which reversed and remanded the Commission's order. The Commission is now appealing this decision, with Illinois Consolidated cross-appealing.

The central issue is whether radio paging companies fall under the statutory definition of public utilities as outlined in section 10.3 of the Public Utilities Act. The jurisdiction of the Commission is limited to what is legislatively conferred, and if radio paging systems do not meet the public utility definition, the Commission would lack jurisdiction over them, thus negating the requirement for a certificate. Notably, the Commission did not contest its jurisdiction in prior proceedings or in its notice of appeal; however, issues of subject matter jurisdiction can be raised at any time.

According to section 10.3, a public utility is defined as any entity that manages or operates equipment for public use, including the transmission of telegraph or telephone messages. The Commission contends that radio paging companies do not transmit telephone messages but rather act as customers of telephone companies. Aircall intends to provide a one-way paging service where a conversation is not possible between the client and the caller. In this system, when someone wants to contact a client, they call the paging service, which then sends a radio signal to activate the client's receiver, allowing for either a short sound or a brief voice message to be relayed. After receiving the signal, the client must use a telephone to obtain further information from the paging service.

A tone-and-voice pager provides sufficient information for clients to contact the paging party. Aircall's service is integrated with the telephone system of Illinois Consolidated, which does not own paging lines or equipment. Under Section 10.3 of the Public Utilities Act, public utilities include entities managing properties for transmitting telephone messages, which applies to paging systems. Previous rulings have classified paging services as public utilities, notably in the case of Danville Redipage, Inc. v. Illinois Commerce Commission, where the court determined that Redipage was a public utility despite lacking a certificate of public convenience. The Commission was instructed to evaluate whether Illinois Consolidated could provide paging services as a 'first-in-the-field' provider. The trial court's decision to reverse and remand the Commission's ruling was supported by this precedent. Additionally, the Illinois Supreme Court in Radio Relay Corp. v. Illinois Commerce Commission affirmed that a paging service falls under the jurisdiction of public utilities when associated with authorized telephone services. Similar judgments in New York have recognized radio paging systems as public utilities. However, the Illinois-Indiana Cable Television Association case clarified that cable television does not meet the definition of a public utility under the Act.

The case is not deemed dispositive due to the fundamental differences between cable television services and radio pager services. The Supreme Court equated telephone and telegraph services’ public functions to those of cable television, noting that while radio pagers facilitate communication between subscribers, cable television does not. Radio paging services must secure frequency usage rights from the Federal Communications Commission (FCC), which exercises exclusive control over frequency allocations under 47 U.S.C. 301 (1976). The FCC’s first-in-the-field doctrine allows it to deny frequency usage to a license holder, claiming this invokes Federal preemption based on the supremacy clause of the U.S. Constitution (U.S. Const. art. VI, cl. 2). This clause permits invalidation of conflicting State laws when they contradict valid Federal statutes.

The Commission argues a conflict exists between Federal frequency awards and Illinois's first-in-the-field doctrine, but this view is contested. Evidence shows that the FCC does not intend to preempt State regulation of radio paging systems. Specifically, 47 C.F.R. 21.13(f)(2) indicates that while the FCC can grant a frequency prior to State certification, the Federal license will expire if State certification is not achieved within 240 days. This illustrates the FCC's intent to collaborate with State regulations. Additionally, Federal law exempts intrastate communication services from FCC regulatory power (47 U.S.C. 152(b), 1976), further supporting that State regulation of radio paging services is valid.

The trial court's agreement is noted, emphasizing the Illinois Commerce Commission's responsibility to assess whether Illinois Consolidated can meet the radio paging needs in the Charleston-Mattoon area. The evidence presented by Aircall regarding community interest in their services may not suffice for operations under the first-in-the-field doctrine. Thus, Illinois Consolidated must demonstrate its capability to serve this potential customer interest to preclude Aircall from entering the market in that region.

The Commission's appeal raises issues concerning the review scope of its order. The trial court's agreement that evidence should be reevaluated based on Illinois Consolidated's first-in-the-field status negates the need to address other concerns related to the Commission’s order. The Commission also objects to assertions made by Illinois Consolidated in its trial brief, but the trial court did not rely on these assertions in its decision. In its cross-appeal, Illinois Consolidated argues that the Commission’s order was contrary to the manifest weight of the evidence, focusing on the necessity of Aircall’s services in the Charleston-Mattoon area, framed within the first-in-the-field doctrine. The court determines that all issues regarding first-in-the-field should be resolved upon remand due to insufficient evidence in the existing record. Consequently, the trial court’s order reversing and remanding the case to the Commission is affirmed. Judges TRAPP and WEBBER concur.