United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 30, 2000 Decided January 23, 2001

No. 99-1535

AT&T Corporation,

Petitioner

v\.

Federal Communications Commission and

United States of America,

Respondents

Telecommunications Resellers Association, et al.,

Intervenors

Consolidated with

00-1090

On Petitions for Review of an Order of the

Federal Communications Commission

Gene C. Schaerr argued the cause for petitioner AT&T Corporation and
supporting intervenor WorldCom, Inc. With him on the briefs were James
P. Young, Mark C. Rosenblum, Peter H. Jacoby, Judy Sello, Thomas F.
O\'Neil, III, William Single, IV, and Jeffrey A. Rackow.

William T. Lake argued the cause for petitioner US WEST Communications,
Inc. On the briefs were Dan L. Poole, Robert B. McKenna, John H.
Harwood, II, and William R. Richardson, Jr.

John E. Ingle, Deputy Associate General Counsel, Federal Communications
Commission, argued the cause for respondents. With him on the brief were
Christopher J. Wright, General Counsel, and Laurel R. Bergold, Counsel.
Robert B. Nicholson and Robert J. Wiggers, Attorneys, United States
Department of Justice, entered appearances.

Mark C. Rosenblum, Peter H. Jacoby, Judy Sello, Gene C. Schaerr, James
P. Young, Thomas F. O\'Neil, III, William Single, IV, and Jeffrey A.
Rackow were on the brief for intervenors AT&T Corporation and WorldCom,
Inc.

Before: Edwards, Chief Judge, Sentelle and Randolph, Circuit Judges.

Opinion for the Court filed by Chief Judge Edwards.

Edwards, Chief Judge: US WEST[^1] petitioned the Federal Communications
Commission (\"FCC\" or \"Commission\"), pursuant to § 10 of the
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
(1996), for forbearance from \"dominant carrier\" regulation in the
provision of high capacity special access and dedicated transport for
switched access services (\"high capacity services\") in the Phoenix and
Seattle Metropolitan Statistical Areas (\"MSAs\"). See Petition of US
WEST Communications, Inc. for Forbearance from Regulation as a Dominant
Carrier in the Phoenix, Arizona MSA, et al., 14 F.C.C.R. 19,947 (1999)
(hereinafter \"Forbearance Order\"). In seeking forbearance, US WEST
relied heavily on evidence regarding its market share. The Commission
found, however, that US WEST failed to provide the underlying raw data
on which its conclusions were based, and, as a result, US WEST\'s
findings were not verifiable. The Commission thus reasonably rejected US
WEST\'s market share evidence.

US WEST argues that the Forbearance Order should nevertheless be
overturned, because the Commission failed to consider evidence of supply
elasticity and demand elasticity. In response to US WEST\'s claim, the
Commission held that market share data is critical to a \"prima facie
showing of competition.\" Id. p 33, at 19,967. In other words, because
US WEST offered no reliable data on market share, the Commission
determined that the petition for forbearance failed to make a prima
facie showing that sufficient competition existed to satisfy the
requirements of § 10. The problem with this position, however, is that
the FCC\'s conclusion is inconsistent with its earlier decisions on this
issue. In the past, the FCC has considered market share along with other
factors such as supply elasticity, demand elasticity and comparative
advantages in cost structure, size and resources. The FCC has even made
a non-dominance determination in the absence of any market share data,
never suggesting that market share data is essential for a prima facie
showing of competition. This case must therefore be remanded for further
consideration by the agency.

