The U.S. Supreme Court Wants CLECs to Make More Money with UNE-P!


On Monday, May 13, 2002, The U S Supreme Court ruled against the ILECs, (Verizon and the Bell Companies), and in favor of the FCC and CLECs, on every issue, validating the FCC's TELRIC methodology in setting competitive rates for UNE-P! This decision was in response to a number of consolidated lawsuits filed by the ILEC's which were heard together in a case that became known as Verizon v. FCC et al, in which incumbent local exchange carriers (ILECs) had challenged the FCC's TELRIC pricing methodology and certain rules requiring ILECs to combine UNEs for requesting carriers. The FCC and CLECs asked the Court to reinstate the TELRIC methodology, which had been invalidated by the Eighth Circuit because it was based on hypothetical, rather than actual costs.

These parties also sought reinstatement of certain FCC rules requiring ILECs to combine UNEs. TELRIC: ILECs sought to overturn an Eighth Circuit holding that "forward-looking cost" is consistent with ยง252(d)(1) of the Telecommunications Act. They sought UNE pricing based on their historical, or embedded, costs. The ILECs also sought to overturn the Eighth Circuit's conclusion that the use of TELRIC pricing is not an unconstitutional taking of property. The ILECs attacked TELRIC on several grounds, including: (1) TELRIC is inconsistent with the plain meaning of the word "cost"; (2) TELRIC pricing creates disincentives for carriers to build facilities to compete with the ILEC; and (3) TELRIC is too complicated to be practical. The U S Supreme Court rejected all three of these ILEC arguments! The FCC and CLECs, on the other hand, sought review of the Eighth Circuit's invalidation of the TELRIC methodology because of its foundation on hypothetical costs of an efficient provider. The Supreme Court affirmed the Eighth Circuit on the ILECs' issues, and reversed the Eighth Circuit's invalidation of TELRIC. Read more about the Supreme Court's decision »