$//MO&O; WU - TWX/Telex; CC Dkt. 78-97; Phase Iⅈ FCC 94-351 //$ $/ 47 U.S.C. Sections 154(i), 222(e) /$ TRANSMITTED FOR FCC RECORD ONLY Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. FCC 94 - 351 In the Matter of ) ) WESTERN UNION TELEGRAPH CO. ) CC Docket No. 78-97 ) (Phases I and II) Revisions to Tariff F.C.C. Nos. 240 ) and 258 filed with Transmittal No. ) 7346; Revisions to Tariff F.C.C. Nos. ) 268 and 269 filed with Transmittal ) Nos. 7347 and 7348; Revisions to ) Tariff F.C.C. Nos. 229, 240, 254, 255, ) 258, 260, 263 and 268 filed with ) Transmittal No. 7417 ) ) Interconnection Arrangements ) CC Docket No. 82-122 Between and Among the Domestic and ) International Record Carriers ) MEMORANDUM OPINION AND ORDER Adopted: December 28, 1994 ; Released: January 5, 1995 By the Commission: I. INTRODUCTION 1. In TRT Telecommunications Corp. v. FCC, 857 F.2d 1535 (D.C.Cir. 1988) (Remand Order), the Court remanded to this Commission "for further consideration and explication" an Order that granted, in part, a petition filed by the Western Union Telegraph Company (Western Union). In the Order remanded by the Court, the Commission directed interconnected carrier parties (ICPs) to pay Western Union the difference between the discounted rates the ICPs had actually paid and the full public rates subsequently prescribed by the Commission for interconnected telex and TWX service for the period from January 1, 1978 to July 24, 1979. The Commission also required the ICPs to pay interest on these amounts. The Remand Order dealt solely with rates for outbound telex and TWX services, which were subject to Section 222 of the Communications Act, 47 U.S.C.  222. Rates for inbound telex and TWX service, which we reviewed under Sections 201-205 of the Act, are not at issue here. For the reasons stated below, we now affirm the conclusions reached in the Reimbursement Order. 2. Soon after the Remand Order was issued, the Court at the Commission's request remanded a separate reimbursement claim arising out of the proceedings in Docket 78-97, Phase II, and CC Docket No. 82-122, which implemented the interconnection provisions of the Record Carrier Competition Act of 1981 (RCCA). As it did in Docket 78-97, Phase I, the Commission ordered the ICPs to pay Western Union the difference between the discounted amounts the ICPs had actually paid and the full public rates subsequently ordered by the Commission for interconnected Telex and TWX service, but with certain adjustments. The Commission also required the ICPs to pay interest on these amounts. The Commission sought, and was granted, a voluntary remand to permit the Commission to give further consideration to the decisions under review in light of the Court's opinion concerning Docket 78-97, Phase I in the Remand Order. For the reasons stated below, we now affirm our previous decisions in Phase II of this proceeding. II. BACKGROUND 3. Telex and TWX services allow subscribers to communicate with each other using teletypewriters. During the period at issue in this proceeding, Western Union provided facilities for domestic telex and TWX messages and the ICPs provided connections used for international telex and TWX traffic. In order to send a message overseas from a domestic point a subscriber used Western Union's facilities to access the international network. Both phases of CC Docket No. 78-97 deal with the proper rates for ICP-interconnected telex and TWX services. A. CC Docket No. 78-97, Phase I 4. Prior to 1973, contracts between Western Union and the ICPs specified the rates the ICPs paid Western Union for interconnection with Western Union's domestic telex and TWX network. Under these contracts the ICPs paid Western Union rates for telex equal to the rates Western Union charged the general public (the public rates). The ICPs paid rates for TWX that were 27 percent lower than the public rates. When these contracts expired, Western Union informed the ICPs that they would be charged public rates for TWX as well as for telex. The ICPs objected to this arrangement, however, and Western Union and the ICPs negotiated settlement agreements under which Western Union charged the ICPs 5.5 percent less than the public rates for both telex and TWX service. These agreements expired December 31, 1977. 5. The dispute at issue in this proceeding arose when Western Union filed tariff revisions in December 1977 in anticipation of the expiration of the settlement agreements. One set of tariff revisions increased the public rates for telex and TWX, and another set of revisions set rates for the ICPs for both telex and TWX equal to the public rates. In March 1978, the Commission initiated an investigation of the proposed increase in Western Union's public rates, suspending them for the statutory 5-month period. In a separate Order released in May 1978, the Commission rejected these tariff revisions as they applied to the ICPs' outbound rates and added to the ongoing investigation of Western Union's public rates the question "[w]hat formula for the division of charges for outbound [ICP]-interconnected Telex and TWX services should the Commission prescribe under Section 222(e) of the Act?" 6. On July 24, 1979, an administrative law judge (ALJ) ordered the ICPs to pay Western Union prospectively the public rates for outbound telex and TWX services. This Interim Prescription Order did not decide, however, what rates should have applied during the period from January 1, 1978 to July 24, 1979, when neither a carrier agreement nor a Commission prescription was in effect. 