The Economics of the Supreme Court's Decision on Forward Looking Costs

In May 2002, the Supreme Court upheld the rules promulgated by the Federal Communications Commission (FCC) to implement provisions in the Telecommunications Act of 1996 (the Act) regarding mandatory resale of the components of local telephone networks. This article explains the background of the forward-looking pricing rules adopted by the FCC, the economic rational for their use, and the implications of the Court's ruling for the future of local telecommunications competition