Opinion ID: 2631065
Heading Depth: 1
Heading Rank: 9

Heading: Pricing

Text: ¶ 58 Appellants next challenge the Commission's public interest finding regarding the pricing of SBC's reclassified services. [78] We have already determined that the Commission correctly interpreted its rule to permit competitive reclassification of regulated telecommunications services without first requiring LRIC cost studies. Having so interpreted its rule, the Commission found that it would be in the public interest to place SBC's reclassified services into Basket 4 at the lower of the LRIC of the service or its existing tariff price. [79] It came to this conclusion based on its finding that the prices of some services were set many years ago and were determined at that time to be just and reasonable. Implicitly finding that some, if not all, of the existing tariff prices are less than the LRIC of the services, the Commission found that it would not be in the public interest to require those prices to increase in order for the services to be placed in Basket 4. [80] Appellants challenge this finding because setting rates below cost can have an anti-competitive effect. ¶ 59 A price floor tied to the cost of supplying a service prevents a company from lowering prices below those which its competitors can meet and still remain in business. Once competitors have been eliminated, the surviving company's prices are no longer constrained by competition. Hence, below cost pricing is ordinarily not in the public interest in the long run even if in the short run the public is shielded from a price increase. That concern is obviated in this case because the Order reiterates the Commission's previous determinations that SBC's existing prices are just and reasonable. Having previously found that SBC's prices are neither anti-competitive nor predatory, the Commission's finding that it would not be in the public interest to raise those prices is justified.