AT&T and WorldCom, in separate petitions for review, argue that the
Forbearance Order should be vacated to the extent that it grants US WEST
forbearance under the Pricing Flexibility Order. See In re Access Charge
Reform, 14 F.C.C.R. 14,221 (1999) (hereinafter \"Pricing Flexibility
Order\"). In p 2 of the Forbearance Order, the Commission stated that
\"we grant the relief requested in the forbearance petitions to the
extent that the Pricing Flexibility Order establishes a framework
pursuant to which the BOC petitioners may obtain relief by demonstrating
satisfaction of the competitive triggers adopted in that order.\"
Forbearance Order, 14 F.C.C.R. p 2, at 19,949. At the conclusion of the
Order, however, the Commission explained that \"the Pricing Flexibility
Order establishes a mechanism by which the petitioners may receive much
of the relief they seek without having to demonstrate loss of market
power.\" Id. p 36, at 19,968. The FCC therefore \"encourage\[d\] the BOC
petitioners to submit \[their\] petitions for any market, including the
markets identified in \... their forbearance petitions, as soon as they
have sufficient information to satisfy the required competitive
triggers.\" Id. AT&T and WorldCom claim that, in referring US WEST to
the Pricing Flexibility Order, the FCC effectively granted relief on a
petition that was found meritless under § 10. This is a specious claim.
It is clear that, the Forbearance Order does nothing more than indicate
that US WEST is eligible to apply for relief under the Pricing
Flexibility Order; no concrete relief was granted to US WEST in the
Forbearance Order.

During argument before this court, counsel for the FCC suggested that
the mere availability of relief under the Pricing Flexibility Order was
itself sufficient to forestall a claim under § 10. We reject this
position. US WEST and other such petitioners are entitled to pursue
forbearance under § 10 without regard to the Pricing Flexibility Order.
In other words, § 10 remains a viable and independent avenue of appeal
for pricing flexibility. Therefore, the FCC\'s rejection of the US WEST
petition for forbearance does not survive review because of the
availability of the Pricing Flexibility Order.

I. Background

US WEST petitioned the Commission to forbear from regulating it as a
dominant carrier in high capacity services in the Phoenix and Seattle
MSAs. Petition of US WEST Communications, Inc. for Forbearance from
Regulation as a Dominant Carrier in the Phoenix, Arizona MSA, CC Docket
No. 98-157 (filed August 24, 1998) (hereinafter \"Phoenix Pet.\"), at 1;
Petition of U § WEST Communications, Inc. for Forbearance from
Regulation as a Dominant Carrier for High Capacity Services in the
Seattle, Washington MSA, CC Docket No. 99-1 (filed Dec. 30, 1998)
(hereinafter \"Seattle Pet.\"), at iii. SBC Companies, Bell Atlantic
Telephone Companies, and Ameritech Operating Companies (\"BOC
petitioners\") also filed forbearance petitions seeking pricing
flexibility in other markets throughout the United States. Forbearance
Order, 14 F.C.C.R. p 1, at 19,947-48. In seeking forbearance, US WEST
requested permissive de-tariffing, which would permit the filing of
tariffs on one day\'s notice with a presumption of lawfulness and
without cost support, exemption from price cap and rate of return
regulation, and permission to charge de-averaged rates. Phoenix Pet. at
8-9; Seattle Pet. at 8-9.

US WEST\'s petition for forbearance rested on § 10 of the
Telecommunications Act of 1996. Under § 10, the Commission will forbear
from applying any regulation or any provision of the Act to a
telecommunications carrier or telecommunications service, or class of
telecommunications carrier or telecommunications services, in any or
some of its geographic markets, if the Commission determines that (1)
enforcement of such regulation or provision is not necessary to ensure
that the charges, practices, classifications or regulations by, for, or
in connection with that telecommunications carrier or telecommunications
service are just and reasonable, and are not unjustly or unreasonably
discriminatory; (2) enforcement of such regulation or provision is not
necessary for the protection of consumers; and (3) forbearance from
applying such provision or regulation is consistent with the public
interest. 47 U.S.C. § 160(a) (1998).

In its petitions, US WEST argued that the high capacity markets in the
Phoenix and Seattle MSAs were robustly competitive, and, as a result, US
WEST did not have market power in those areas. US WEST based its claims
primarily on reports prepared by Quality Strategies, POWER Engineers
(\"PEI\"), and economists Alfred E. Kahn and Timothy J. Tardiff. Kahn
and Tardiff based their economic evaluation on the reports prepared by
Quality Strategies and PEI, in addition to their own research. In
describing its diminished market power, US WEST addressed several
factors, including (1) market participants, (2) market share, (3) demand
elasticity of customers, (4) supply elasticity of customers, and (5) the
carrier\'s cost, structure, size, and resources. Phoenix Pet. at 14;
Seattle Pet. at 14. What follows is a brief review the evidence offered
by US WEST.