7. Subsequently, in the Initial Decision in the docketed investigation, a second ALJ formally concluded that Western Union's public inbound and outbound rates were unreasonable and discriminatory, and that Western Union incurred cost savings in providing service to the ICPs which justified giving the ICPs a discount of 25 percent off public rates. The Commission reversed these findings, however, concluding that Western Union's public rates were lawful and that the ICPs were not entitled to any discount. The Commission concluded, in part, that Western Union did not realize significant cost savings in handling ICP-interconnected telex traffic as compared with public telex traffic, and that the ICPs were not entitled to a discounted rate. The U.S. Court of Appeals for the Second Circuit denied the ICPs' petition for review of the Interim Prescription Order and the Final Decision. 8. However, no rates had formally been in effect for inbound telex/TWX service to the ICPs between the date the settlement agreements expired and the date the Western Union inbound tariffs went into effect (January 1, 1978 to August 10, 1978), and no outbound rates were formally established from January 1, 1978 until the ALJ's interim rate prescription of July 24, 1979. During those periods, the ICPs, with the apparent exception of FTC Communications, Inc., paid the same 5.5 percent discounted rate which they had been paying under the expired settlement agreements. Thus, soon after the Final Decision was issued, Western Union filed a petition for reconsideration or clarification, requesting the Commission to order the ICPs to pay Western Union for the difference between the public rates that were effective and the discounted rates of 5.5 percent off the public rates that the ICPs actually paid Western Union during those time periods for both inbound and outbound services. 9. The Commission denied Western Union's request as to inbound rates in the Reimbursement Order. However, it granted Western Union's petition as to outbound rates. The Commission stated that it had the authority under Section 222(e) to establish retroactively the outbound telex and TWX rates for the periods in question. It also decided that Western Union was entitled to recover the full public rate for outbound telex and TWX services from the ICPs for the period from January 1978 to August 1979, when neither a carrier agreement nor a Commission prescription existed that established telex and TWX rates among the parties. The Commission concluded that Western Union was entitled to reimbursement plus interest from the ICPs that took "unauthorized discounts" while using Western Union's telex and TWX services during that time period. Finally, the Commission ordered Western Union to recompute the amount of its claim and file supporting data with the Commission within 30 days of the Order's release. 10. The ICPs appealed these determinations. The Court affirmed that the Commission had the authority under Section 222(e) to order retrospective relief. The Court found, however, that, in ordering the ICPs to reimburse Western Union for outbound telex and TWX service the Commission relied on traditional ratemaking principles instead of division of revenues principles. It held that, under Section 222, Congress intended that Western Union and the ICPs should apportion, or divide, the revenues received for provision of telex and TWX services over their joint network. According to the Court, however, the Commission in several respects treated the ICPs simply as customers of Western Union, rather than as parties entitled to bargain with Western Union on an equal footing. It held that the Commission erroneously focused on Western Union's rates and possible cost savings, rather than on the revenues of either Western Union or the ICPs, and in doing so, incorrectly placed the burden of proof on the ICPs. It stated that the Commission incorrectly assumed that the ICPs should have been paying the full public rates all along, whereas the statutory scheme set forth in Section 222(e) required the Commission to independently determine whether the public rates the Commission found should govern the division of charges prospectively should be applied retrospectively. The Court concluded that this error infected both the Commission's decision to grant Western Union retrospective relief (i.e., reimbursement at the public rates for the hiatus period) and to award interest on the amount of the ICPs' reimbursement. The Court found that "[f]or all its detailed discussion of its statutory authority to order retrospective relief, the Commission offered no independent justification of its decision to do so." The Court therefore remanded to this Commission "for further consideration and explication." B. CC Docket No. 78-97, Phase II and CC Docket No. 82-122 11. Phase II of this proceeding was initiated after Western Union filed a new distance insensitive or "postalized" structure in place of its prior distance-sensitive rate structure. Phase II covers the period from April 24, 1981, the date that Western Union's postalized rate structure became effective, to May 20, 1985, the date when the Commission terminated its Phase II investigation. 