Opinion ID: 380921
Heading Depth: 2
Heading Rank: 4

Heading: The Purchase for Resale, or Sharing, of WATS

Text: 83 In its 1976 WATS decision the FCC did not address whether WATS should be subject to purchase for resale or sharing, because that issue was the focus of another proceeding. 99 Shortly thereafter, in a separate decision, the FCC found unjust and unreasonable carriers' tariffs prohibiting the purchase for resale or the sharing of private line services. 100 In that decision the FCC recognized that outlawing such prohibitions might lead to a further equalization of service and rates between large and small communication users. 101 The FCC refused to extend that determination to tariffs prohibiting the purchase for resale or sharing of WATS, however, on the ground that it might result in a significant shift of MTS users to the WATS offering. 102 The FCC explained: 103 84 . . . This shift would decrease MTS revenues, possibly requiring a rate increase for MTS, and might lead to an adverse impact on the revenue requirements for intrastate service as a result of changes in the separations data. Moreover, both MTS and WATS are switched services, with characteristics distinct from those of private line service, and we are not prepared to warrant that removal of the restrictions on WATS would lead to the benefits which we foresee for private line service (see paragraphs 75-88, infra ). Accordingly, we will not require removal of the restrictions on sharing and resale of WATS. In view of this action, we are not reviewing AT&T's present practices under and interpretation of its MTS and WATS tariffs. 85 That decision was affirmed in all respects by the Second Circuit, 104 but the treatment of WATS in the FCC's opinion was apparently not an issue raised in the petition for review before that court. 86 In its 1977 WATS opinion the FCC noted that specialized carriers such as MCI have repeatedly been authorized to provide only private line services and reaffirmed its decision not to require the resale of WATS (subject to the possibility of later reconsideration). 105 The mere fact that resale has not been allowed in the past, however, is not a reasoned explanation for not allowing it now. 87 The FCC viewed allowing resale or sharing of private line services as principally promoting customer cost savings. That same rationale may be applicable to the resale or sharing of WATS. Indeed, the FCC's 1976 determination not to allow the resale or sharing of WATS because that would cause greater use of it and less of MTS seems outdated in view of the FCC's 1978 determination that WATS and MTS are like communication services between which carriers may not discriminate in rates and practices without justification. If they are similar services, and if rates for them must be the same (or, if different, justified on the basis of differences in service or other considerations), then the possibility of an increase or decrease in the usage of one or the other seems perhaps irrelevant. 88 On July 27, 1979, MCI petitioned the FCC to begin a proceeding designed to consider the propriety of the current tariff restrictions on sales for resale and shared use of common carrier communication services, including WATS. On February 25, 1980 the FCC issued a broad notice of proposed rulemaking on that question and related issues. 106 It seems that a WATS sale for resale requirement or the sharing of WATS might well alleviate some of the alleged noncompetitive aspects about the tariffs now in effect. But we leave resolution of that question initially to the FCC.