Opinion ID: 6345095
Heading Depth: 2
Heading Rank: 4

Heading: Cost-justification of the Rate Cap

Text: Inteliquent and the amici argue broadly that the rate cap the FCC has adopted is below some tandem switch providers’ costs and therefore unreasonable. It is true, as Inteliquent notes, that the FCC may not ignore “costs that the Commission acknowledges to be legitimate,” Global TelLink v. FCC, 866 F.3d 397, 413 (D.C. Cir. 2017), but as discussed above, other considerations may justify its departure from cost-based rates, see CTA, 87 F.3d at 532. Next, as the FCC and USTelecom point out, Inteliquent never provided evidence that the rate cap is below its costs, nor does it claim that now. Instead, it argues the rate cap is below its current weighted national average rate, but it produced no authority suggesting it is entitled to that rate. Therefore, it was reasonable for the Commission to conclude that Inteliquent’s data did not prove it needed to continue charging its current rates to remain profitable. 16 Inteliquent then argues that the agreement of USTelecom’s membership to a $0.001 per minute rate cap does not demonstrate that the rate is above-cost because its members may cross-subsidize by shifting costs to “tandem connection charges.” Although that is possible, there is no record evidence that USTelecom’s members will cross-subsidize tandem switch services capped at $0.001. In addition, the FCC points out that the independent tandem switch providers among USTelecom’s members, which could not cross-subsidize, nonetheless agreed to the rate cap. Finally, Inteliquent argues the rate cap is below-cost for some rural carriers, pointing to a letter in the record that so asserts. As the Commission points out, however, the letter does not contain any supporting data and Inteliquent made no effort to reconcile the letter with the support of USTelecom’s rural members. Finally, even if Inteliquent is correct that the rate is below cost for a small number of providers, Inteliquent cites no precedent, and we are aware of none, requiring the FCC to set a rate cap above the costs of the highest cost provider.