Verizon Pennsylvania, Inc. v. Commonwealth

Justice EAKIN,

concurring and dissenting.

I agree with the Majority and, the dissent of Chief Justice Saylor that Commonwealth v. Bell Tel. Co., 348 Pa. 161, 34 A.2d 531 (1943) (Bell III), controls the outcome of the instant appeals. Verizon Telephone Company of.Pennsylvania fails to, present a compelling reason to set aside the doctrine of stare decisis. See Majority Op., at 756-60. I further agree with the Majority’s conclusion that, in light of Bell III, Verizon’s gross receipts from the provision of private telephone lines1 and directory assistance services are taxable under § 1101(a)(2) of the Tax Code, 72 P.S. § 8101(a)(2).2 See Majority Op., at 760-63, I dissent, however, from the Majority^ expansive application of Bell III to Verizon’s non-recurring service charges — ie., charges for the installation, repair, and relocation of telephone lines — and conclude these charges are not subject to the gross receipt tax imposed by § 1101(a)(2).,

To be taxable under § 1101(a)(2), Verizon’s gross receipts from non-recurring service charges must constitute revenue “received from ... telephone messages transmitted!)]” See 72 P.S. § 8101(a)(2). In Bell III,. this Court interpreted “telephone messages transmitted” to include those services and apparatus that make the transmission of telephone messages more effective or satisfactory for customers. Bell III, at 532-33 (interpreting 72 P.S. .§ .2181 (repealed), which, like § 1101(a)(2), imposed tax on gross receipts received by telephone corporations for “telephone messages transmitted wholly within the State”). In reaching this interpretation, the Court examined the taxability of certain recurring usage charges,3 focusing specifically on the purpose of the service or apparatus used. M The Court concluded, because the purpose of each service or apparatus was to render the transmission of an ongoing telephone message more effective or satisfying, the gross receipts received by the appellant for their usage were taxable. Id.

Here, however, the gross receipts at issue are distinguishable from those in Bell III, as the purpose of Verizon’s non-recurring service charges is not to make the transmission of telephone messages more effective or satisfying, but rather, to make the transmission possible. By installing, repairing, and relocating telephone lines, Verizon enables its customers to transmit messages — it does not,improve the transmission of messages or a customer’s expe*768rience through these services. Nevertheless, the Majority opines:

[W]hen a customer pays Verizon a onetime fee for its installation of telephone lines, this unquestionably makes his or her ability to transmit telephone messages more effective, since, absent those lines, the making and receiving of telephone calls is impossible. Likewise, when a customer pays-for repair services for telephone lines,- this also has the result of making telephone service more effective, since ... the customer would not pay for such repairs unless he or she was experiencing difficulty transmitting messages through the telephone lines.
[F]urther[,] ... [mjovement of the customer’s lines, or alteration of the customer’s phone service to better suit the customer’s needs and wishes, makes the customer’s use of the telephone service more satisfactory, much like the installation of a telephone line in the first instance. 1

Majority Op., at 764. Yet, this rationale conflates the difference between making something more effective or satisfying, and making something possible. To say the transmission of telephone messages is more effective or more satisfying is to measure the degree of a customer’s contentment with existing services or apparatus against his contentment with additional services or apparatus. Said another way, for the transmission of telephone messages to be more effective or satisfying, there must be a baseline that is increased by additional services or apparatus provided by the telephone company. Here, however, there is no baseline increased by Verizon’s installation, repair, or relocation of telephone lines because these services simply make transmission of telephone messages possible, but do not improve it; these services are the baseline that other services and apparatus, such as those discussed in Bell III, make more effective or satisfying.

Two additional concerns regarding the Majority’s rationale bear noting. First, the Majority suggests the repairing of telephone lines makes the transmission of messages more effective because, prior to repair, transmission is impossible. Id., at 764. However, I believe this reasoning broadens the Bell III standard far beyond the bounds intended by this Court, and may result in the taxation of nearly all “troubleshooting” services that make transmission possible if provided to customers at a charge. Second, the focus of the Majority’s rationale regarding Verizon’s relocation of customers’ telephone lines is misplaced. As noted above, the Bell III Court centered' its analysis on the purpose of the service or apparatus used. Here, however, the Majority ignores the purpose of the service provided by Verizon, i.e., making the transmission of telephone messages possible, and instead focuses on' the purpose of the customer’s request for service, ie., “to better suit the customer’s needs and wishes[.]” Id., at 764-65. While such a customer request would make the transmission of telephone messages more satisfactory, that is not the purpose of the telephone company’s provision of the service, which is the only focus of the Bell III standard. Thus, the Majority’s rationale misapprehends Bell III.

Finally, I cannot conclude Verizon’s nonrecurring service charges are taxable under § 1101(a)(2) where no telephone message is actually transmitted as a direct result of the service provided. Unlike Bell III, where the services and apparatus at issue involved, at least in some part, the actual transmission of a telephone message, see, e.g.; Bell III, at 532 (noting without code calling system or signal apparatus, customer away from his phone *769would not know of incoming call, but with equipment, he could be alerted of call, thus making actual transmission of telephone message more effective), Verizon’s non-recurring service charges do not involve the transmission of a telephone message; thus, the instant case is further distinguishable from Bell III. On these bases, I dissent.

.In various portions of its opinion, the Majority refers to the revenue received by Verizon for the provision of private telephone lines as installation charges.. See, e.g.,.id., at 2, However, these charges are for the use and access of private lines — not their installation, see Appellant’s Brief, at 39 (“The revenue at issue from the provision of private lines related to fixed monthly charges paid by Verizon[’s] customers for the exclusive and uninterrupted ability to use a dedicated telecommunications channel.” (emphasis added)) (citing Stipulation of Facts, 11/21/12, at ¶¶ 33, 35), which affects my analysis below. Thus, I take exception with thé Majority's phrasing.

. Section 1101(a)(2) provides, in relevant part, "Every ... telephone [corporation] ... doing ; business in this Commonwealth ... shall pay ... a tax ... upon each dollar of the gross receipts of the corporation ... received from ... telephone messages transmitted wholly within this State[.]” Id. (emphasis added).'

. The charges reviewed consisted of charges for the use of code calling systems and signal equipment, supplemental telephone equipment, and auxiliary telephone lines. Id., at '532. '