Line Sharing Takes a Hit
Appeals court rules against FCCA US federal appeals court today handed a significant victory to the bells, striking down rules that require them to share their networks with competitors at discounted rates. The court's decision also took issue with the FCC's plan to defer some decision making to the states. The court essentially provides what Michael Powell wanted in the first place, the elimination of line-sharing and a further elimination of the policies imposed by the Telecom Act of 1996. Powell was over-ruled by Kevin Martin and the FCC's two Democratic commissioners, who argued the states should have some say on competitive issues. The decision is sure to be chewed on ad nauseum by lawyers and analysts over the next few days ….
[Notice that part of the FCC decision was upheld, meaning no change affecting broadband competition. Meanwhile, the Powell side dug in. "Today’s court ruling upheld the Commission’s decision to spur the development and deployment of vital broadband services to all Americans," said a statement released by Powell. "As a result, our citizens will enjoy the increased capabilities, innovation, and lower prices of advanced wireline broadband services for decades to come."
Bell competitors said the rules would slowly exclude them from the market as fiber optics were added to the telephone networks. The court upheld the rules even while acknowledging that some competitors, known to the court by the acronym "CLEC" could be hurt. The decision also adds an additional twist to an already complicated political scenario at the FCC: Chairman Michael Powell, who found himself on the losing end of the battle to eliminate line-sharing, in the Triennial Review, now finds himself being supported by the courts.]
iii.co.uk
WASHINGTON (AFX) -- The Bell local phone carriers scored a big triumph Tuesday when a federal appeals court rejected rules that force them to let rivals use their networks at deep discounts.
For the third time, a three-judge panel on the Circuit Court of Appeals in Washington, D.C., struck down a plan by the Federal Communications Commission to boost competition in the local phone market.
The panel also threw out a key provision that would have given state regulators greater say over how such rules are crafted.
The decision was hailed by the Bells and by free-market proponents. Yet consumer groups and rival phone companies blasted the ruling as detrimental to competition.
Under existing rules, the Bells are supposed to let rivals use portions of their networks at steep discounts. The goal was to help smaller competitors establish a footprint in the local phone market.
Yet critics, such as FCC Chairman Michael Powell, say the rules allowed rivals to piggyback on the work of the Bells and avoid building out costly networks of their own. The FCC, under pressure from the appeals court, sought to remake its rules early last year.
In a controversial 3-2 vote, the FCC voted to continue to force the Bells to let rivals access their local networks at deep discounts. The agency also agreed to give state regulators greater authority.
At the time, Republican Commissioner Kevin Martin joined with the panel's two Democrats to form a majority. An embarrassed Powell sharply criticized the decision and predicted that it would be overturned. The court's decision appeared to vindicate him.
"I dissented from the majority's decision on local telephone competition because it was inconsistent with the law and would result in years of regulatory uncertainty and unrealized consumer promise," Powell said.
He said he ordered his staff to start preparing new rules.
Still, the court left open the possibility that a similar policy could be reinstated if the agency better defines its rules. The decision was stayed for 60 days to allow the FCC to appeal.
If the court ruling stands, the Bells could derive substantial financial benefits by retaining current local customers and perhaps regaining old ones. Relying on a leasing strategy, rivals have captured about 10 million local customers in the past few years, mostly through resale.
The Bells complain that prices are determined by unrealistic criteria and fail to reflect the true costs of providing local service. They've sought clearer and less burdensome rules at the federal level to avoid a costly state-by-state process.
Critics, on the other hand, assert that the Bells charge too much for wholesale access, forcing customers to overpay.
Under a historic 1996 law deregulating the phone industry, the Bells were required to prove that their networks were open to rivals in exchange for permission to sell long-distance service, a market from which they'd historically been barred. They've since gained approval to enter nearly every state.
If the FCC cannot satisfy the court's concerns, however, it would undermine a key component of the 1996 law and possibly spur Congress to consider a major revision. |