12. In December, 1981, prior to the release of the Initial Decision, the Record Carrier Competition Act of 1981 (RCCA) was enacted. The RCCA permitted Western Union to compete in the international record market and the ICPs to compete in the domestic market. To establish a competitive environment, the RCCA directed the Commission to require Western Union and the ICPs to provide full interconnection of their facilities at "just, fair and reasonable" rates. In April 1982 the Commission initiated CC Docket No. 82-122 to implement the RCCA's directives. The Docket 82-122 Interim Order prescribed an interim 15 percent discount for carrier-to-carrier interconnection associated with end-to-end domestic service and for the domestic portion of outbound and inbound international service. That discount was premised on the assumption that the discount reflected cost savings realized by Western Union. The Commission specified that this discount was an interim measure, and that it would be eliminated if, at the conclusion of the investigation in CC Docket No. 78-97, we found that no cost savings existed. 13. After the Commission released the Final Decision in CC Docket No. 78-97, Phase I, it reopened the proceedings in the Phase II investigation. The Commission established a pleading cycle and noted that the scope of the Phase II investigation was limited to issues not then decided in Phase I. 14. In Phase II, the ICPs alleged that changes in the market occasioned by the RCCA and changes in switching technology produced cost savings for Western Union in providing service to the ICPs that the Commission had found in Phase I did not exist. The Phase II Investigation Order also solicited comments on the impact of deaveraging telex and TWX rates on the development of record service competition, and whether discounted telex/TWX rates for the ICPs would result in higher rates for public customers. 15. The Commission subsequently found that, under the postalized rate structure, Western Union did not realize any significant cost savings in providing service to the ICPs. That Order also rejected the ICPs' arguments that the RCCA required a non-cost based discount from the public rates. The Order found that the RCCA required interconnection terms based as far as possible on cost, and did not envision a non-cost based ICP discount. The Commission further found that such a discount would inhibit competition by discouraging the ICPs from establishing their own domestic networks and entering the domestic record market as full competitors. 16. The Commission denied the ICPs petitions for reconsideration of the Phase II Termination Order. At the same time, the Commission granted, in part, Western Union's petition for action terminating CC Docket No. 82-122 and for the retroactive adjustment of the Commission's interim prescription in that docket. The Commission concluded that Western Union was entitled to retrospective relief measured by the difference between the discounted rates paid by the ICPs under the Docket 82-122 Interim Order and the public rates, plus interest. We found that reimbursement was appropriate in view of the conclusions in the Phase II Termination Order that neither cost-based reasons nor non-cost based reasons justified a discount. We rejected the ICPs' argument that we lacked authority to order reimbursement finding that retroactive adjustment of the interim rate prescription was within our statutory authority. Nevertheless, we limited the effect of the reimbursement to exempt outbound international messages from the reimbursement computation because earlier Commission actions had effectively required the ICPs to flow through the 15 percent discount for these messages to end users. 17. The ICPs sought judicial review of the Commission's actions permitting Western Union to charge the ICPs the public rate for telex and TWX service and requiring the ICPs to reimburse Western Union for the interim 15 percent Phase II discount during the period June 1982 through August 1984. Western Union sought review of the Commission's decision exempting outbound traffic from the reimbursement requirement and of the subsequent modification of the ICPs' reimbursement requirement. At the Commission's request, these orders were remanded for further consideration in light of the Court's Remand Order in Phase I. 18. In the motion requesting the remand, the Commission noted important similarities existed in the two phases of Docket 78-97. In each phase, the Commission concluded that the ICPs were not entitled to discounts below Western Union's public rates. In each phase, the Commission ordered the ICPs to reimburse, with interest, amounts to Western Union for previous periods in which the carriers made discounted payments. The Commission observed, however, that Phase I was decided using the old Section 222, covered a "hiatus" period during which no rates were in effect, and was based on one set of evidence on rates. Phase II, on the other hand, was decided using the RCCA, covered a period in which a Commission order prescribed