First, regarding market participants, US WEST claimed that, in the
Phoenix MSA, it faced competition from resellers and five
facilities-based competitors. US WEST emphasized that the merger of
Teleport Communications Group, one of its competitors, with AT&T
(\"AT&T/TCG\"), and the pending merger of MCI with another of its
competitors, MFS WorldCom (\"MCI/MFS WorldCom\"), further contributed to
robust competition. Phoenix Pet. at 2-3. In the Seattle MSA, US WEST
claimed to face competition from resellers and three facilities-based
competitors, AT&T/TCG, Electric Lightwave Inc., and MCI/MFS WorldCom.
Seattle Pet. at 14-15.

Second, in reference to market share, US WEST emphasized that, based on
the market analysis conducted by Quality Strategies, competitors have
captured more than 70% of the retail market for high capacity services
in the Phoenix MSA. Phoenix Pet. at 19. In addition, competitors in the
Phoenix MSA have captured significant portions of the growth in demand
in the provider segment, i.e., high capacity services ultimately
purchased by end users, and in the transport segment, i.e., high
capacity services purchased by carriers for transport. Id. at 21. In the
Seattle MSA, US WEST presented market analysis by Quality Strategies
showing that competitors have almost 80% of the retail market for high
capacity services. Seattle Pet. at 19. Moreover, competitors have
captured about two-thirds of the growth in demand for high capacity
services. Id. at iv.

Third, in demonstrating high demand elasticity, US WEST pointed out
that, in the Phoenix MSA, customers for high capacity services are
sophisticated businesses, some of which could migrate high capacity
traffic to their own affiliated fiber networks. Phoenix Pet. at 23-25.
US WEST emphasized that evidence showing that competitors hold
significant portions of market share in the retail segment, and
increasing portions of market share in the provider and transport
segments of the market, further indicates demand elasticity. Id. at 25.
Similarly, in the Seattle MSA, customers tend to be sophisticated
businesses and governmental entities that are highly sensitive to price.
Seattle Pet. at 24. In addition, as in the Phoenix MSA, US WEST\'s
largest carrier customers in the Seattle MSA are able to migrate high
capacity traffic to their own affiliated fiber networks. Id. at 25.
Furthermore, Kahn and Tardiff explain that competitors\' high market
share in the retail segment of the Seattle market, and the rapid growth
of competitors\' market share in the provider and transport segments of
the market, reinforces demand elasticity. Id. at 25.

Fourth, in relation to supply elasticity in the Phoenix MSA, US WEST
explained that, based on Quality Strategies\' market reports,
competitors have more than adequate excess capacity to constrain US
WEST\'s pricing determinations. Phoenix Pet. at 26. US WEST\'s five main
facilities-based competitors in the Phoenix MSA have put in place over
800 route miles of optical fiber. In the Phoenix MSA, competitors\'
fiber backbone networks would be able to assume US WEST\'s end-use and
transport traffic utilizing less than 8% capacity. Id. at 26. Based on
the PEI study of the Phoenix MSA, US WEST explained that if competitors
invest \$45 million, they could serve almost 50% of US WEST\'s high
capacity customer locations within 1,000 feet of their current fiber
networks. Id. at 27. Kahn and Tardiff pointed out that economies of
scale and opportunities to bundle services make the investment to
revenue comparison more favorable to competitors in the Phoenix, MSA.
Id. at 28-29. US WEST emphasized that the growth of competitors\' market
share in the Phoenix MSA demonstrates that the cost of entry is not
prohibitive. Id. at 30.

Similarly, in the Seattle MSA, competitors have in place more than 700
route miles of optical fiber, with the capacity to service all of US
WEST\'s end user and transport traffic. Seattle Pet. at 26. An estimated
61% of US WEST\'s high capacity demand is located within 100 feet of
competitors\' networks. Id. at iv. As a result, competitors could absorb
US WEST\'s services relatively quickly. Based on PEI\'s report, the cost
to competitors of extending their fiber networks to take over most of US
WEST\'s high capacity demand would not be prohibitive. If competitors
invest \$46 million, they will be able to serve the almost 60% of US
WEST\'s high capacity customer locations within 1,000 feet of their
existing fiber networks. Id. at 27. The significant growth of
competitors\' market share demonstrates that the cost of entry is not
prohibitive. As in the Phoenix MSA, Kahn and Tardiff emphasized that
economies of scale and opportunities to bundle services make the
investment to revenue ratio more favorable for potential competitors in
the Seattle MSA. Id. at 28-29.

