The Ohio Public Utilities Commission made a major ruling this month in favor of Cleveland-based wireless reseller Cellnet Telecommunications Inc. in the company’s eight-year legal battle with what are now Cingular Wireless and Verizon Wireless.
The commission’s lengthy and complicated ruling agrees in essence with Cellnet, which argued that the two carriers offered better rates, terms and conditions to their affiliated retail operations than they did to Cellnet.
“This case is basically a discrimination case,” said Mike Tricarichi, Cellnet’s president and chief executive officer. “We proved in this proceeding that the rates, terms and conditions that the affiliate was getting was significantly better than what Cellnet was getting.”
The ruling is a major move in the case, which was originally filed in 1993 in a state court. Cellnet brought the case against Ameritech-which is now Cingular-and AirTouch Cellular-which is now Verizon, alleging that they violated state law by offering better deals to their own affiliated retail operations.
Since then, the case has wound its way through six different courts, both at the state and federal level. In 1997, the U.S. Court of Appeals for the Sixth Circuit ruled that the state public utilities commission had jurisdiction over the case. The Ohio PUC heard the companies’ arguments in 1999 and made its ruling last month.
“Congratulations to Cellnet for persisting,” said David Gusky, executive vice president of Ascent, a Washington, D.C.-based organization that represents the nation’s resellers.
Kathleen Trafford, a partner with the law firm Porter, Wright, Morris & Arthur, represents New Par-which became AirTouch Cellular and is now Verizon. She said the case will be appealed to the Ohio Supreme Court.
“We obviously disagreed with what the Ohio PUC ruled,” she said.
In essence, the Ohio PUC’s ruling found that the carriers were in violation of state laws that were designed to further competition in Ohio’s wireless retail markets. The PUC also said the carriers had failed to provide proof that they had separated their operations into wholesale and retail outlets.
“Ameritech Mobile and AirTouch Cellular are both in violation of past commission orders and several statutes for refusing to make their services … universally available on equal terms to nonaffiliated resellers,” the Ohio PUC said in its ruling. “Such conduct resulted in the charging or the proposing to charge Cellnet more than is charged to their affiliated retail arms, absent any justifiable explanation.”
Randy Hart, a partner with the law firm of Hahn, Loeser & Parks, L.L.P., represented Cellnet. He said the carriers were working to squeeze out the rest of the competition.
“If they were able to favor their own retail operation over an unaffiliated reseller, there would be no way for the unaffiliated reseller to be able to compete in the market,” Hart said. “What the state’s trying to do is create a level playing field so that the competition is at the retail level and not at the wholesale level.”
A major part of the argument also centered over a 1993 federal law, part of the Omnibus Budget Reconciliation Act, which does not give states the authority to regulate the rates charged by wireless carriers. The Ohio PUC’s ruling doesn’t cover rates charged but rather the carriers’ conduct, which falls under the “other terms and conditions” of wireless service that states have jurisdiction over.
Hart said an appeal to the Ohio Supreme Court would be quickly struck down because the issues have already been resolved by the Ohio PUC. He also said the Ohio PUC’s ruling opens the door for Cellnet to seek monetary damages.
Hart said the company would likely ask for more than $80 million in damages.