an interim discount for the ICPs and was based on evidence compiled after, and in addition to, the evidence in Phase I. C. Commission Proceedings on Remand 19. In order to ensure a complete record on which to resolve this remand, we requested separate comments on the issues in each phase of the investigation. As to Phase I, parties were directed to explain how we should address the issues in the Remand Order. Particularly, they were told to state the principles that should govern the division of revenues produced by telex and TWX service during the hiatus period. Parties were invited to supply additional information, if necessary, for the Commission to address the remanded issues. We also specifically directed commenters to attach to their comments any earlier pleadings that they believe would be relevant to a resolution of these issues. Comments as to Phase I were filed on May 8, 1992 by New Valley Corporation (New Valley, formerly Western Union Corporation) and TRT/FTC Communications, Inc. (TRT/FTC, formerly TRT Communications, Inc., and FTCC Communications, Inc.). The same parties filed replies on May 22, 1992. 20. On May 22, 1992, the Commission issued a Public Notice requesting comments concerning the issues in Phase II. As in Phase I, we invited parties to supply additional information, if necessary, in order to completely address the remanded issues. Also, as in Phase I, we specifically directed commenters to attach to their comments any earlier pleadings that they believe would be relevant to a resolution of these issues. Comments as to Phase II were filed on June 19, 1992 by New Valley (hereinafter, Western Union), TRT/FTC, Consortium Communications International, Inc.(CCI), and Graphnet, Inc. (Graphnet). On July 6, 1992, all but Graphnet filed replies. III. ISSUE ANALYSIS A. CC Docket No. 78-97, Phase I 21. It is well-established that issues in Phase I before us must be decided consistently with former Section 222(e) of the Communications Act. In remanding this proceeding to this Commission, the Court affirmed that we have statutory authority to order retrospective relief under Section 222. The Court concluded, however, that the Reimbursement Order did not adequately justify the particular retrospective relief the Commission granted. The Court did not hold that the public rates were an impermissible measure of the retrospective relief that might be due Western Union nor did it hold that this Commission was barred from awarding interest on any relief granted under Section 222. Based on the record before us now, however, we conclude that the public rates are the best measure of the retrospective relief due Western Union for interconnected outbound service during the hiatus period. We also conclude that Western Union is entitled to interest on these amounts as a matter of equity, not as a penalty to be imposed on the ICPs. 1. Public Rates 22. The Court held that the Reimbursement Order erroneously focused on the proper rate Western Union should charge its ICP customers rather than on a proper division of charges between Western Union and the ICPs during that period. The Court also stated that the Commission did not consider the earnings of either Western Union or the ICPs in providing outbound service, but rather focused on the possibility of cost savings to Western Union in providing service to the ICPs vis-a-vis its other customers. In the Phase I Public Notice, we asked for comments from the parties concerning the principles they believed should govern the division of telex revenues during the hiatus period. 23. TRT/FTC claims that the Remand Order requires that any reimbursement requirement must be preceded by a division of revenues analysis. It asserts that such an analysis would involve calculation of revenue requirements for Western Union and the ICPs and would require that the Commission revisit the conclusion that Western Union did not realize cost savings in providing interconnected service to TRT/FTC. TRT/FTC argues that the Commission does not have the authority to order payments to Western Union absent an evidentiary record. It contends that relevant evidence is not in the record, and cannot now be developed. 24. Western Union opposes attempting a division of revenues inquiry for the hiatus period, and disagrees with TRT/FTC's assertion that the Remand Order requires the Commission to employ a division of revenues approach. It asserts, rather, that the proceeding was remanded for further consideration and explication, not for the Commission to conduct a division of revenues study. Western Union agrees with TRT/FTC that the record does not contain sufficient evidence to perform an appropriate division of revenues analysis, notwithstanding the fact that both sides have submitted data concerning their rates of return for the period at issue. 25. Section 222 of the Act granted the Commission overall authority to effect a full disposition of the claims between the parties. Absent injury to the public interest, and in the event no agreement between the parties is reached, the Commission is vested with authority to fully resolve the parties' dispute. In order to achieve a full resolution of the dispute, we must determine a proper division of charges for the outbound service during the hiatus period. We believe full resolution of these issues is necessary to achieve a just, reasonable, and equitable result. We therefore decline TRT/FTC's invitation to leave this issue essentially unresolved by vacating this proceeding. 