Fifth, US WEST asserted that it did not have an advantage over its
competitors in terms of relative size. In the Phoenix MSA, US WEST faces
five facilities-based competitors, and the merged competitors AT&T/TCG
and MCI/MFS WorldCom have significant advantages in terms of economies
of scale and access to capital. Phoenix Pet. at 31. Kahn and Tardiff
explain that the fact that competition in the market in the Phoenix MSA
has increased, while prices for services have decreased, strongly
indicates that investors believe in-cumbents do not have absolute cost
advantages in the market. Id. at 32.

Similarly, in the Seattle MSA, US WEST does not benefit from comparative
advantage in terms of costs, structure, size, and resources. As in the
Phoenix MSA, AT&T/TCG and MCI/MFS have advantages based on size;
furthermore, increase in competitive entry into the market, despite the
fact that US WEST\'s charges for high capacity services have declined,
strongly indicates that US WEST does not have an insurmountable cost
advantage. Seattle Pet. at 31-32.

The Commission received numerous comments arguing that US WEST remained
dominant in the markets for high capacity services in the Phoenix and
Seattle MSAs, including comments criticizing Quality Strategies\' market
reports. Forbearance Order, 14 F.C.C.R. p 25, at 19,961 n.88. The
Commission denied US WEST\'s request for forbearance, finding US WEST\'s
basis for evidence regarding market share, the market analysis conducted
by Quality Strategies, could not be verified and, therefore, was not
reliable. Id. p p 25-26, at 19,961-62. Furthermore, the market share
data was based on DS1 equivalents, which distorted the level of
competition. Finally, the Commission rejected the market share analysis,
because US WEST focused on retail market share and, therefore, failed to
account for the fact that even when US WEST did not provide retail
services, US WEST still provided and received compensation for the
underlying facilities. Without Quality Strategies\' underlying evidence
of market share, the Commission found that US WEST had failed to make a
prima facie showing of competition and, therefore, did not satisfy the
initial requirement for § 10 forbearance. Id. p 33, at 19,967.

The Commission, however, completely failed to address the evidence other
than the market share data offered by US WEST to show its diminished
market power\--i.e., evidence relating to market participants, demand
elasticity of customers, supply elasticity of customers, and the
carrier\'s cost, structure, size, and resources. It is this failing that
is the focus of US WEST\'s petition for review.

III\. Discussion

A. Standard of review

We review the Commission\'s order pursuant to familiar Administrative
Procedure Act standards, to determine whether it is arbitrary,
capricious, an abuse of discretion, or not in accordance with law. 5
U.S.C. § 706(2)(A) (1994). As the Supreme Court explained in Motor
Vehicle Manufacturers Ass\'n v. State Farm Mutual Automobile Insurance
Co., 463 U.S. 29 (1983):

The scope of review under the \"arbitrary and capricious\" standard is
narrow and a court is not to substitute its judgment for that of the
agency. Nevertheless, the agency must examine the relevant data and
articulate a satisfactory explanation for its action including a
\"rational connection between the facts found and the choice made.\"
Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962).
In reviewing that explanation, we must \"consider whether the decision
was based on a consideration of the relevant factors and whether there
has been a clear error of judgment.\" Bowman Transportation, Inc. v.
Arkansas-Best Freight System, Inc., supra, at 285; Citizens to Preserve
Overton Park v. Volpe, supra, at 416. Normally, an agency rule would be
arbitrary and capricious if the agency has relied on factors which
Congress has not intended it to consider, entirely failed to consider an
important aspect of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in view or the
product of agency expertise. The reviewing court should not attempt
itself to make up for such deficiencies; we may not supply a reasoned
basis for the agency\'s action that the agency itself has not given. SEC
v. Chenery Corp., 332 U.S. 194, 196 (1947).

Id. at 43. In addition, the Court has made it clear that when an agency
determines to change an existing regulatory regime it must do so on the
basis of \"reasoned analysis.\" Id. at

42\.

