Opinion ID: 380921
Heading Depth: 1
Heading Rank: 2

Heading: the 1977 and 1978 fcc decisions

Text: 26 Because of the requirements of the FCC's 1976 TELPAK decision on how costs for each service line should be determined, AT&T requested and was given an extension of time in which to file tariffs which would conform to the FCC's 1976 WATS decision. 26 Accordingly, AT&T filed further WATS tariff revisions in April 1977. 27 The FCC, however, again found AT&T's submissions unacceptable. 27 One concern of the FCC was whether WATS and MTS are like communications services under the statute; 28 if so they may not be treated differently without justification. 29 Thus, the FCC instituted a separate proceeding to determine whether WATS and MTS are competitive services. That proceeding later assumed substantial significance. 28 The projected rate of return for outward WATS in AT&T's 1977 filing was 19 percent with 11.6 percent for inward WATS. Many WATS customers opposed the 1977 revisions as setting rates too high, and common carriers in competition with AT&T complained that the rates were too low. Thus, MCI, as a competitor of AT&T, requested a moratorium on AT&T's expansion of WATS to ease the effect of what it terms AT&T's anticompetitive tariffs. 30 The FCC summarily rejected AT&T's 1977 tariff revisions, finding ten aspects of that filing which did not conform to the FCC's 1976 WATS decision. 31 Additionally, in the FCC's view the 1977 filing failed in nine respects to satisfy the FCC's 1976 TELPAK decision. 32 29 The FCC decided to summarily reject AT&T's filing rather than to conduct further hearings at that point, because the FCC felt that the issues involved had already been examined in detail: 33 30 Suspension and hearing is clearly not indicated here. We are rejecting the WATS tariff filing on numerous independent grounds which have already been the subject of prior Commission hearings and decisions, as cited in the above discussion. Relitigation of these matters in the context of this tariff filing, particularly when the material filed perpetuates deficiencies in ratemaking documentation and methodologies already specifically determined in prior decisions after hearings, would be a waste of the resources of both this Commission and other parties. 31 The net result of this decision was to keep AT&T's previous WATS tariff revisions in effect. 32 The FCC rejected MCI's allegations that AT&T's WATS tariff was predatory and anticompetitive as conclusionary and (because they) lack specificity, although it agreed to consider MCI's charges at a later date. 34 Additionally, the FCC rejected MCI's request that it at least be allowed to purchase for resale, or otherwise share, WATS. A recent FCC decision had addressed the issue and allowed the resale of some AT&T communications services, but WATS was specifically excluded from that holding. 35 Thus, the FCC determined not to order sharing and allow resale of WATS in the context of this particular tariff filing which we are rejecting in any event. 36 33 AT&T was required to consult with the FCC's Common Carrier Bureau within 30 days and the Bureau staff was instructed to meet with AT&T to provide guidance in developing a new WATS filing. 37 Thirty days after that meeting AT&T was to submit a proposed schedule for conducting studies of peak hour WATS usage and for ultimately filing lawful WATS tariffs. Additional proposals for the conducting of cross-elastic demand studies on MCI's charges of predatory and anticompetitive conduct were ordered to be submitted in another 60 days. Without discussion, the FCC deferred pending further Commissioner Order 38 the effective date of its 1976 WATS decision. 34 Commissioner Fogarty filed a separate statement describing the results of the latest round of proceedings as frustrating and inconclusive. 39 He noted that the FCC's rejection of AT&T's tariff on 19 separate grounds put the FCC no closer to ending the proceeding than when it began, and concluded: 40 35 . . . It is difficult for me to see how the public interest is served by the seemingly endless regulatory meandering. 36 I therefore endorse wholeheartedly the instructions of the staff of the Common Carrier Bureau to meet with AT&T to provide guidance in developing a new WATS filing. I think it essential, however, that the Commission itself exercise more active oversight in these tariff proceedings. I would, in fact, strongly urge that a supervisory Commissioner or committee of Commissioners be designated to oversee these consultations between the Bureau staff and AT&T to ensure the expeditious filing of new WATS tariff schedules in full compliance with the specific requirements of this Order. 