IN RE SERVICE QUALITY RULES FOR TELECOMMUNICATIONS PROVIDERS
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STATE OF MICHIGAN
COURT OF APPEALS
________________________________________
IN RE SERVICE QUALITY RULES FOR
TELECOMMUNICATIONS PROVIDERS
VERIZON NORTH, INC., and CONTEL OF THE
SOUTH, INC., d/b/a VERIZON NORTH
SYSTEMS,
UNPUBLISHED
January 21, 2010
Appellants,
v
MICHIGAN PUBLIC SERVICE COMMISSION,
TELECOMMUNICATIONS ASSOCIATION OF
MICHIGAN and AT&T MICHIGAN,
No. 283028
MPSC
LC No. 00-014962
Appellees.
MICHIGAN BELL TELEPHONE COMPANY,
d/b/a AT&T MICHIGAN,
Appellant,
v
MICHIGAN PUBLIC SERVICE COMMISSION
and TELECOMMUNICATIONS ASSOCIATION
OF MICHIGAN,
No. 283117
MPSC
LC No. 00-014962
Appellees.
Before: Cavanagh, P.J., and Fitzgerald and Shapiro, JJ.
PER CURIAM.
In these consolidated cases, appellants Verizon North, Inc., and Contel of the South, Inc.,
d/b/a Verizon North Systems (hereinafter Verizon), and Michigan Bell Telephone Company,
d/b/a AT&T Michigan (AT&T), claim appeals from orders entered on September 18, 2007, and
December 18, 2007, by appellee Michigan Public Service Commission (PSC) adopting
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telecommunications quality of service rules and formally adopting telecommunications service
quality rules, respectively. We affirm in both cases.
I. Background
In July 2001, the PSC opened Case No. U-013013 to consider adopting new
telecommunications quality of service rules to replace the rules that were to expire on September
1, 2001. On August 20, 2002, the PSC approved revised rules, some of which contained
automatic penalty provisions. However, in Verizon North, Inc v Public Service Comm, 263 Mich
App 567, 571; 689 NW2d 709 (2004), this Court nullified the rules on the ground that the PSC
lacked the statutory authority under the Michigan Telecommunications Act (MTA), MCL
484.2101 et seq., to promulgate the revised rules.1
In 2005, the Legislature amended the MTA via 2005 PA 235. Act 235 amended § 202 of
the MTA, MCL 484.2202, to provide in pertinent part:
(1) In addition to the other powers and duties prescribed by this act, the
commission shall do all of the following:
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(c) Promulgate rules under section 213[2] to establish and enforce quality
standards for all of the following:
(i) The provision of basic local exchange service to end users.
(ii) The provision of unbundled network elements and local interconnection
services to providers which are used in the provision of basic local exchange
service.
(iii) The timely and complete transfer of an end user from 1 provider of basic
local exchange service to another provider.
(iv) Providers of basic local exchange service that cease to provide the service to
any segment of end users or geographic area, go out of business, or withdraw
from the state, including the transfer of customers to other providers and the
reclaiming of unused telephone numbers.
In 2006, the PSC drafted revised quality of service rules, and those revised rules received
administrative approval in early 2007.
1
The PSC repromulgated the rules in 2005, but subsequently withdrew them.
2
Section 213 of the MTA, MCL 484.2213, authorizes the PSC to promulgate rules pursuant to
the Administrative Procedures Act (APA), MCL 24.201 et seq. The promulgation of such rules
is subject to § 201 of the MTA, MCL 484.2201.
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II. Underlying Facts and Proceedings
The PSC announced that it would hold a public hearing on the proposed revisions to the
quality of service rules and would accept written comments on the proposed revisions. Attached
to the order and notice of hearing was a copy of the quality of service rules, with the proposed
deletions and additions indicated by strike marks and bold face type, respectively.
These appeals concern the following quality of service rules:
R 484.535 Business offices. [Rule 35]
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(4) A provider shall ensure that all information provided to customers and others
is accurate and in compliance with commission rules and the provider’s tariff. A
provider shall not make a statement to a customer that the provider knows to be
untrue.
