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Telrite Corp. v. Nebraska Public Service Commission

Supreme Court of Nebraska

August 22, 2014


Appeal from the Public Service Commission.

Stephen M. Bruckner, Russell A. Westerhold, and Jacqueline M. DeLuca, of Fraser Stryker, P.C., L.L.O., for appellant.

Jon Bruning, Attorney General, and L. Jay Bartel for appellee.



Page 911

[288 Neb. 867] Connolly, J.


Telrite Corporation, doing business as Life Wireless (Telrite), was designated as an eligible telecommunications carrier (ETC) and a Nebraska eligible telecommunications carrier (NETC) by the Nebraska Public Service Commission (PSC). These designations permitted Telrite to participate in the " Lifeline" program and receive subsidies from federal and state funds for the provision of telecommunications service to low-income households. Six weeks after receiving its designations, Telrite held a 1-day outdoor enrollment event in Omaha, Nebraska. At the event, Telrite used the wrong enrollment form, and the PSC later received inquiries and complaints from consumers who had attended.

The PSC issued a show cause order to Telrite and thereafter revoked Telrite's ETC designation and ordered it to cease and desist from offering Lifeline service in Nebraska. Telrite appeals from the PSC order, arguing that the PSC imposed an excessive penalty, exceeded its statutory authority, and failed to comply with its regulations. We agree that the penalty was excessive. Therefore, we reverse the order and remand the cause for further proceedings before the PSC.

[288 Neb. 868] BACKGROUND

Statutory Background

The Telecommunications Act of 1996 (Telecommunications Act)[1] established the principle of " universal service," which is broadly defined as the goal of " ensuring that all Americans have access to affordable phone service." [2] The Telecommunications Act created the federal Universal Service Fund (Federal Fund) by requiring telecommunications carriers providing interstate services to contribute to " mechanisms established by the [Federal Communications] Commission to preserve and advance universal service." [3] Telecommunications

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companies participating in universal service programs are eligible to receive support from the Federal Fund if they are designated as an ETC.[4] The Telecommunications Act provides that state commissions are primarily responsible for making ETC designations.[5] In Nebraska, the PSC makes ETC designations.[6]

Among the mechanisms established by the Federal Communications Commission (hereinafter FCC) and supported by the Federal Fund is the Lifeline program, under which qualified low-income consumers pay reduced charges for voice telephone services.[7] ETC's participating in the Lifeline program receive a monthly disbursement of $9.25 from the Federal Fund for each qualified consumer.[8] Lifeline support is limited to a single subscriber per household, and eligibility is determined by the subscriber's income or participation in government programs directly related to income.[9]

[288 Neb. 869] The Telecommunications Act also authorized states to create their own universal service funds and maintain them with mandatory contributions from providers of intrastate telecommunications services.[10] The Nebraska Legislature exercised this power by enacting the Nebraska Telecommunications Universal Service Fund Act (NTUSFA).[11] The NTUSFA created the Nebraska Telecommunications Universal Service Fund (Nebraska Fund) in order to advance the state universal service effort.[12] The Nebraska Fund receives contributions from surcharges collected on all " end-user telecommunications" provided in Nebraska commerce.[13] The NTUSFA also charged the PSC with the creation of the Nebraska Telephone Assistance Program to promote universal service for low-income households and to determine eligibility guidelines and standards for the federal and Nebraska support mechanisms.[14]

In addition to making ETC designations as provided by the Telecommunications Act, the PSC determines the telecommunications providers that are eligible for support from the Nebraska Fund. The PSC denominates a provider eligible to receive support from the Nebraska Fund as a " Nebraska Eligible Telecommunications Carrier" (NETC).[15] The PSC's regulations require ETC's receiving federal support to participate in Nebraska's universal service program,[16] in effect requiring an ETC to receive an NETC designation. An NETC ...

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