26. Unfortunately, we must agree with the parties that the requisite data for either Western Union's or TRT/FTC's approach to dividing the outbound telex charges is not in the present record. TRT/FTC contends that ICP cost and revenue data is not in the record. More importantly, it claims, Western Union was not previously required to submit cost data sufficiently disaggregated to show a cost difference. Western Union agrees with TRT/FTC that the ICPs' cost data is not in the record. Further, despite numerous opportunities for the parties to substantiate their claims, neither party has done so. Absent the requisite information from the parties, we cannot divide the outbound telex charges using the divisions methodologies the parties suggest. 27. We considered requiring a third administrative hearing on the issue to obtain the requisite data. We do not believe, however, that yet another administrative hearing, if ordered, could produce the information the parties claim to be essential for a proper division of revenues approach. And, although each party has had ample opportunity, none have come forward with reliable data. Therefore, due to the lack of necessary information, we conclude that we are unable to perform a formal division of revenues analysis. 28. We can, however, accomplish the purpose of the Act, consistent with the Court remand, if we decide the dispute between the parties, or "do equity" in determining the proper level of compensation for these services when agreement between them fails. The agreement at issue failed January 1, 1978, when the previous agreement expired and no agreement or tariff was in force to govern Western Union's charges to the ICPs. No charges existed until July 24, 1979, when the ICPs were required to pay the public rates for outbound telex and TWX services on a prospective basis. 29. We conclude that applying the outbound public rates retrospectively for the hiatus period best achieves the directive of Section 222 to prescribe a just, reasonable, and equitable division of charges when agreement among the carriers fails. The record of this proceeding does not support a conclusion that any other "division of revenues" for the hiatus period would be more just, reasonable, equitable, and in the public interest than the public rates. The parties have had ample opportunity to supplement the record, and have been unable to do so. As Western Union notes, the Remand Order concedes that, prospectively, the Commission's approach in the Final Decision "may well have been justified for purposes of effecting a permanent resolution of the ongoing controversy...." That decision was affirmed on appeal to the Court of Appeals for the Second Circuit, which found "substantial evidence to support the Commission's conclusion...." 30. The Remand Order noted that this determination did not automatically apply retrospectively to the hiatus period but after further consideration we conclude that it should apply. In the absence of information that would be necessary to perform a division of revenues analysis -- which the parties agree has never been produced and is not now available -- our earlier findings supply the only rational basis for a resolution of this dispute. As we have noted, we concluded in the Final Decision that the public rates were reasonable as applied to the public and as applied to the ICPs on a prospective basis. We also found that Western Union's costs for providing ICP-interconnected service did not differ from its costs for providing service to the public. The Remand Order did not disturb these findings, nor does anything in the present record undermine them. We therefore conclude that applying the public rates to the hiatus period best achieves the just, reasonable and equitable resolution called for by Section 222 of the Act. 31. Moreover, we conclude that this result is equitable for all parties because we have found that the public rates are just and reasonable and fairly compensate Western Union. We are not engaged in an exercise of apportioning "blame" for the rate hiatus. Thus, our conclusion that equity compels application of the public rates during the hiatus period is not based on a finding that the ICPs were solely, or even mainly, at fault for the rate hiatus. We do not blame either party for the existence of a hiatus period. We must, however, prescribe charges that are "just, reasonable, equitable, and in the public interest" as Section 222(e) requires. The Commission prescribed such charges in the Final Decision. In the Final Decision, the Commission found that telex and TWX services are provided to the public and to the ICPs at no significant cost difference to the provider of those services. It concluded that the just and reasonable charges which were applied to the public users of the service should be considered just and reasonable when applied to the ICPs. These same considerations that led to the conclusion in the Final Decision that the public rates represented an appropriate division of revenues from outbound telex and TWX services prospectively, a conclusion that was affirmed by the Second Circuit, lead us to conclude that the public rates represent an appropriate division of revenues for the hiatus period. Nothing in the current record detracts from this conclusion. 