R 484.551 Maintenance of plant and equipment.
Rule 51. (1) A facilities-based provider shall adopt and implement a maintenance
program designed to achieve efficient operation of its system consistent with the
rendering of safe, adequate, and continuous service in compliance with applicable
codes, including the national electric safety code and other state and local
codes.
R 484.555 Out-of-service repairs. [Rule 55]
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(3) If a provider fails to achieve a monthly average repair time of 36 hours or
less for 3 consecutive months, that provider shall credit those residential and
small business customers for whom the provider fails to repair the service
within 36 hours or less, on a going forward basis, an additional $5.00 per day
for the fourth and subsequent days of service outage until the first full day
that service is restored. The provisions of this subrule shall continue to apply
until the provider achieves a 36-hour or less monthly average repair time for
3 consecutive months.
(3 4) For the same repeat trouble within 30 15 days of the first occurrence, a
provider shall give a residential or small business customer a credit of $5.00 for
each day or portion of each day, commencing when beginning the second day
after the repeat trouble is reported to or found by the provider, until service is
restored. This subrule shall not become effective until June 30, 2008.
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R 484.557 Repair appointments and commitments.
Rule 57. (1) For all repair requests requiring a customer to be present, a provider
shall give a residential or small business customer a 4-hour time period within
which the repair shall commence. Otherwise, the commitments will specify a 24hour time period.
(2) For appointments scheduled at least 48 hours in advance, a provider shall keep
all repair commitments unless it contacts the customer not less than 24 hours in
advance and reschedules the appointment or commitment. If unusual repairs are
required or other factors preclude completing repairs promptly, then a provider
shall make reasonable efforts to notify the customer.
(3) If a provider misses a time commitment and subrule (2) of this rule does not
apply, then the provider shall give the customer a credit of $25.00 $15.00 for each
missed commitment. This subrule shall not become effective until June 30, 2008.
R 484.558 Installation and local number portability commitments. [Rule 58]
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(4) If a provider does not complete an installation, except migration, by the fifth
day tenth day for a migration, or commitment date, then the provider shall waive
50% of the installation fee, unless the customer or applicant misses the
appointment. If a provider does not complete an installation by the eleventh day,
or migration by the sixteenth day, then the provider shall waive 100% of the
installation fee, unless the customer or applicant misses the appointment. This
subrule shall not become effective until June 30, 2008.
In written comments,3 Verizon asserted that the automatic service credit provisions
contained in Rules 55, 57, and 58 were in fact automatic penalty provisions, and were arbitrary
and capricious because they were unrelated to any actual expense that a customer might incur as
a result of a service problem. Verizon also argued that the PSC lacked the statutory authority to
impose automatic penalties, and that penalties could be imposed only in accordance with the
procedure set out in § 601 of the MTA, MCL 484.2601.
3
Verizon made comments on various rule revisions that are not the subject of Verizon’s appeal.
We do not address those comments in this opinion.
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In written comments,4 AT&T noted that MCL 484.2202(2) required the PSC to consider
whether current market conditions were sufficient to protect customer service when deciding
whether to promulgate new rules, and contended that the current market conditions made new
quality of service rules unnecessary. In addition, AT&T contended that the proposed revision to
Rule 51(1) to require a provider to be in compliance with all applicable national, state, and local
codes was overly broad, vague, and unnecessary; that the automatic service credits provided for
in Rule 55(3) and 55(4) were in fact automatic penalty provisions, were excessive, and were
unlawful because imposition of such penalties did not comply with MCL 484.2601; and that the
installation credit provided for in Rule 58(4) should be eliminated because it was unnecessary
given the extremely competitive environment in which providers operated.
In an order entered on September 18, 2007, the PSC adopted the quality of service rules.5
The PSC concluded that: (1) the amendment to Rule 51(1) merely clarified the codes with which
providers were required to comply; (2) the automatic service credit provisions in Rules 55 57
were consistent with the MTA and federal law; and (3) the provisions in Rule 58 for waiver of
installation fees addressed a service quality issue.
