|
A federal appeals court handed a big victory
to the four large regional Bell telephone companies on Tuesday, striking down
regulations that had required the Bells to lease their local networks to rival
companies at low prices set by state regulators.
If Tuesday's decision survives further legal
challenges, it would be a substantial blow to AT&T, WorldCom
and smaller companies that have relied on inexpensive access to the local
networks to reach their customers. By increasing the cost of access, the ruling
could significantly reduce competition in local markets and lead to higher
prices for callers, according to competitors of the Bell companies, consumer
groups and some analysts.
A three-judge panel of the United States Court of
Appeals for the District of Columbia sharply narrowed the role of state
regulators in overseeing competition in the phone market. It criticized the
Federal Communications Commission both for its delegation of authority to the
states and for issuing other regulations last year that a majority of the
commissioners had said were intended to make local phone markets more
competitive.
After the decision, separate statements issued by
the F.C.C. chairman and another commissioner, who had opposed the rules, and by
the three commissioners who approved them, suggested that the agency was in a
kind of civil war over the regulations.
The three commissioners who approved the rules said
they had instructed "our general counsel" to seek an appeal to the
Supreme Court. But the chairman, Michael K. Powell, who dissented from the
rules, said he had instructed the staff to begin drafting regulations to comply
with the appeals panel's order. A fifth commissioner who had dissented with Mr.
Powell applauded the decision and urged the F.C.C. to rewrite the rules.
As a matter of protocol, the agency will consult
with the Justice Department, which argued in favor of the new rules before the
court, before deciding whether to pursue an appeal.
Rivals of the Bells criticized the decision.
"At a time when consumers and small-business owners are just beginning to
realize the benefits of competition, the D.C. Circuit today held up a stop sign
and halted eight years of progress," said James Cicconi, AT&T's general
counsel. "This decision is not in the public interest, but is instead in
the interest of four Bell monopolies."
But executives of the regional Bell companies
contended that the rules never made economic sense and in reality discouraged
greater investment in local phone networks. The rules, they argued, had forced
the Bells to set artificially low leasing rates to rivals.
William M. Daley, president of SBC
Communications, said: "Today's court action is a victory for consumers,
and should help this industry move forward in developing healthy, sustainable
and economically rational competition that will extend telecommunications
innovations further and faster in the marketplace. This appears to be a victory
for those who support markets free of rules that have repeatedly been judged
illegal and which have eliminated jobs, shrunk investment and hurt fair
competition."
The news of the decision, which came about two hours
before the market closed, lifted the share prices of the regional Bells - SBC, Verizon,
BellSouth
and Qwest.
The 62-page opinion in the case, United States
Telecom Association v. Federal Communications Commission, was written by Judge
Stephen F. Williams and joined by Judges Harry T. Edwards and A. Raymond
Randolph.
The judges were harshly critical of the commission,
saying it ignored the court's previous decisions on phone regulation and the
mandate of the Telecommunications Act of 1996.
The court's frustration with the F.C.C. and its
"unbundled network elements rules" was reflected in the decision's
last paragraph, which ordered the commission to rewrite the rules in the next 60
days or after denial of a petition for a rehearing, whichever is later - either
before the three-judge panel or the full circuit. "This deadline,'' it
said, "is appropriate in light of the commission's failure, after eight
years, to develop lawful unbundling rules, and its apparent unwillingness to
adhere to prior judicial rulings.''
But the issues raised by the case may take many
months to resolve, particularly if the Supreme Court decides to review it in its
next term, beginning in October. And it is not known if the current commission
will act soon or whether the issues will be put off until next year, when the
agency's composition might change after the presidential election.
For the time being, at least, the decision was
vindication for Mr. Powell, who lost control of the commission and predicted in
February 2003 that the new rules could not withstand judicial challenge. He
found himself in the uncomfortable position of being the first chairman in more
than a decade to dissent from a major telecommunications decision.
On Tuesday, the court upheld rules, supported by Mr.
Powell and two other commissioners, that had relieved the Bell companies of
their obligation to give rivals low-cost access to many of the crucial elements
of their new high-speed online networks.
Mr. Powell issued a statement after the decision
that all but said: I told you so. "I dissented from the majority's decision
on local telephone competition,'' he said, "because it was inconsistent
with the law and would result in years of regulatory uncertainty and unrealized
consumer promise. Today, the court agreed and restored the opportunity to bring
about new advanced services and true competition that will bring consumers
choice and innovation."
"My fellow commissioners and I need to
expeditiously get to work to produce a set of judicially sound rules, once and
for all," Mr. Powell said. "I have already directed the staff to begin
preparing new rules that will provide the sorely needed clarity and guidance
essential to bringing consumers the benefits they were promised and
deserve."
Yet there was no indication that Mr. Powell had any
more control over the agency now than he did when it approved the rules last
year.
The three commissioners who voted in favor of them -
Jonathan S. Adelstein, Michael J. Copps and Kevin J. Martin - suggested in a
brief statement that the appellate panel's opinion was inconsistent with earlier
decisions by the Supreme Court.
"We believe that the rules preserve competition
in a manner that is lawful, and recognize the important role that states have
historically played," they said. "Today, over 50 million Americans
benefit from the new local and long distance one-rate plans offered by both
incumbents and competitors that are a result of our rules." The three
commissioners also said they had instructed the general counsel "to seek a
stay and to appeal the D.C. Circuit decision to the Supreme Court so that we can
clarify tension with the Supreme Court's past decisions."
|
About Us
Our Services