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Communication Law Keyed to Benjamin, 2nd Ed.
Verizon Communications Inc. v. Federal Communications Commission
Citation:
535 U.S. 467 (2002)Facts
The Telecommunications Act of 1996 aimed to end local telephone monopolies by requiring incumbent carriers to share their networks with new competitors. The Act established three entry strategies for competitors: building their own networks and interconnecting with incumbents, reselling incumbents’ retail services, or leasing unbundled network elements from incumbents. For the third strategy, the Act required rates to be “based on the cost” of providing the element, but “determined without reference to a rate-of-return or other rate-based proceeding.” The FCC implemented this through its TELRIC methodology, which based rates on the cost of an efficient network using current technology rather than incumbents’ historical investments. The FCC also established rules requiring incumbents to combine network elements for competitors when requested. Incumbent carriers challenged these rules, arguing that TELRIC’s forward-looking approach departed from traditional cost-based ratemaking and that the combination rules exceeded the FCC’s statutory authority.
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