Verizon and AT&T filed petitions for rehearing. In separate orders entered on December
18, 2007, the PSC denied the petitions and formally adopted the quality of service rules.
The arguments raised on appeal by Verizon and AT&T overlap in large measure. In
order to avoid repetition, we have arranged the issues into subject groups for purposes of
discussion and analysis. Those subject groups are: (1) adoption of quality of service rules
without consideration of current market conditions; (2) imposition of automatic
penalties/installation credits; (3) Rule 51(1); and (4) Rule 35(4).
III. Standard of Review
The standard of review for PSC orders is narrow and well defined. All rates, fares,
charges, classification and joint rates, regulations, practices, and services prescribed by the PSC
are presumed, prima facie, to be lawful and reasonable. MCL 462.25; Michigan Consolidated
Gas Co v Public Service Comm, 389 Mich 624, 635-636; 209 NW2d 210 (1973). A party
aggrieved by an order of the PSC has the burden of proving by clear and convincing evidence
that the order is unlawful or unreasonable. MCL 462.26(8). To establish that a PSC order is
unlawful, the appellant must show that the PSC failed to follow a mandatory statute or abused its
discretion in the exercise of its judgment. In re MCI Telecom Complaint, 460 Mich 396, 427;
596 NW2d 164 (1999). An order is unreasonable if it is not supported by the evidence.
Associated Truck Lines, Inc v Public Service Comm, 377 Mich 259, 279; 140 NW2d 515 (1966).
4
This opinion addresses only those comments that are relevant to the arguments AT&T raises in
its appeal.
5
This opinion addresses the PSC’s holdings on only those rules that are at issue in these appeals.
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A final order of the PSC must be authorized by law and be supported by competent,
material, and substantial evidence on the whole record. Const 1963, art 6, § 28; Attorney Gen v
Public Service Comm, 165 Mich App 230, 235; 418 NW2d 660 (1987).
We give due deference to the PSC’s administrative expertise, and as a general rule, we
will not substitute our judgment for that of the PSC. Attorney Gen v Public Service Comm No 2,
237 Mich App 82, 88; 602 NW2d 225 (1999). We give respectful consideration to the PSC’s
construction of a statute that the PSC is empowered to execute, and will not overrule that
construction absent cogent reasons. If the language of the statute is vague or obscure, the PSC’s
construction serves as an aid to determining the legislative intent, and will be given weight if it
does not conflict with the language of the statute or the purpose of the Legislature. However, the
construction given to a statute by the PSC is not binding on us. In re Complaint of Rovas
Against SBC Michigan, 482 Mich 90, 103-109; 754 NW2d 259 (2008). Whether the PSC
exceeded the scope of its authority is a question of law that we review de novo. In re Complaint
of Pelland Against Ameritech Michigan, 254 Mich App 675, 682; 658 NW2d 849 (2003).
IV. Analysis
A. Adoption of Quality of Service Rules Without Consideration of Current Market Conditions
On appeal, both Verizon and AT&T note that § 202(2) of the MTA, MCL 484.2202(2),
requires the PSC to examine current market conditions when deciding whether to promulgate
quality of service rules to determine if those conditions are sufficient to provide adequate service
to end users. Verizon and AT&T argue the PSC did not fulfill this statutory mandate prior to
promulgating the quality of service rules, and that therefore, the quality of service rules should
be declared invalid. We disagree.
The PSC’s consideration of current market conditions satisfied the statutory mandate.
Section 202(2) provides:
(2) Rules promulgated under subsection (1)(c) shall include remedies for the
enforcement of the rules that are consistent with this act and federal law. Rules
promulgated under subsection (1)(c)(ii) shall not apply to the provision of
unbundled network elements and local interconnection services subject to quality
standards in an interconnection agreement approved by the commission. In
promulgating any rules under subsection (1)(c), the commission shall consider to
what extent current market conditions are sufficient to provide adequate service
quality to basic local exchange service end users. Any service quality rules
promulgated by the commission shall expire within 3 years of the effective date of
the rules. The commission may, prior to the expiration of the rules, promulgate
new rules under subsection (1)(c). [MCL 484.2202(2).]
