Federal Communications Law Journal

Document Type


Publication Date


Publication Citation

52 Federal Communications Law Journal 239 (2000)


The FCC requires that the price of unbundled network elements be equal to the total element long-run incremental cost of production plus a reasonable contribution to common and joint costs. This pricing standard has the potential of making the telecommunications market more competitive. TELRIC prices, however, are set independently of historic costs and therefore may not compensate investors for incurred costs. Hence, incumbent local exchange carriers have been fighting its implementation. In all probability, the U.S. Supreme Court will become involved in the debate over its adoption. The Supreme Court has looked at changes in valuation methods in the past. In the abandonment of the fair value doctrine, the Court established criteria to allow a paradigm shift. This Article argues that the same conditions may now exist for TELRIC pricing. Furthermore, the Article presents data that indicates that, to date, no taking has resulted from the use of TELRIC pricing. Hence, the Court is likely to find TELRIC as a viable alternative to historic rate of return pricing.