Opinion ID: 769026
Heading Depth: 2
Heading Rank: 3

Heading: Marginal Payphone Methodology

Text: 28 The FCC based its calculations on the number of calls from a marginal payphone--a payphone that breaks even--to ensure fair compensation under 276(b)(1). The Commission wanted to ensure the widespread deployment of payphones as required by the statute, and declined to use average payphone call volume because that would render below average payphones unprofitable. Third Order, 14 F.C.C.R. 2545 p 141. 29 To determine the number of calls a marginal payphone receives, the FCC requested that the RBOC Coalition provide two figures: (1) the number of calls placed at a phone that does not pay rent, and (2) the number of calls made from a location that begins to pay rent. The two numbers reported back were 414 and 464, with a midpoint of 439 which the FCC adopted. 30 The IXCs fault the FCC for relying on the RBOC Coalition data. They claim that the data cannot be used because the RBOC Coalition did not explain their underlying methodology for developing the data. In City of New Orleans v. SEC, 969 F.2d 1163 (D.C. Cir. 1992), we found error in an agency's reliance on estimates which had no explanation or underlying support. Id. at 1167. However, that is not the case here. The RBOC Coalition did explain how it developed the data, and noted certain difficulties it had in doing so. For example, it pointed out that average revenue depends in part on factors other than call volume, such as the mix of types of calls and the maintenance expense of specific locations. It explained its attempt to determine the average daily revenue needed to decide to place a new payphone and the average revenue needed to begin paying commissions on such a phone, and then determined what mix of calls will produce that revenue. The RBOC Coalition also explained that the final numbers were a weighted average of numbers submitted by members of the Coalition. While the data submitted by the RBOC Coalition could be subjected to various challenges, we cannot say that it was unreasonable or arbitrary for the FCC in the exercise of its expertise to rely upon it. See Madison Gas and Elec. Co. v. SEC, 168 F.3d 1337, 1344 (D.C. Cir. 1999).