The PSC did not explicitly discuss current market conditions in its orders of September
18, 2007, and December 18, 2007. However, in its regulatory impact statement filed before the
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adoption of the quality of service rules, the PSC concluded that the new quality of service rules
were needed to reflect advancements in technology and to reflect the increased competition in
telecommunications services.6 The evidence supports a finding that the PSC considered current
market conditions and determined that revised quality of service rules were needed to address
those conditions. Verizon and AT&T seem to argue that because they contended that no new
rules need be promulgated, the PSC was required to adopt their position. This argument finds no
support in the law.
Verizon and AT&T have not shown that the PSC failed to fulfill the statutory
requirement that it consider current market conditions when determining whether to promulgate
new quality of service rules. Thus, Verizon and AT&T have not shown by clear and convincing
evidence that the PSC’s orders are unlawful on this basis. MCL 462.26(8); In re MCI
Telecommunications Complaint, 460 Mich at 427.
B. Automatic Penalties/Installation Credits
Verizon and AT&T argue that the PSC lacked the statutory authority to promulgate rules
containing automatic penalties such as those contained in Rules 55(3) and (4), 57(3), and 58(4).
The MTA contains a specific process that the PSC must follow in order to impose penalties.
Section 601 of the MTA, MCL 484.2601, allows the imposition of penalties only for violations
of the MTA, only after notice and a hearing, and only to protect and make whole persons who
have suffered economic losses due to violations of the MTA. The automatic penalty provisions
in the quality of service rules do not meet these requirements.
Verizon and AT&T also argue that: the proposed automatic penalties are not the
remedies contemplated by MCL 484.2202(2) in that they do not require a provider to develop a
plan to improve service and do not have any relationship to any damage caused to a particular
customer; the automatic penalty provisions are arbitrary and capricious in that a penalty must be
paid even if the provider did not cause the problem that resulted in a service interruption and the
amount of a penalty could exceed the costs incurred by a particular customer; and the automatic
penalty provisions are unconstitutional because they result in a taking of property without notice
and a hearing and provide no due process protections, unlike those in MCL 484.2601. We
disagree.
“The PSC possesses only that authority granted it by the Legislature. Authority must be
granted by clear and unmistakable language. A doubtful power does not exist.” Michigan
Electric Coop Ass’n v Public Service Comm, 267 Mich App 608, 616; 705 NW2d 709 (2005).
In Michigan Electric Coop Ass’n, this Court set out the standard for reviewing an
administrative rule:
6
The PSC’s regulatory impact statement filed in advance of the promulgation of the 2003 rules
contained a much more extensive discussion of market conditions.
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In determining the validity of an administrative rule, a court must
consider: (1) whether the rule is within the subject matter of the enabling statute;
(2) whether it complies with the legislative intent underlying the enabling statute;
and (3) whether it is arbitrary or capricious. Dykstra v Dep’t of Natural
Resources, 198 Mich App 482, 484; 499 NW2d 367 (1993). “A rule is arbitrary if
it was ‘fixed or arrived at through an exercise of will or by caprice, or without
consideration or adjustment with reference to principles, circumstances, or
significance.’” Id. at 491, quoting Binsfield v Dep’t of Natural Resources, 173
Mich App 779, 786; 434 NW2d 245 (1988). A rule is capricious if it is apt to
change suddenly, or is freakish or whimsical. If a rule is rationally related to the
statute’s purpose, it is not arbitrary or capricious. Id. at 786, 787. Any doubt
must be resolved in favor of the validity of a rule. Dykstra, supra at 491. [267
Mich App at 619-620.]
