Opinion ID: 185358
Heading Depth: 2
Heading Rank: 3

Heading: Rate Deaveraging for Transport Basket Services

Text: 63 As part of the Pricing Flexibility Order, the FCC gave LECs additional flexibility to deaverage rates for transport basket services, subject to certain limitations, because averaged rates have the potential to create a pricing umbrella for competitors that would deprive customers of the benefits of more vigorous competition. Order p 60. The FCC believes that deaveraged rates promote efficiency, and existing regulations discouraged carriers from pursuing deaveraged rates. Petitioners challenge this decision on the grounds that allowing rate deaveraging will result in predatory pricing and cross-subsidization. In particular, petitioners contend that LECs will use this new pricing flexibility to lower their transport rates in competitive markets and increase their rates where competition is minimal. 64 Merely because WorldCom disagrees with the FCC's conclusion that deaveraging rates will produce more consumer benefits than maintaining the existing regulatory structure is no reason for this court to strike down the FCC's decision. As noted above, the FCC's policy judgments are entitled to due deference from this court so long as the agency's conclusions are reasonable and supported by substantial evidence, and the agency complies with the applicable procedural requirements. As above, the FCC's decision with regard to deaveraging rates meets this minimal test. 65 Petitioners' concerns were raised by both AT&T and WorldCom during the notice and comment period, were considered by the FCC, and rejected. The FCC concluded that petitioners' fears are exaggerated, and there is no basis upon which this court could conclude that this determination was arbitrary, capricious or otherwise contrary to law. Indeed, there is a consensus among commentators that predatory pricing schemes are rarely tried, and even more rarely successful. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 589 (1986). Moreover, the FCC took specific steps to guard against the possibility of anticompetitive conduct. In particular, the Order limits annual price increases within pricing zones to fifteen percent, and the annual increases in the study area are limited to five percent. See Order p 63; 47 C.F.R. § 61.47(e). According to the Commission, this safeguard ensures that incumbent LECs cannot define zones that are, for all practical purposes, specific to particular customers. Order p 62. Finally, LECs can still be subject to prosecution should they engage in predatory behavior. After thorough review, the FCC considered these safeguards to be sufficient in this instance, and we can find no reason to upset that result.