37 In a motion for reconsideration, MCI moved the FCC to restore the pre-1974 WATS rates by requiring AT&T to refile its superseded 1973 tariffs. The FCC's 1978 decision on reconsideration denied that request on the same grounds that the FCC gave in 1976 for not prescribing interim WATS rates: 41 38 We shall also deny MCI's and Conrail's request for a roll back of WATS rates to pre-1974 levels, i. e., the tariff in effect prior to the filing of Transmittal No. 11935 (which was found unjustified and therefore unlawful in Docket No. 19989, WATS, supra ). We had hoped the Docket No. 19989 record would be sufficient to permit us to affirmatively approve AT&T's tariff filing or prescribe alternatives. However, the record was insufficient to allow us to approve or prescribe rates and we found a roll-back could not serve the public interest basically because of the confusion it would cause for subscribers. See 59 FCC2d at 709. As to MCI's instant roll back request we continue to believe that such a temporary roll back, pending submission of a revised filing, could create substantial confusion and administrative difficulties for existing and potential WATS subscribers. 39 As an alternative to restoring the pre-1974 rates, MCI's petition for reconsideration before the FCC also asked that AT&T be precluded from providing WATS to new customers or expanding the services it provides existing customers. The FCC also rejected that request: 42 40 . . . We shall also deny MCI's alternative request that we prohibit AT&T from expanding WATS services while the present unjustified WATS tariffs remain effective. Although we are concerned that AT&T offers and continues to expand WATS services based on rates that have been found unjustified and therefore unlawful, there appears to be no other reasonable alternative at this time. The alternative suggested by MCI would have the effect of depriving potential users of any WATS service at all, while existing users would be able to retain their service at present levels. This substantial denial of an authorized service to a large portion of the public could be considered an imposition of a discrimination among users in violation of the Communications Act. 41 On the same day it denied MCI's request for reconsideration of its 1977 WATS decision, the FCC found WATS and MTS to be like communication services under the statute, in the separate proceeding the FCC began as the result of its 1977 WATS decision. 43 Because of that finding, the FCC concluded in its decision on reconsideration that AT&T's asserted cost savings for WATS would subsequently have to be justified in detail. 44 42 Since we have found MTS and WATS services to be like services in Docket No. 21402, to aid the Commission in determining whether any rate differentials between MTS and WATS services are justified under Section 202(a), AT&T is now required in the next filing to justify its conclusory assertions of cost savings by itemizing and quantifying them on a dollar basis, and then showing clearly that such savings are logically and causally related to the actual rates filed for WATS services relative to MTS. 43 Again because of its like service finding, and its resultant concern that low WATS rates might unduly increase the demand for WATS as compared with MTS and result in more WATS equipment being built and utilized while MTS equipment is under-utilized, the FCC in its 1978 decision denying reconsideration emphasized its urgent need for data to determine whether WATS and MTS rates overly encourage peak usage, thus requiring excessive plant additions and costs. 45 The FCC therefore required AT&T to file alternative proposals for studies of peak usage. The FCC also ordered AT&T to institute a 'tracking' process to compare estimated (WATS demand) market results with actual historical results, as well as to make future projections (ex ante  studies) of the data AT&T will rely on in revising its WATS tariffs. 46 The FCC stated that its goal is to require AT&T to formulate verifiable predictions (of WATS market demand) by a means or method which is also verifiable. 47 44 The FCC set March 1, 1979 for AT&T's filing of proposals called for by the 1978 order, with the date for filing a replacement tariff to be determined as appropriate by the (FCC's Common Carrier) Bureau. 48 AT&T submitted proposals on the date the FCC set and again on May 1, 1979. The FCC gave public notice of AT&T's proposals on June 15, 1979 and asked for comments which several interested parties, including MCI, filed. 49 As we understand it, that is where this case now stands at the FCC. 50 45 In bringing the FCC's 1977 and 1978 decisions here for review MCI alleges that the WATS rates AT&T now charges are predatory in effect and intent 51 i. e., too low 52 and that MCI is consequently losing business in the long distance telephone services it provides in competition with WATS. There is a clear pattern of AT&T filings of unsupported WATS tariffs, MCI charges, which when allowed to remain in effect for prolonged periods by the FCC give AT&T an unjustified competitive advantage. 53