Inteliquent, Inc. v. FCC, No. 20-1471 (D.C. Cir. 2022)
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Petitioner challenged the Federal Communication Commission’s (“FCC”) rate cap on the provision of tandem switch services. To reduce the incentives for regulatory arbitrage and to encourage companies to transition to lower-cost Internet Protocol technologies, the FCC set a transitional tariffed rate cap of $0.001 per minute for tandem switch services. Inteliquent argued the Commission: (1) ignored its evidence supporting a rate cap of $0.0017 per minute, (2) impermissibly delegated its rate cap decision to USTelecom, a trade association, and/or (3) set the rate cap below Inteliquent’s or other providers’ costs.
The DC Circuit denied Petitioner’s petition for review holding that the FCC Order setting the rate cap for tandem switching services at $0.001 per minute was not arbitrary and capricious. The court reasoned that incentive-based regulation need not accommodate the high-cost practices of every regulated firm, particularly when exigent circumstances, in this instance widespread arbitrage, provide the impetus for the agency’s order. The court explained that here Inteliquent’s submission did not show the Commission’s rate cap was below cost for itself or for any other provider. The court concluded that Inteliquent’s petition rests upon weak data and an outdated approach to price regulation.
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