The Legislature amended § 202 of the MTA to require the PSC to promulgate quality of
service rules to “establish and enforce quality standards” for telecommunications providers,
MCL 484.2202(1)(c), and to provide for “remedies for the enforcement of the rules that are
consistent with this act and federal law.” MCL 484.2202(2). The MTA does not define the term
“remedies,” and does not include a statute that specifically authorizes the imposition of penalties
for noncompliance with quality of service rules, as does § 10p(8), MCL 460.10p(8), of the
Customer Choice and Electricity Reliability Act, MCL 460.10 et seq. Nevertheless, the clear
language of MCL 484.2202(1)(c) and (2) indicates that the Legislature intended that the PSC
provide remedies through which the quality of service rules could be enforced. The rules
providing for automatic penalties comport with this legislative intent.
Verizon and AT&T assert that any penalties imposed under the MTA must be imposed in
accordance with MCL 484.2601, which provides:
If after notice and hearing the commission finds a person has violated this
act, the commission shall order remedies and penalties to protect and make whole
ratepayers and other persons who have suffered an economic loss as a result of the
violation, including, but not limited to, 1 or more of the following:
(a) Except as provided in subsection (b), the person to pay a fine for the
first offense of not less than $1,000.00 nor more than $20,000.00 per day that the
person is in violation of this act, and for each subsequent offense, a fine of not
less than $2,000.00 nor more than $40,000.00 per day.
(b) If the provider has less than 250,000 access lines, the provider to pay a
fine for the first offense of not less than $250.00 or more than $500.00 per day
that the provider is in violation of this act, and for each subsequent offense a fine
of not less than $500.00 or more than $1,000.00 per day.
(c) A refund to the ratepayers of the provider of any collected excessive
rates.
(d) If the person is a licensee under this act, the person’s license is
revoked.
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(e) Cease and desist orders.
(f) Except for an arbitration case under section 252 [37 USC 252],
attorney fees and actual costs of a person or a provider of less than 250,000 endusers. [Footnote omitted.]
MCL 484.2202(2) requires the PSC to provide for remedies for the enforcement of the quality of
service rules; nothing in the statute specifies that those remedies be only those sanctioned in
MCL 484.2601. MCL 484.2202(2) and MCL 484.2601 may be construed in a manner that
avoids conflict. House Speaker v State Administrative Bd, 441 Mich 547, 568-569; 495 NW2d
539 (1993). The automatic penalties provided for in Rules 55(3) and (4), 57(3), and 58(4) apply
only to those failures of service addressed in the particular rule, while the penalties and remedies
provided for in MCL 484.2601 apply to other violations of the MTA, and may be imposed only
after notice and hearing. See Michigan Electric Coop Ass’n, 267 Mich App at 618-619. The
PSC’s interpretation and application of MCL 484.2202(2) is reasonable, and Verizon and AT&T
have not demonstrated that cogent reasons exist to overturn that interpretation. In re Complaint
of Rovas, 482 Mich at 108. Verizon and AT&T have not demonstrated that the PSC exceeded its
authority by adopting quality of service rules that provide for automatic penalties, and have not
established by clear and convincing evidence that the quality of service rules are unlawful or
unreasonable. MCL 462.26(8).
Verizon and AT&T also have not demonstrated that the automatic penalty provisions are
arbitrary and capricious. These rules were authorized by statute and comply with the legislative
intent. Verizon and AT&T correctly note that service credits imposed as penalties do not relate
to the cost of the service interruption or inconvenience experienced by customers; however, this
fact does not make the automatic penalties arbitrary or capricious as those terms are defined.
Michigan Electric Coop Ass’n, 267 Mich App at 619-621.
The assertion by Verizon and AT&T that the rules providing for automatic penalties are
arbitrary and capricious because they require a provider to pay penalties even if the provider did
not cause the problem that resulted in the service interruption or because they could require a
provider to pay penalties that exceed the cost of the service interruption is without merit. The
PSC adopted Rule 71, R 484.571, which allows a provider to seek waivers and exceptions under
a wide variety of circumstances. Rule 71 provides:
(1) A provider may petition for a permanent or temporary waiver or
exception from these rules when specific circumstances beyond the control of the
provider render compliance impossible or when compliance would be unduly
economically burdensome or technologically infeasible.
