Opinion ID: 6345095
Heading Depth: 2
Heading Rank: 3

Heading: USTelecom’s Proposal

Text: Inteliquent next argues the Commission arbitrarily adopted USTelecom’s proposed rate cap despite its lack of cost justification. Inteliquent’s argument assumes the FCC must 13 adopt cost-based rates, which we have already seen is not correct. See CTA, 87 F.3d at 532, supra p. 9. The same is true of the rates Inteliquent cited in its own data as “cost-based”; those were benchmark rates, drawn from the tariffs of incumbent local service providers, and did not reflect the costs of those incumbent carriers. As noted previously, the Commission abandoned cost-based ratemaking for its current rate cap approach so that firms would have the incentive to lower their costs in order to increase their profits, which was also one of its reasons for capping rates for tandem switching. Finally, even if the FCC needed some evidence the rate cap was above providers’ costs, it reasonably relied upon evidence that many carriers already provided service at or below $0.001 per minute, and upon the overwhelming support of the numerous and diverse members of USTelecom. Inteliquent next argues the FCC, in accepting USTelecom’s proffered rate, failed to exercise its independent judgment. It is true the Commission may neither rely upon a commenter’s proposal without analyzing the support for that proposal, see City of New Orleans v. SEC, 969 F.2d 1163, 1167 (D.C. Cir. 1992), nor delegate its decision-making authority to a private party, see Texas Office of Public Utility Counsel v. FCC, 265 F.3d 313, 328 (5th Cir. 2001). Here, however, the FCC did neither. In City of New Orleans v. SEC we vacated an agency’s finding because it relied upon a submission containing “no explanation or underlying support” and did not “ascertain[] the accuracy of the data contained in the study,” which taken together suggested the agency did not engage in reasoned decision-making. See 969 F.2d at 1167. Here, in contrast, the FCC reached its decision by analyzing the various arbitrage studies and comparing the submissions of USTelecom, Inteliquent, and others. The accuracy of the data upon which the FCC relied was not questioned; indeed, Inteliquent never argues USTelecom’s members were not 14 willing to accept $0.001 per minute as the rate cap — and therefore that the information USTelecom’s members provided through their revealed preference in accepting the proposal was inaccurate. It argues instead that the FCC should not have inferred the members’ support for the $0.001 rate cap implies their costs are less than $0.001. Considering, however, that USTelecom’s members are for-profit enterprises, we can hardly imagine an inference more reasonable. To have required that the association’s proposal be supplemented with cost data from its member firms would have complicated the proceeding to no purpose. Inteliquent next argues the FCC could not adopt USTelecom’s findings because they are not representative of the industry. Specifically, Inteliquent points out the midpoint rate USTelecom proposed was based upon the experience of large carriers only. Inteliquent is correct, but USTelecom members of all sizes nevertheless agreed to the rate, which implies it was above their costs as well. Indeed, the FCC said as much at the outset of the Order, recognizing that “not all carriers have endorsed the USTelecom proposal,” but it has support of “carriers whose size and business models vary significantly.” 8YY Reform, 2020 WL 6055137, at  n.73. In addition, USTelecom adopted its suggested rate of $0.001 per minute with the support of the same incumbent carriers upon which Inteliquent’s rate study was based; in other words, Inteliquent’s rate data are no more representative of the industry as a whole. Id. Inteliquent next criticizes the Commission’s reliance upon the support of Bandwidth Technologies, another commenter, for the $0.001 rate cap on the ground that Bandwidth does not provide independent tandem switch services. As an initial matter, the petitioner overstates the Commission’s reliance upon Bandwidth’s support; the FCC pointed to Bandwidth’s 15 assent to the rate cap merely to point out that not only USTelecom’s members supported its proposal. More fundamental, Inteliquent’s assertion that Bandwidth does not provide the same kind of services as Inteliquent is not correct; it does, but it uses a lower-cost, internet-based technology. In any event, Inteliquent’s argument that its own legacy technology deserves special cost consideration conflicts with the Commission’s stated purpose of encouraging adoption of lower cost technologies; we cannot substitute Inteliquent’s preferred policy of maintaining old technology for the Commission’s contrary policy. In sum, the FCC did not delegate its decision-making to USTelecom. Nor did the FCC improperly rely upon USTelecom’s proposal despite the lack of explicit cost data supporting the proposal.