2. Interest Award 32. In the Remand Order, the Court directed the Commission to revisit the issue of whether interest should be assessed under Section 222(e) on any amounts the ICPs may owe Western Union because of their failure to pay public rates. The Court stated that the Commission had improperly relied on conventional ratemaking principles as a basis for awarding interest. It held that those principles, which were developed under Sections 201-205 of the Communications Act, 47 U.S.C.  201-205, did not apply to the statutory scheme created in Section 222(e). The Court also held that the concept of "unlawful rates," which was the predicate of the Commission's argument that interest was required to make Western Union whole, was inapplicable. It stated that the Commission's interest award improperly placed the entire burden for the "rate gap" on the ICPs. Finally, it concluded that the Commission could not justify its interest award on the basis that the ICPs were "at fault" or that they took an "unauthorized discount" because, under Section 222(e), both parties were responsible for reaching agreement or, failing to do so, for petitioning the Commission for a prescription. In the Public Notice, we asked for comments from the parties as to the propriety of an interest award. 33. TRT/FTC contends that the Remand Order held that the Commission had no authority to award interest under Sections 4(i) and 222 of the Communications Act when it invalidated the Commission's theory that an interest award was integral to any remedy necessary to make Western Union whole. TRT/FTC argues that Western Union has identified no statutory basis to sustain an award of interest under the circumstances of this case. TRT/FTC also claims that the requisite circumstances do not exist in this case that would allow an award of "prejudgment interest." It asserts that the ICPs' actions do not constitute the misconduct that is normally required for an award of prejudgment interest. It adds that, even in cases where a wrong has been committed, prejudgment interest is denied if there are serious good faith disputes concerning final liability, if the fault is not one-sided, or if the disputed amount is unknown. Finally, it argues that it would be arbitrary and capricious for the Commission to award prejudgment interest when the amount owed is unresolved and the methodology to be used has not been adopted. 34. Western Union, however, argues that wrongdoing is not a prerequisite for an interest award, claiming that precedent favors the assessment of interest in divisions cases. It claims that prejudgment interest has historically been included in retroactive divisions cases under the Interstate Commerce Act, the model of the Communications Act of 1934. Further, it asserts, the ICPs were on notice from the beginning of the proceeding that the Commission might find Western Union was entitled to the full tariff rates, and that its position has consistently been that the ICPs should pay full public rates for interconnection services. 35. We agree with TRT/FTC that it is not solely responsible for the failure of the parties to reach agreement on a proper division of charges. Nevertheless, as we have already stated, we are not engaged in an exercise of apportioning blame. Rather, it is our task to determine a just, reasonable, and equitable division of charges. 36. We cannot agree with TRT/FTC's assertion that we lack authority to award interest in these circumstances. Section 4(i) of the Act allows us to make such orders as are necessary to the execution of our responsibilities. We conclude that an award of interest is necessary to carrying out our responsibility to determine a just, reasonable, and equitable division of charges. We have decided that Western Union was entitled to receive from the ICPs charges equal to the public rates during the hiatus period. We could have declined to include an interest component. If we had selected that option, Western Union would have received a principal amount 14 years after the amount was due. Moreover, the ICPs would have been able to use those funds for the benefit of their shareholders for the duration of this proceeding. We believe that outcome would be blatantly unfair. Western Union and its shareholders have been unable to make use of the funds, incurring an opportunity cost over 14 years with respect to those funds. The ICPs, on the other hand, had the opportunity to benefit from using those funds. If we did not include an interest component, we would not be meeting our responsibility to ensure that our decision today fully discharges the Commission's obligation to "do equity" among the parties in this lengthy dispute. Section 4(i) thus provides the authority for an award of interest in this case. 37. We have affirmed our conclusion that the public rates were the appropriate division of charges for the hiatus period for the same reasons that the public rates represented an appropriate division of charges prospectively. We also affirm our earlier