(2) A provider may request a temporary waiver in order to have sufficient
time to implement procedures and systems to comply with these rules.
(3) A provider is exempt from R 484.555, R 484.557, or R 484.558, under
any of the following circumstances:
(a) If the problem is or was caused by the customer, an independent third
party, or malicious damage, then a provider’s exemption is automatic, and the
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information described in subrule (4) of the rule need not be provided unless
requested by the staff of the commission’s telecommunications division. This
exemption is not available if, at the time the damage occurred, the provider was
not in compliance with the Miss Dig program procedures.
(b) The problem is or was attributable to an “act of God.” The term “act
of God” shall include events such as any of the following:
(i) Flood.
(ii) Lightning.
(iii) Tornado.
(iv) Earthquake.
(v) Fire.
(vi) Blizzard.
(vii) Ice storm.
(viii) Other unusual natural or man-made disasters.
(c) There is a work stoppage or other work action by the provider’s (or
underlying provider’s) employees, beyond the control of the provider, that causes
or caused a significant reduction in employee hours worked.
(d) The problem occurs or occurred during a major failure. A “major
failure” is a single event or occurrence that is not the direct result of action taken
by the provider and that generates out-of-service reports affecting 100 or more
access lines.
(4) The provider shall notify the commission’s telecommunications
division, in writing, within 10 business days of its intent to invoke the occurrence
of an event described in subdivision (b), (c), or (d) of subrule (3) of this rule. The
notification to the commission shall include all of the following information:
(a) Specific description of the event and general impact.
(b) Date or dates of the event.
(c) Location affected, such as exchanges or wire centers.
(d) Estimated number of customers affected.
(5) If the commission’s telecommunication division staff disputes the
validity of the provider’s invocation of an event described in subrule (3) of this
rule, it shall notify the provider within 10 business days, in writing stating the
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reasons for such dispute. If the dispute cannot be resolved within 10 business
days of the notification, then the provider shall file an application with the
commission within 10 business days thereafter for resolution of the dispute.
This rule gives a provider ample opportunity to contest an assertion that it violated the quality of
service rules and is required to pay penalties as provided for in the rules. Rule 71(5) indicates
that the provider would be entitled to notice and a hearing to resolve the dispute. The rules
providing for the imposition of penalties for violation of the quality of service rules cannot be
said to be arbitrary and capricious under these circumstances.
A person cannot be deprived of property without due process of law. US Const, Am V;
Const 1963, art 1, § 17. A person cannot be deprived of property by administrative rule without
receiving notice, an opportunity to be heard, and written findings. See Bundo v Walled Lake,
395 Mich 679, 696-697; 238 NW2d 154 (1976). The rules providing for the imposition of
automatic penalties do not violate due process. A provider is entitled to seek a waiver of the
penalty provisions, and if the dispute is not resolved, to notice and a hearing. The procedures
outlined in Rule 71 comport with due process requirements. Id.; see also Michigan Electric
Coop Ass’n, 267 Mich App at 622-623.
The PSC acted within its statutory authority in promulgating quality of service rules
providing for the imposition of automatic penalties for violation of the rules. Verizon and AT&T
have not demonstrated by clear and convincing evidence that the PSC’s orders approving the
rules are unlawful or unreasonable. MCL 462.26(8).
C. Rule 51(1)
Verizon and AT&T argue that the requirement in Rule 51(1) that a provider operate its
system “in compliance with applicable codes, including the national electric safety code and
other state and local codes” is unauthorized, vague, and impossible to enforce, and is unrelated to
the quality of service rules. We disagree.
