7. TracFone is a Public Utility and Telephone
Corporation Under the Public Utilities Code
The Commission confirms the ALJ's ruling issued in this proceeding and dated January 26, 2011. In adopting the ALJ's ruling, we reviewed the record, the applicable law, and applied the standard of review set forth in Code of Civil Procedure Section 437c. Under this code section and related Commission decisions, the moving party in a summary adjudication motion bears the initial burden of proving that there are no triable issues regarding any material facts and that the moving party is entitled to a judgment as a matter of law.51
The January 26, 2011 ALJ's ruling found no triable issues on any material facts as to whether TracFone operates in California as a public utility and a telephone corporation. The ruling further found that, as a matter of law, TracFone is a California public utility and a telephone corporation under Cal. Const., art. XII, § 3; Pub. Util. Code §§ 216, 233, and 234. We agree with the conclusions of in the ALJ's ruling and adopt it today.
The ALJ's ruling indicated that TracFone's public utility status would be addressed in more detail in the final decision. Today we strengthen the findings set forth in the ALJ's ruling by including an analysis of TracFone's services within California under the dedication requirement.52
The California Supreme Court has determined that "the essential feature of a public use is that it is not confined to privileged individuals, but is open to the indefinite public. It is this indefiniteness or unrestricted quality that gives it its public character."53 As long as its services are made available on the same terms (Thayer v. California Development Company, 164 Cal. 117, 128), and to substantially all who have sought such use, dedication to public use may be implied.54 TracFone's services are sold at many retail establishments throughout California,55 via the internet, 56 and by calling TracFone's customer care center.57 As such, TracFone's services are open to the public and available to substantially all who seek such service. Accordingly, TracFone's telecommunication services are dedicated to the public use and, under this dedication test, TracFone operates as a public utility in California.
TracFone filed testimony and legal briefing on whether it operated as a public utility on November 18, 2010 in response to a CPSD's Motion for Summary Adjudication.58 The facts and legal arguments presented by TracFone in these pleadings were addressed in the January 26, 2011 ruling. We now address the additional legal arguments and facts presented by TracFone after January 26, 2011 regarding its public utility status. TracFone submitted additional information in prepared testimony prior to the February 2011 evidentiary hearings. TracFone's brief addresses the legal argument related to public utility status at footnote 19 in its March 16, 2011 opening brief. Footnote 19 refers to Exhibit TR-111 (Pollak).59 TracFone asserts that the testimony referenced at footnote 191 presents "evidence demonstrating that it did not fit within the statutory definition of a California public utility."60 We address this argument below.
In prepared testimony, TracFone's principle argument against finding it a public utility is based the language in §§ 233 and 234. Referring to the relevant material cited in footnote 191, TracFone's witness Pollak summarizes the argument that TracFone is not a public utility as follows:
...in California, companies who are telephone corporations are deemed to be public utilities, and that `telephone corporation' is defined by the Public Utilities Code as entities which own, control, operate, or manage lines for compensation within California. Even though the term `lines' has been broadly defined to include conduits, ducts, poles, wires, cables, instruments, and appliances, and other real estate, fixtures, and personal property managed in connection with or to facilitate communication by telephones, TracFone does not own, control, operate or manage anything in California in connection with or to facilitate communication by telephones.61
Based upon TracFone's analysis of §§ 233 and 234, TracFone concludes that it is not a public utility under California law.62
TracFone's interpretation of this statutory language is incorrect. First, it is well-established that resellers of telecommunication services operate as public utilities in California.63 TracFone's business model is consistent with a reseller of facilities-based service and TracFone fails to provide any reasons why its resale operation should not be deemed a public utility.
Second, TracFone's argument fails to address the definition of public utility status as set forth in Thayer v. California Development Company, 164 Cal. 117. As explained in the ALJ's Ruling, the Commission has interpreted the language "owning, controlling, operating or managing any line in California," to mean entering into an arrangement with facilities-based carriers to operate on a non-facilities basis and resell the telecommunications services to end user customers under their own name and rate structure to fall within the definition of public utility and telephone corporation.64 Thus, ownership of property is not the sole defining characteristic of public utility status. Public utility status has routinely been established upon lease arrangements. In the classic resale arrangement, an entity leases equipment (rather than obtaining ownership rights) and uses this leased property to provide services to the general public. In the case of TracFone, it relies upon lease arrangements to provide wireless telecommunication services to customers. From the customer's perspective, TracFone provides telephone service to its customers.
Accordingly, TracFone's additional testimony and legal arguments fail to refute the finding of the ALJ that TracFone operates as a public utility and telephone corporation under applicable California law.
51 State of California Department of Transportation, Cox California Telecom dba Cox Communications, et. al., v. Crow Winthrop Development and Pacific Bell, D.01-08-061 at 7, citing to Westcom Long Distance v. Pacific Bell, D.94-04-082.
52 &_butType=3&_butStat=2&_butNum=1&_butInline=1&_butinfo=&_fmtstr=FULL&docnum=6&_startdoc=1&wchp=dGLbVzk-zSkAb&_md5=75e3c5592309ff1d90274b99dffd0d7b" target="_top">Thayer v. California Development Company, 164 Cal. 117 (1912).
53 Id. 164 Cal. 117, 127.
54 Western Canal Co. v. Railroad Commission, 216 Cal. 639, 289 U.S. 742, cert. denied.
55 Exhibit TR-111 at 5:7-8.
56 February 2, 2010 RT 324:25.
57 February 2, 2010 RT 327:10.
58 CPSD's motion was originally filed on September 17, 2010 and amended to include additional citations on September 28, 2010. The amended document was referred to by CPSD as a brief rather than a motion. All references to CPSD's motion or brief will be to the September 28, 2010 version and referred to herein as Motion for Summary Adjudication.
59 TracFone opening brief at 56, fn. 191 provides in full as follows: "See e.g., Exh. TR-111 (Pollak), pp. 10:21-11:11 and 13:16-15:5."
60 TracFone opening brief at 56.
61 Exhibit TR-111 13-14 (Pollak).
62 Exhibit TR-111 14 (Pollak).
63 The January 26, 2011 ruling provides, "Commission precedent establishes that telecommunications entities that operate on a non-facilities basis and that resell telecommunications services to end user customers under their own name and rate structure fall within the definition of public utility and telephone corporation. D.92-06-069, 1992 Cal. PUC LEXIS 972 *9, 44 CPUC2d 747; see also D.95-01-044."
64 D.92-06-069, 1992 Cal. PUC LEXIS 972 *9, 44 CPUC2d 747; see also D.95-01-044.