B. Commission\'s Denial of Forbearance

The Commission determined that it was not required to forbear from
treating US WEST as a dominant carrier solely because of three major
areas of weakness in US WEST\'s evidence regarding market share. The
Commission\'s principal concern appeared to be that the studies
conducted by Quality Strategies analyzing US WEST\'s market share were
not reliable. US WEST did not provide the underlying raw data on which
the studies were based. As a result, the analysis could not be evaluated
or verified. The Commission noted, for example, that Quality Strategies
failed to provide a copy of the questions and answers that were the
basis of its surveys, and failed to describe how it weighted and
evaluated responses to the surveys. Forbearance Order, 14 F.C.C.R. p 25,
at 19,961. Without adequate information about Quality Strategies\'
methods, the Commission found that it was unable to resolve
discrepancies between their market share evidence and evidence presented
by other commentators. Id. p 26, at 19,962.

The Commission also faulted the material prepared by Quality Strategies
insofar as it purported to measure market share by analyzing the
percentage of capacity provided by various providers of high capacity
services. A \"DS1\" is a measure of capacity, and Quality Strategies
used DS1 equivalents to measure market share. The problem, however, as
the FCC pointed out, is that reliance on DS1 equivalents fails to
provide an accurate measure of competition for high capacity services,
because resort to this data overstates competitive inroads in a market.
One DS3 channel is equivalent to 28 DS1 channels. Therefore, if entity
\"x\" provides one DS3 channel to one customer, and entity \"y\"
provides 28 DS1 channels to 28 different customers, entity \"y\" can
claim that it has only 50% of the market share based on \"capacity.\"
Id. p 27, at 19,963. Because of this type of distortion, the Commission
rejected the claim that the DS1 equivalents methodology provides an
accurate measure of market share. The Commission also found that DS1
equivalents methodology puts disproportionate weight on entrance
facilities, which are usually DS3 circuits. Id. p 28, at 19,964.

Finally, the Commission found that US WEST\'s evidence regarding market
share further distorts levels of competition by relying on retail market
share. By defining competitive losses based on retail, US WEST can claim
competitive losses even when US WEST provides the underlying facilities
and, therefore, continues to benefit from a substantial revenue stream
from the services. Id. p 29, at 19,965. For example, the Commission
noted that US WEST claimed to have lost 70% of the Phoenix retail market
for special access and high capacity dedicated transport services. But,
according to its own calculations, US WEST maintained control over 77%
of the overall Phoenix market for special access and high capacity
dedicated transport. Id. US WEST argues that the FCC considered only
market share and failed to analyze other bases of market power,
including evidence regarding supply elasticity, demand elasticity, and
the comparative resources of US WEST and its competitors. They are right
on this point. The FCC\'s order rests solely on a view that, because US
WEST offered no reliable data on market share, the petition for
forbearance failed to make a prima facie showing that sufficient
competition existed to satisfy the requirements of § 10. Insofar as
there may be other reasons to reject US West\'s petition, such as the
purported deficiencies in US West\'s elasticity arguments outlined in
the FCC\'s brief, they were not articulated in the FCC\'s order and,
therefore, cannot provide the basis for upholding the FCC\'s decision.
See Burlington Truck Lines v. United States, 371 U.S. 156, 168-69 (1962)
(\"the courts may not accept appellate counsel\'s post hoc
rationalizations for agency action; Chenery requires that an agency\'s
discretionary order be upheld, if at all, on the same basis articulated
in the order by the agency itself\" (citing SEC v. Chenery, 332 U.S.
194, 196 (1947)).

