Opinion ID: 185358
Heading Depth: 3
Heading Rank: 1

Heading: Immediate Pricing Flexibility

Text: 13 The Order provides immediate pricing flexibility for LECs in three important respects: (1) LECs may introduce new services subject to a streamlined approval process; (2) LECs may offer deaveraged rates for services in the trunking basket; and (3) interstate interLATA and intraLATA toll services are removed from price cap regulation. Order p p 34-66. Petitioners challenge the first and second changes as unlawful. 14 New services are those services that, by definition, expand[ ] the range of service options available to consumers. Id. p 37. Previously, an LEC needed a waiver to offer a new switched access service that did not fit into the preexisting rate structure. The LEC was required to demonstrate that such a waiver was in the public interest. Finding that existing new service rules impede the introduction of new services, id. p 37, the FCC Order eliminates the required public interest showing and allows LECs to file tariffs for new services with only one-day's notice. LECs are still prohibited from offering new services outside of price cap regulation. Id. p 43. 15 Under the FCC's regulations, price cap LECs are generally required to geographically average charges for access elements across a given study area (typically a state or region). 47 C.F.R. § 69.3(e)(7). Deaveraging--the disaggregation of charges for specific service access elements--was only allowed in up to three zones per LEC and only subject to certain conditions, such as intensity of use. Under the new rules, LECs may define up to seven zones subject to the requirements that (1) each zone other than the highest price zone accounts for at least fifteen percent of the LEC's trunking basket revenues in the study area, and (2) annual price increases in a zone cannot exceed fifteen percent. Order p 62. According to the FCC, this new flexibility enhances the efficiency of the market for those services by allowing prices to be tailored more easily and accurately to reflect costs and, therefore, promotes competition. Id. p 59. 16 The Pricing Flexibility Order also removes interLATA and intraLATA toll services from price cap regulation upon an LEC's implementation of toll dialing parity. See id. p 45. Toll service is telephone service between stations in different exchange areas for which there is made a separate charge not included in contracts with subscribers for exchange service. 47 U.S.C. § 153(48). When an LEC provides toll dialing parity, it permits its local service customers within a given calling area to make a local telephone call notwithstanding the identity of the customer's or the called party's telecommunications service provider. 47 C.F.R. § 51.207. LECs are required to implement toll dialing parity throughout their service areas. See 47 C.F.R. §§ 51.205, .209, .211, .213. Upon meeting this requirement for all interLATA and intraLATA toll services, an LEC's provision of these services is removed from price cap regulation. This portion of the Pricing Flexibility Order is not challenged in this case.