Appeal of Verizon New England, Inc.

Summary

The New Hampshire Supreme Court reviewed the New Hampshire Public Utilities Commission’s order requiring Verizon New England to impute at least $23.3 million in Yellow Pages revenues for ratemaking purposes. The court held that the directory publishing agreement was unjust and unreasonable because it failed to compensate the regulated telephone company and its ratepayers for associative value derived from the company’s reputation and relationship with the directory affiliate. The court affirmed the revenue-imputation remedy and upheld a $1,000 penalty for failing to file an amendment to an affiliate agreement.

Holdings

1. Because the 1999 amendment was not filed as required by RSA 366:3, it was unenforceable under RSA 366:4 and could not modify the 1991 agreement. The 1991 agreement therefore remained in effect until it was superseded by the 2000 agreements, making the 1999 termination of revenue-sharing payments improper.
2. The PUC was not collaterally estopped from determining that the 2000 directory publishing agreement was unjust and unreasonable merely because it had approved the 1991 agreement and its termination provisions.
3. The PUC reasonably found that the 2000 directory publishing agreement was unjust and unreasonable because the agreement failed to provide adequate compensation to Verizon and its ratepayers for the continuing associative value supplied to the affiliate.
4. Section 222(e) of the Telecommunications Act of 1996 does not prohibit a telecommunications provider from transferring the value of its reputation or association to an affiliate directory publisher in exchange for remuneration, including revenue sharing.
5. The 1984 directory publishing agreement was neither in form nor in effect a sale or permanent disposition of the directory publishing business.
6. RSA 366:5 grants the PUC broad remedial authority to order revenue imputation when an affiliate agreement is unjust or unreasonable, even though the statute specifically mentions disallowing payments.
7. The PUC properly imposed a $1,000 civil penalty for Verizon's failure to file the 1999 amendment.

Questions Presented

1. Whether the PUC properly found the 2000 directory publishing agreement unjust and unreasonable because it failed to reserve compensation for Verizon and its ratepayers for the associative value provided to the affiliate.
2. Whether the PUC had statutory authority under RSA 366:5 to impute revenues earned by an unregulated affiliate to the regulated telephone company as a remedy.
3. Whether 47 U.S.C. § 222(e) precluded Verizon from receiving compensation or sharing revenues with its directory publishing affiliate.
4. Whether the 1984 directory publishing agreement effected a permanent sale or transfer of Verizon's directory publishing assets requiring separate PUC approval.
5. Whether the PUC reasonably imposed a $1,000 civil penalty for Verizon's failure to file the 1999 amendment.

Disposition

affirmed