Were this the first time the FCC was asked to consider whether a carrier
was dominant in a given market, the explanation provided by the
Commission in the Forbearance Order may well have been adequate; but it
is not the first time that the Commission has addressed this issue.
Indeed, the FCC has considered this question on several occasions, each
time applying a test different from that applied here to determine
whether the firm in question retained market power. For instance, in the
Motion of AT&T Corp. to be Reclassified as a Non-Dominant Carrier, 11
F.C.C.R. 3,271 (1995) the FCC considered four factors: (1) \"AT&T\'s
market share\"; (2) \"the supply elasticity of the market\"; (3) \"the
demand elasticity of AT&T\'s customers\"; and (4) \"AT&T\'s cost
structure, size and resources.\" Id. p 38, at 3,293-94. This approach
was also followed in subsequent proceedings before the agency. See
Motion of AT&T Corp. to be Declared Non-Dominant for International
Service, 11 F.C.C.R. p 36 at 17,977 (1996) (\"AT&T International
Nondominance Order\"); COMSAT Corp., Petition Pursuant to Section 10(c)
of the Communications Act of 1934, as amended, for Forbearance from
Dominant Carrier Regulation and for Reclassification as a Non-Dominant
Carrier, 13 F.C.C.R. p 67, at 14,118-19 (1998) (\"COMSAT Nondominance
Order\"). Yet, in evaluating US West\'s petition, the FCC ended its
inquiry once it deemed the market share data inadequate.

Logically, for the lack of market share data to establish the lack of a
prima facie case, market share must be an essential factor, not merely
one of several factors in the determination. Our research indicates,
however, that the FCC has never viewed market share as an essential
factor in the past, and the Commission does not assert to the contrary.
In fact, the FCC acknowledges that \"the factors the Commission
traditionally considered in classifying carriers as dominant or
non-dominant include market share, supply substitutability, elasticity
of demand, and the cost structure, size and resources of the carrier.\"
FCC Br. at 4. Therefore, the FCC\'s conclusion in the Forbearance Order
that market share data is essential for a prima facie showing of
competition simply is not consistent with the agency\'s earlier
decisions.

It is also noteworthy that, in the past, the FCC has gone so far as to
view market share as irrelevant where there was other evidence that a
carrier lacked market power. In the COMSAT Nondominance Order, for
example, the FCC made a nondominance finding without \"specific data\"
on the market shares of the carrier in question or its competitors.
COMSAT Nondominance Order, 13 F.C.C.R. p 111, at 14,139.

It may be that it is reasonable for the Commission to demand a showing
on market share in every dominance inquiry. But, no matter how
reasonable it may be for the FCC to require market share data before
evaluating an incumbent local exchange carrier\'s market power, it is
not reasonable for the Commission to announce such a policy without
providing a satisfactory explanation for embarking on this course when
it has not followed such a policy in the past. The FCC \"cannot silently
depart from previous policies or ignore precedent\" as it has done here.
Committee for Community Access v. FCC, 737 F.2d 74, 77 (D.C. Cir. 1984)
(citing Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C.
Cir. 1970) (\"an agency changing its course must supply a reasoned
analysis indicating that prior policies and standards are being
deliberately changed, not casually ignored\")). No matter how reasonable
the FCC\'s position that market share data is necessary for a prima
facie showing of market competition, the FCC\'s \"conclusory statements
cannot substitute for the reasoned explanation that is wanting in this
decision.\" Arco Oil & Gas Co. v. FERC, 932 F.2d 1501, 1504 (D.C. Cir.
1991).

Accordingly, the FCC\'s Forbearance Order must be remanded so that the
Commission may \"examine the relevant data and articulate a satisfactory
explanation for its action.\" Motor Vehicle Manufacturers Ass\'n, 463
U.S. at 43. The FCC departed from its traditional non-dominance analysis
without explanation. The FCC\'s new policy that market share data is
essential to evaluate a carrier\'s market power may well be reasonable,
but until the Commission has adequately explained the basis for this
conclusion, it has not discharged its statutory obligation under the
Administrative Procedure Act. Where, as here, an agency \"has failed
\... to explain the path that it has taken, we have no choice but to
remand for a reasoned explanation.\" Tex Tin Corp. v. EPA, 935 F.2d
1321, 1324 (D.C. Cir. 1991).

C. Alleged Grant of Forbearance Under the Pricing Flexibility Order

In the Forbearance Order, the Commission stated that \"we grant the
relief requested in the forbearance petitions to the extent that the
Pricing Flexibility Order establishes a frame-work pursuant to which the
BOC petitioners may obtain relief by demonstrating satisfaction of the
competitive triggers adopted in that order.\" Forbearance Order, 14
F.C.C.R. p 2, at 19,949. AT&T and WorldCom argue that the Forbearance
Order should be vacated to the extent that the Commission \"granted\"
\"relief\" to US WEST, because US WEST\'s petition was found to be
meritless under § 10. This argument borders on being disingenuous.