Verizon and AT&T do not argue that they were not required to comply with any codes
prior to the amendment of Rule 51(1). The amendment of Rule 51(1) to refer specifically to “the
national electric safety code and other state and local codes” seemingly simply clarifies to what
codes the rule referred prior to its amendment, as the PSC found. Furthermore, a provider knows
the locations in which it operates, and has the capacity to determine what codes are applicable in
those locations. The argument that a provider would be unable to determine with what codes it
was required to comply is not plausible. Moreover, Rule 71 allows a provider to seek a waiver
from compliance when compliance would be unduly burdensome.
MCL 484.2202(1)(c) required the PSC to promulgate quality of service rules to “establish
and enforce quality standards” for, among other things, the provision of basic telephone service
to end users. Requiring a provider to maintain its system in a manner that complies with all
applicable codes serves to ensure that the provider is able to maintain quality standards.
The assertion that Rule 51(1) delegates the PSC’s enforcement duties to state and local
agencies is not supported by the structure of the quality of service rules. Presumably, a
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provider’s noncompliance with a state or local code would be reported to the PSC by a state or
local agency, and any further action would be taken by the PSC.
The promulgation of a rule clarifying the codes with which a provider must comply was
within the PSC’s mandate in MCL 484.2202(1). Verizon and AT&T have not demonstrated that
cogent reasons exist to overrule the PSC’s construction of MCL 484.2202(1), and have not
shown by clear and convincing evidence that the PSC’s orders approving Rule 51(1) are
unlawful or unreasonable. MCL 462.26(8).
D. Rule 35(4)
Verizon argues that Rule 35(4), which requires a provider to ensure that “all information
provided to customers and others is accurate and in compliance with commission rules and the
provider’s tariff[,]” is overly broad and is unrelated to the quality of service rendered by the
provider. The PSC has no statutory authority to regulate a provider’s speech to customers.
Moreover, Rule 35(4) conflicts with § 502 of the MTA, MCL 484.2502, which prohibits a
provider from making “a statement or representation, including the omission of material
information, regarding the rates, terms, or conditions of providing a telecommunication service
that is false, misleading, or deceptive[,]” or from causing “a probability of confusion or a
misunderstanding as to the legal rights, obligations, or remedies of a party to a transaction by
making a false, deceptive, or misleading statement or by failing to inform the customer of a
material fact, the omission of which is deceptive or misleading.” Rule 35(4) prohibits all false
statements, not just those related to the terms of service or those likely to result in confusion or
misunderstanding. Rule 35(4) exceeds the PSC’s jurisdiction because it purports to prohibit all
misstatements, even those unrelated to quality of service issues.
Verizon’s arguments regarding Rule 35(4) are without merit.
MCL 484.2202(1)(c) mandated that the PSC promulgate quality of service rules
regarding the provision of basic telephone service to customers, the provision of unbundled
network elements and local interconnection services to other providers, the transfer of a customer
from one provider to another, and the transfer of customers whose provider has gone out of
business or left the state. Requiring a provider to give accurate information to customers helps to
ensure the quality of services delivered to customers.
Moreover, Rule 19, R 484.519, limits the application of the quality of service rules to
those services regulated by the PSC. Therefore, contrary to Verizon’s assertion, a provider could
not be held to have violated Rule 35(4) for giving a customer inaccurate information such as
incorrect directions to a particular location in its building.
The PSC’s promulgation of Rule 35(4) did not exceed the authority granted to it by MCL
484.2202(1)(c). Verizon has not shown that the PSC’s orders adopting Rule 35(4) are unlawful
or unreasonable. MCL 462.26(8).
V. Conclusion
In conclusion, we hold that the PSC’s consideration of current market conditions satisfied
the statutory mandate in MCL 484.2202(2), the PSC did not exceed its statutory authority by
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promulgating rules containing automatic penalty/service credit provisions, the PSC did not
exceed its statutory authority by promulgating Rule 51(1), and the PSC did not exceed its
statutory authority by promulgating Rule 35(4).
Affirmed.
/s/ Mark J. Cavanagh
/s/ E. Thomas Fitzgerald
/s/ Douglas B. Shapiro
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