y the fact that it is now an economic truism that opportunity costs represent a true economic cost borne by the incumbent LEC (Sidak and Spulber 1997a). Indeed, the Supreme Court in effect recognized as much when it cited "opportunity cost" as an example of a forward-looking "cost" that fell within the purview of the statute (Verizon, 535 U.S. at 499 n. 17). The FCC's second reason for rejecting ECPR is equally misplaced. The FCC asserted that because ECPR calculates opportunity cost on the basis of current retail prices, it simply locks in monopoly rents without providing a mechanism for moving prices toward competitive levels (FCC 1992b, 1996c). This argument suffers from two fundamental flaws. First, it ignores the fact that as competition emerges in the retail markets, ECPR will dynamically readjust the opportunity-cost factor downward to reflect the increased competition in the downstream market. Indeed, once the downstream market becomes fully competitive, regulation of the input market will no longer be necessary. Second, the existence of any monopoly rents in retail prices is more properly regarded as the result of the failure of rate regulation at the state level rather than any theoretical flaw in ECPR. Such a failure would justify improving the manner in which state regulatory authorities establish retail prices. It does not provide a justification for incurring the myriad problems that would result from distorting access prices (Sidak and Spulber 1997a). Although the Supreme Court upheld the FCC's ratemaking methodology in Verizon, it would be a mistake to construe the Court's action as a specific endorse- ment of TELRIC and a rejection of ECPR as a matter of economic policy. On the contrary, the Court carefully eschewed expressing any opinion about the relative merits of any particular economic approach to ratemaking. Instead, the Court based its decision on the deferential standard of review that gives agencies a wide range of discretion in resolving any interpretive ambiguities that exist in the st