Opinion ID: 757345
Heading Depth: 2
Heading Rank: 2

Heading: TIC Charges

Text: 54 The IXC petitioners next argue that the FCC's refusal to abolish the non-cost-based transport interconnection charge (a per-minute charge assessed on all switched access minutes) despite its adverse effect on the long-distance market is arbitrary, capricious, inconsistent with the Commission's own policy, and a violation of the District of Columbia Circuit's order in CompTel. They argue that, although the FCC has acknowledged that the TIC is not cost-based, and adversely affects the development of competition in the interstate access market, Order p 212, it has refused to move immediately to eliminate these non-cost-based transport charges and has failed to explain its reasons for not doing so. In CompTel, the District of Columbia Circuit directed the FCC to move expeditiously upon remand to a cost-based alternative to the [TIC], or to provide a reasoned explanation of why a departure from cost-based ratemaking is necessary and desirable in this context. 87 F.3d at 532. 55 Contrary to the IXCs' contention that the FCC has not made a concerted effort to determine and allocate the costs improperly included in the TIC, the Commission has found a series of service-specific costs that had been incorporated in the TIC, but that could be separated out and charged to long-distance carriers on a cost-causative basis. See Order pp 167, 170-73, 217, 219-21 (including SS7 signalling costs, p 217, multiplexing costs, p 173, and [h]ost/remote trunking costs, p 220). As to the remaining costs that could not be assigned to a particular facility--the residual TIC--the FCC implemented a plan designed to eliminate those costs as quickly as possible consistent with avoiding short-term market distortions. Id. p 234. LECs were instructed to migrate their remaining per-minute TIC charges to flat-rated pre-subscribed interexchange carrier charges, id., and to target their annual price-cap productivity adjustments to the TIC, see id. pp 234-38. The result of these regulatory changes, according to the FCC, is that the per-minute TIC charge will be eliminated in two to three years. Id. p 64. In addition, to the extent that the residual TIC raises issues concerning the jurisdictional separations process, 14 the Commission stated that it will refer such issues to a Federal-State Joint Board, as required by the 1996 Act. See id. p 213. In our opinion, the FCC has made reasonable progress toward establishing a cost-based alternative to the TIC, and, in cases where this objective has proved elusive, the FCC has explained adequately its reasons for not acting immediately. 56 The Commission explained in the Order that its goal was to establish a mechanism to reduce and eliminate the TIC in a manner that fosters competition and responds to the D.C. Circuit's remand. Id. Consistent with this objective, the agency properly adopted a number of short-term, transitional solutions to protect against needless disruption and unfairness, while pursuing its goal of moving toward cost-based rates. See, e.g., Rural Tel. Coalition v. FCC, 838 F.2d 1307, 1314-15 (D.C.Cir.1988). We conclude that the FCC's decisions temporarily to retain the TIC after reallocating identifiable costs to their particular elements, to eliminate gradually the residual TIC through, among other methods, price-cap targeting and the PICC, and to refer jurisdictional separations concerns to the Joint Board are not arbitrary, capricious, inconsistent with the agency's policies, or in violation of the District of Columbia Circuit's CompTel order.