TELRIC pricing was originally adopted at a time when U.S.
TELRIC eludes the problems caused by the distinction between fixed and
The FCC's rule adopting
TELRIC was initially challenged in
The place to begin in defining
TELRIC is with the regulation itself, (47) and the FCC's initial Report and Order setting forth
TELRIC.
(88) The court warned the FCC not to use an open-ended standard for assessing the viability of competition, particularly in light of the court's apparent disdain for access pricing decisions using
TELRIC that "cut further into ILEC revenues in areas where ILECs' service is mandated by state law--and mandated to be offered at artificially low rates funded by ILECs' supracompetitive profits in other areas." (89)
One has been that unbundling of network elements at
TELRIC prices would lower incentives for investments in facilities to provide advanced services: incumbents' incentives would be lower if
TELRIC prices do not account for the risk associated with new investments, and entrants might wait to invest until after they had the opportunity to develop experience with the successful investments of incumbents through purchase of unbundled elements.
Second, the FCC pre-empted state regulatory discretion over pricing to the extent of mandating that unbundled network elements be priced on the basis of "forward looking" incremental costs (dubbed "Total Element Long-Run Incremental Cost" (
TELRIC)).
Specifically, this allows the FCC to require that the state regulatory commissions use total element long-run incremental cost (
TELRIC), the FCC's favored methodology in setting prices for interconnection and network elements.
In contrast, in proceedings to set prices, terms, and conditions of mandatory access to local telecommunications networks under the Telecommunications Act of 1996, entrants and regulators (including the Department of Justice and the Federal Communications Commission) advocated regulated prices set at total element long-run incremental cost (
TELRIC) plus a reasonable share of forward-looking common costs.
8 The FCC and state regulatory commissions have interpreted these words to mean Total Element Long Run Incremental Cost (
TELRIC), which is the forward-looking, long-run, (minimized) economic cost of an unbundled element and includes the competitive return on capital.
against their attacks on
TELRIC (total element long-run incremental cost
The agency ordered incumbent providers to unbundle the network elements underlying virtually every retail service that they offered at prices based on the suspect "
TELRIC" costing methodology designed to produce artificially low access rates.