BACKGROUND - Today the U.S. Supreme Court upheld the Federal Communications Commission's (FCC) pricing scheme for total element long-run incremental costs (TELRIC). TELRIC determines prices that incumbent telephone companies like Verizon must charge for pieces of their networks they lease to competitors. The court said that the current methodology based on forward-looking costs is a permissible interpretation of the Telecommunications Act. The following response should be attributed to John P. Frantz, vice president and counselor to the general counsel for Verizon Communications.
"While this decision maintains the status quo, the FCC is currently looking at its unbundled network element policies, recognizing that a 'course correction' -- as noted by Chairman Powell -- may be necessary to encourage facilities-based competition as the Telecom Act intended. We hope that the chairman will not follow the bankrupt policies of the past but will provide leadership on this issue. While the court upheld TELRIC methodology as a legal matter, that does not mean this is the best policy for consumers or for the telecommunications industry at large."