Vermont’s Public Utility Commission says it doesn’t have jurisdiction to hold hearings on a dispute between telecommunication operators VTel and FirstLight, in a legal dispute that stems from a VTDigger investigation into FirstLight’s use of banned Huawei gear.
Jake Marren, a hearing officer at the quasi-judicial PUC, issued a preliminary final order on Wednesday. The full commission will issue a final order next month.
Marren indicated at the end of a daylong hearing in August that he wasn’t sure the PUC had jurisdiction to decide whether FirstLight could cancel a “dark fiber” contract with VTel as retribution for giving a reporter access to secure equipment facilities.
VTel’s efforts to convince Marren that the PUC had the authority to hear the case appear to have been insufficient.
“The only potential cause of action that is described in VTel’s petition is a question of private right that should be adjudicated by a court of law,” Marren writes. “Therefore, I recommend that the Commission dismiss VTel’s petition for lack of jurisdiction.”
The dispute centers on a stretch of “dark fiber” — high-speed optical fiber that is available for rent — that is owned by FirstLight and leased by VTel.
VTel initially signed a contract to use the fiber — which runs from Lebanon, New Hampshire, to Boston — with 186 Communications, one of many New England telecommunications companies that has been bought up by FirstLight in recent years.
FirstLight claims that it removed all Huawei equipment from its Vermont network on June 30, the day before VTDigger published an article showing photos of the banned equipment at facilities in Montpelier and Stowe.
Vermont was the first state in the country to ban state contractors from using the Chinese technology, in response to federal fears that Huawei might allow the Chinese government to use the equipment for cyber espionage.
FirstLight insists that since that ban came into force in February, none of its state services have passed through Huawei equipment.
Soon after VTDigger published an article about FirstLight’s use of Huawei equipment in its Vermont network, the company took prompt action against both VTDigger and VTel.
FirstLight cancelled a $15,000 underwriting contract with VTDigger in response to the article and raised the possibility of legal action. It accused VTel of breaking a confidentiality clause in their dark fiber contract by allowing a reporter into secure “co-location” offices, where Huawei equipment was in plain view.
During last month’s PUC hearing, VTel argued that FirstLight’s expectation of confidentiality regarding the equipment in the shared co-location facilities was unreasonable.
VTel said if FirstLight was able to cancel their contract, it could impact their Vermont customers by eliminating its back-up line for some long-distance telephone calls, cable television channels, data services and E911 geo-location, used to help first responders pinpoint a caller’s location if they aren’t able to communicate it themselves.
FirstLight argues that VTel can simply purchase fiber from another company. VTel says there is no other “dark fiber” option, and that “lit fiber” — sold as a service rather than letting companies lease the actual equipment — is both slower and far more expensive.
There’s also the question of whether the PUC can wade into disputes about equipment and contracts that exist outside Vermont — in this case New Hampshire. As companies like FirstLight pursue aggressive regional expansion, there are myriad ways the decisions they make in one state can impact services in another.
The Department of Public Service said during the hearing it was important that the PUC not limit its jurisdiction only to disputes that fit neatly in Vermont.
However, Marren’s decision was based on the contract in question, meaning the PUC won’t be considering any of these other issues — unless the other commissioners make the rare move to completely break from the preliminary decision.
Marren said the PUC has the authority to intercede in disputes when a company’s behavior impacts consumers, but wrote “this jurisdiction does not give the Commission the power to adjudicate breach of contract claims generally.”
In the dispute over a dark fiber contract, he said during the August hearing, the fact that FirstLight was a regulated utility in Vermont did not mean that all of its business dealings everywhere were subject to the PUC’s oversight.
And just because cancelling a contract might impact another company’s service delivery did not make it the PUC’s place to intervene, Marren suggested.
In his order, Marren said the commission’s powers are derived only through state statutes, and after a thorough review he determined “the statutes do not confer on the Commission the authority to adjudicate common law contract claims between two utilities.”
VTel’s president, Michel Guite, said he respected whatever decision the PUC made in the case, as he had full faith in its independence. He said he hadn’t decided whether to take the dispute to court if the PUC dismisses the petition.
“What my first thought is — I say this with all sincerity — is if the Public Utility Commission of Vermont, which is this tremendously respected organization, says we simply don’t want to assist in this matter, it causes me to say perhaps we are wrong to be advocating for it and perhaps we should simply follow their guidance and go on to other things,” Guite said.
The Department of Public Service said VTel should be given 30 days to find a new service provider before FirstLight cancels its contract.
FirstLight sought confidentiality for many of its filings in the case. Marren said in his preliminary that he found its argument for confidentiality convincing.
“The Commission has previously recognized that sensitive network information should be protected,” he wrote. “I find that the allegedly confidential information presented in this case is of the same quality.”
FirstLight’s spokesperson, Maura Mahoney, did not respond to an email seeking comment for this article. She has previously accused VTDigger of bias in its reporting on the company.