When the Forbearance Order is read in its entirely, it is absolutely
clear that US WEST was granted no relief whatsoever. US WEST sought
forbearance and it was categorically denied. At the conclusion of the
Order, the Commission reminded US WEST and other BOCs that they were
eligible to apply for pricing flexibility under the Pricing Flexibility
Order:

The BOC petitioners may file petitions with the Commis-sion in
accordance with the procedures outlined in the Pricing Flexibility Order
for any market, including the markets identified in their forbearance
petitions, identifying the relief requested and demonstrating
satisfaction of the triggers adopted therein.

Id. p 2, at 19,949. Indeed, the FCC was quite candid in suggesting that
the Pricing Flexibility Order might be the preferred mechanism for
companies seeking relief from the burdens of dominant carrier status,
because \"price cap LECs are not required to demonstrate that they lack
market power in the provision of any access service to receive much, if
not all, of the pricing flexibility that the BOC petitioners seek in
their forbearance requests.\" Id. p 11, at 19,953. The Forbearance Order
does not, however, ensure US WEST any kind of entitlement to the
regulatory relief available under either § 10 of the Act or the recently
promulgated Pricing Flexibility Order. Accordingly, the claims from AT&T
and WorldCom are specious.

D. Impact of Pricing Flexibility Order on § 10 Forbearance

During oral argument, it became clear that there is some confusion over
the relationship between the mechanisms for relief afforded by § 10
forbearance and the Pricing Flexibility Order. FCC counsel went so far
as to suggest that the latter preempts the former. We reject this view.

There is no doubt that the Commission expressed great enthusiasm over
the availability of the Pricing Flexibility Order as a mechanism for
relief of the sort sought here by US WEST and other BOCs. Indeed, the
Commission suggested that might be a better mechanism for affected
companies, because

non-dominance showings \[under § 10\] are neither administratively
simple nor easily verifiable. The Commission \[bases\] non-dominance
findings on complex criteria, including market share and supply
elasticity. Market share analyses require considerable time and expense,
and they generate controversy that is difficult to resolve.

Id. p 11, at 19,953. The Commission may or may not be right in what it
surmises about the purported advantages of the Pricing Flexibility
Order; but, at least for now, these surmises are beside the point.
Congress has established § 10 as a viable and independent means of
seeking forbearance. The Commission has no authority to sweep it away by
mere reference to another, very different, regulatory mechanism.

Section 10 broadly states that the Commission will forbear from applying
any regulation or any provision of the Act to a telecommunications
carrier or telecommunications service, or class of telecommunications
carrier or telecommunications services if certain statutory
determinations are made. 47 U.S.C. § 160. The Pricing Flexibility Order
does not purport to regulate pursuant to § 10\--it is narrower in reach
and adopts different burdens of proof with respect to issues that might
be common to claims arising under § 10 or the Pricing Flexibility Order.
And, notably, in the Forbearance Order, the Commission did not claim
that the Pricing Flexibility Order would afford all of the relief
otherwise available to a petitioner under § 10; rather, the Commission
said only that \"the Pricing Flexibility Order establishes a mechanism
by which the petitioners may receive much \[not all\] of the relief they
seek\" under § 10. 14 F.C.C.R. p 36, at 19,968.

In short, the availability of the Pricing Flexibility Order as an
alternative route for seeking pricing flexibility does not diminish the
Commission\'s responsibility to fully consider petitions under § 10.
Therefore, the Commission is without authority to deny US WEST\'s
petition for forbearance because of the availability of the Pricing
Flexibility Order.

IV\. Conclusion

For the foregoing reasons, US WEST\'s petition for review is granted and
the case is remanded for further consideration by the agency. The
petition for review filed by AT&T and WorldCom is hereby denied.

[^1]: ^^ At the request of petitioner in 00-1090, the caption was
    amended to read: \"Qwest Corporation v. Federal Communications
    Commission and United States of America\". Although US West merged
    into Qwest Corporation, this court\'s opinion refers to petitioner
    as \"US West\".