Opinion ID: 769026
Heading Depth: 2
Heading Rank: 1

Heading: Bad Debt

Text: 19 As we noted above, the Commission declined to add any amount to the coinless call fee for bad debts associated with the collection of coinless call fees. The PSPs, before the FCC, advanced arguments based on their own alleged bad debt experience, and now argue that the FCC should have been able to calculate some amount for inclusion in the coinless call rate based on that evidence. Cross petitioners argued before the Commission, and here, that the debts on which the proffered evidence was based were either the result of PSP negligence in collection, or do not genuinely represent bad debt losses at all, but only unresolved billing disputes. The Commission concluded that it had insufficient information about the levels of bad debt to enable it to rationally calculate an appropriate figure for inclusion. 20 Specifically, the Commission found that the data regarding uncollected per-call compensation was not reliable enough to predict accurately future levels of bad debt. See Third Order, 14 F.C.C.R. 2545 p 162. The Commission noted that it could not determine what percentage of uncollected per-call compensation was the result of PSP billing errors (i.e., not charging the correct IXC), as opposed to deadbeat carriers (i.e., the appropriate party is billed but refuses to pay). The Commission further noted that providing an improperly computed allowance for uncollectibles could result in double recovery if the PSP ultimately collected from the delinquent carrier. That is, the PSP would collect once from the IXC and once from the consumer (through the bad debt cost element included in the higher compensation amount). Finally, the Commission determined that a bad debt allowance was unnecessary because the agency had ensured in the Third Order that PSPs will receive interest on late payments for as long as such payments are overdue. In short, with insufficient information, the Commission found that it would be unwise to establish a cost element for bad debt at this time.Id. 21 The PSP petitioners argue that the Commission was required to include some estimate of bad debt in its calculation and that the failure to do so effectively determin[es] that dial-around uncollectibles would be zero. (The PSPs rely on some of the same data that the Commission deemed not sufficient to allow a rational decision.) We disagree. 22 Perhaps the FCC could have formulated some best-guess figure for bad debt, but we cannot require an agency to enter precise predictive judgments on all questions as to which neither its staff nor interested commenters have been able to supply certainty. Where existing methodology or research in a new area of regulation is deficient, the agency necessarily enjoys broad discretion to attempt to formulate a solution to the best of its ability on the basis of available information.Industrial Union Dep't, AFL-CIO v. Hodgson, 499 F.2d 467, 474-75 n.18 (D.C. Cir. 1974) (citing Permian Basin Area Rate Cases, 390 U.S. 747, 811 (1968)); see also FCC v. National Citizens Comm. for Broad., 436 U.S. 775, 813-14 (1978).That is exactly the situation the FCC faced here. The agency was presented with bad debt data culled from a relatively short historical period, while knowing that some of the factors affecting that data may change in the future. Any figure that it might have chosen to represent bad debt would likely be challenged on that and other similar evidentiary bases. We conclude that it was prudent and reasonable for the Commission to decide that, on balance, the existing bad debt data was not reliable enough to warrant any educated guess as to future bad debt percentages. It may not have been the only decision it could have made, but it was a reasonable one under the circumstances. 23 In upholding the reasonableness of the Commission's exclusion of the bad debt element from coinless call cost, we are mindful of the nature of the debt involved. As intervenor long distance carriers remind us, the [f]ailure to pay the required compensation is a violation of FCC rules for which the carrier is subject to damages as well as fines and penalties. See 47 U.S.C. §§ 206-08, 501-03 (1994). The plight of the allegedly uncompensated payphone service provider does not equate to that of a merchant pursuing deadbeat customers in the marketplace. Furthermore, for any harm that may be done to the PSPs, they are not left without remedy. After noting that it was unable to generate a sufficient record on this question for issuing this Order, the FCC invited the parties to file petitions for clarification on the bad debt issue.Third Order, 14 F.C.C.R. 2545 p 162. The RBOC Coalition has made such a filing; the Commission has received that petition; sought and received comments; and, is considering the issue. See Common Carrier Bureau Seeks Comment on the RBOC/GTE/SNET Payphone Coalition Petition for Clarification Regarding Carrier Responsibility for Payphone Compensation Payment, CC Docket No. 96-128, DA 99-730 (1999), available at 1999 WL 335783.