decision to award interest in order to "make Western Union whole." We emphasize that our decision to award interest and thus make Western Union whole is based on equitable considerations, not on rate of return principles. It is true that the duration of this proceeding could make interest the lion's share of any payment due Western Union as a result of the retrospective application of the public rates. Nevertheless, assessing interest on these amounts is not a penalty for delay or for taking an "unauthorized discount." On the contrary, our award of interest will effectuate the most fair, reasonable, and equitable division of charges possible and is fair to both Western Union and the ICPs. 38. We do not wish to penalize any party to this proceeding. Clearly, however, to deny Western Union interest at this late date, after the long pendency of this proceeding, would certainly penalize Western Union. We have concluded that the public rates properly should apply to the hiatus period. It is elemental fairness to grant interest to Western Union when the ICPs have had the use of this money for almost 15 years. By doing so, we are not assessing blame. Our conclusion that the ICPs should reimburse Western Union for discounts that the ICPs took during the hiatus period means only that the ICPs have had use of Western Union's money in the interim. In these circumstances, we adopt the commonly held view that interest is not a penalty, but is simply the price that one pays for using another person's money. Therefore, using our broad equitable powers under Section 4(i) of the Act, 47 U.S.C.  154(i), we direct Western Union to determine the amounts withheld by TRT/FTC for outbound service based on actual minutes billed, including interest calculated at the rate established by the Commissioner of Internal Revenue. Interest should be calculated from the time Western Union billed for its services during the hiatus period. 39. We next address the methodology to be used in computing interest on the amounts to be reimbursed by the ICPs. We recently adopted a general policy that requires parties to common carrier proceedings to compute interest, when awarded, on a daily compounded basis. This marked a departure from our previous practice which required simple interest computed at the prevailing IRS rate. In adopting the new policy, however, we noted that unique circumstances of a particular case could warrant the application of simple rather than daily compounded interest. Such circumstances exist in the present case. The Commission first directed the ICPs to pay interest to Western Union in the Reimbursement Order, which was released in 1985. Although silent on this point, the Reimbursement Order contemplated that the interest payments would be computed consistent with the Commission's then-existing practice of requiring simple interest. The Court subsequently remanded the proceeding to the Commission to consider, inter alia, whether the ICPs should be required to pay interest on a retroactive basis. The Court did not specify, nor have the parties raised in this remand proceeding, issues concerning the correct methodology to be used in computing interest. We believe it is appropriate to adhere to the practice contemplated by our initial Reimbursement Order of awarding simple interest. Notwithstanding the prolonged nature of these remanded proceedings, Western Union and the ICPs all have been diligent in presenting their respective claims to this Commission. Moreover, all parties have expended a considerable amount of time and resources in an effort to resolve the reimbursement issue. Under these circumstances, it would be inappropriate to depart from the Commission's Reimbursement Order and now require that interest be computed on a daily compounded basis in this case. B. Docket No. 78-97, Phase II and CC Docket No. 82-122 40. In the Phase II Public Notice, we asked the parties to respond to four issues: (1) Whether the public rates that the Commission allowed to become effective for Western Union's telex and TWX facilities were appropriately applied to the ICPs during the June 1982 to August 1984 period, when the Commission's interim prescription was made effective in accordance with the RCCA's directive; (2) whether non-cost considerations justified lower rates for the ICPs than for the general public for the same services; (3) whether the Commission has authority under the RCCA to order reimbursements from the ICPs to Western Union for the June 1982 to August 1984 period; and (4) whether interest should be assessed on any amounts the ICPs may owe Western Union because of their failure to pay the public rates if principles under the RCCA are used to determine those amounts. 41. Western Union repeats arguments both from its earlier pleadings in Phase II and from its supplemental Phase I pleadings discussed above. For example, Western Union contends that the Remand Order does not require us to perform a division of revenues analysis in Phase II. Rather, Western Union argues, the public rates, without any offsets, are an appropriate measure of the reimbursement it is due from the ICPs. Moreover, Western Union supports the position consistently taken in earlier Commission Orders that the RCCA does not warrant, much less require, granting the ICPs a discount from public rates on the basis of considerations other than cost. Finally, Western Union argues that the RCCA and Section 4(i) of the Act, 47 U.S.C.  154(i), provide ample authority for the Commission's actions in requiring the ICPs to reimburse Western Union and to pay interest on the reimbursement. 