Opinion ID: 185358
Heading Depth: 2
Heading Rank: 2

Heading: Immediate Pricing Flexibility for New Services

Text: 58 Petitioners also challenge the FCC's decision to grant LECs immediate pricing flexibility for new services. Prior to the new rule LECs were required to tariff new services fifteen days in advance and to demonstrate that prices were reasonable given the carrier's direct costs of providing the service. As a result of the FCC's Pricing Flexibility Order, LECs may tariff with only one day's notice and (with the exception of loop-based services) need not show that the prices for new services bear any relation to costs. As noted above, the FCC granted pricing flexibility for new services because it found that existing regulatory requirements delayed the development and introduction of new services to the detriment of consumers. See id. p 37. 59 Petitioners contend that the FCC's decision to grant immediate pricing flexibility for new services is unlawful because it compromises the Commission's fundamental obligation to ensure that rates are just and reasonable. Section 201(b) of the Communications Act provides that [a]ll charges ... shall be just and reasonable, and any such charge ... that is unjust or unreasonable is declared to be unlawful. 47 U.S.C. § 201(b). Citing the Second Circuit, petitioners argue that there is no authority for the proposition that the FCC may abdicate its responsibility under section 201(b) to regulate dominant carriers so as to ensure just and reasonable rates. AT&T v. FCC, 572 F.2d 17, 25 (2d Cir. 1978). 60 Contrary to petitioners' claims, there is nothing inherently unreasonable in the Commission's shift to streamlined review of new services. Cf. Nat'l Rural Telecom Ass'n v. FCC, 988 F.2d 174, 185 (D.C. Cir. 1993) (In light of the FCC's objective of eliminating the filing burdens of both itself and the carriers, and its reasonable finding that caps and bands render the prospect of unreasonable filings sufficiently improbable, we find streamlined review to be reasonable.). The Commission is free to reduce regulatory requirements where, as here, it finds that less regulation will better serve its statutory goals. As we noted above, [t]he FCC's judgment about the best regulatory tools to employ in a particular situation is ... entitled to considerable deference from the generalist judiciary. Western Union Int'l, 804 F.2d at 1292. Here, the Commission determined that consumers are better served by loosening the government's grip on new service offerings and prices. 61 Petitioners further argue that insofar as new services represent significant technological advances over existing services, failure to offer that service to consumers or competitors at a reasonable price can produce competitive harm. Although the FCC did not remove new services from price cap regulation altogether, petitioners contend incumbent LECs may nonetheless incorporate a new service into the price caps at an inflated monopolistic price, thereby inflating the overall price cap and enabling LECs to raise the prices of other services. The FCC also rejected this contention, noting that price caps are determined on a revenue-weighted basis. Therefore, should an LEC offer a new service at an inflated price, it would have little revenue weight so it would not enable the LEC to inflate the rates for other services. 62