42. The ICPs likewise reiterate arguments that they have made previously in Phase II. CCI, for example, argues that the Phase II Final Order's modification of the interim prescription was beyond the Commission's statutory authority. In addition, the ICPs argue for various reasons that they have previously advanced, that they were entitled to a discount from Western Union's public rates, on the basis of both costs and non-cost reasons. 43. The ICPs also contend that Phase I of this proceeding is not dispositive of Phase II, principally because Phase II is governed by the RCCA and not by the prior Section 222 of the Communications Act. Nevertheless, they assert that the Court's treatment of the interest issue in the Remand Order in Phase I is dispositive of that issue in Phase II. The ICPs argue, for essentially the same reasons advanced in their supplemental pleadings in Phase I, that the Commission should not assess interest on any reimbursement in Phase II. Finally, Graphnet contends that the Commission's efforts in the telex investigation exemplify the unwieldiness of substituting regulation for market forces. 44. When the Commission asked the Court to remand its decisions in Phase II, it was concerned that the similarities between the two phases might require it to modify its conclusions in Phase II if it modified its original conclusions in Phase I. However, after reviewing the Remand Order and the record in this proceeding, we decide that we need not modify any of the conclusions reached in Phase II. The parties' comments do not demonstrate that the Remand Order requires us to revise any of the Commission's earlier conclusions in Phase I, and in this we agree with the ICPs to the extent they argue that the Remand Order is not dispositive of Phase II. Moreover, unlike Phase I, we decided Phase II under the RCCA and on evidence compiled after, and in addition to, that considered in Phase I. As we have noted, we concluded, under the RCCA and on the record before us, that neither cost-based nor non-cost based factors justified discounted rates for ICP-interconnected telex and TWX traffic; that the RCCA did not require non-cost based discounts; and that we had adequate statutory authority to adjust our interim prescription and award interest on the amount of the reimbursement due Western Union from the ICPs. We required the ICPs to reimburse Western Union based on the foregoing conclusions because we found the public rates to be reasonable. We assessed interest as a matter of equity because the ICPs have had use of Western Union's money in the interim. Because the Phase I Remand Order does not require us to revise these conclusions we affirm our resolution of Phase II of the investigation. IV. CONCLUSION 45. We have reviewed the comments, the replies, and the supporting materials filed in Dockets 78-97 and 82-122. We affirm our previous decisions concluding that Western Union was entitled to recover the full public rate for outbound telex and TWX services from the ICPs for the period from January 1978 to August 1979, when neither a carrier agreement nor a Commission prescription existed that established telex and TWX rates among the parties. We also find that Western Union was entitled to reimbursement plus interest from the ICPs for their use of Western Union's telex and TWX services during that time period. We also affirm our previous decisions in Phase II of this proceeding. We order Western Union to recompute the entire amount of its claim, and to file supporting data with the Commission within 30 days of this Order's release. V. ORDERING CLAUSES 46. ACCORDINGLY, IT IS ORDERED, pursuant to Sections 4(i), 222(e) of the Communications Act, 47 U.S.C.  154(i), 222(e), that the Commission's Orders ARE AFFIRMED. 47. IT IS FURTHER ORDERED, pursuant to Sections 4(i), 222(e) of the Communications Act, 47 U.S.C.  154(i), 222(e), that the Western Union Telegraph Company shall submit the information required in paragraphs 38, supra, not later than 30 days after the release of this Order. 48. IT IS FURTHER ORDERED that the Motion to Strike/ Motion for Leave to File Supplemental Responsive Pleading, filed by TRT/FTC Communications, Inc., on June 12, 1992, IS DENIED. 49. IT IS FURTHER ORDERED that the Motion for Leave to File Supplemental Reply Comments, filed by New Valley Corporation, on July 17, 1992, IS DENIED. 50. IT IS FURTHER ORDERED that the Opposition to Motion for Leave to File Supplemental Reply Comments, filed by TRT/FTC Communications, Inc., on July 30, 1992, IS DENIED. 51. IT IS FURTHER ORDERED that the Reply of New Valley Corporation to the Opposition to Motion for Leave to File Supplemental Reply Comments, filed by New Valley Corporation on August 7, 1992, IS DENIED. 52. IT IS FURTHER ORDERED that authority is delegated to the Chief, Common Carrier Bureau, as specified herein, to effect the decisions set forth above. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary