FCC Wholesale Phone Rules Would Raise Rates 15% in 6 Mos
[negatively affects at&t, mci, as these telecom carries don't have access to 'the last mile' without using a bell network. these wholesale rates at least would go up.]
By MARK WIGFIELD
July 13, 2004 7:54 p.m.
Of DOW JONES NEWSWIRES
WASHINGTON -- Wholesale prices for companies leasing the regional Bell networks would be frozen for six months, followed by a 15% price increase for the next six months under an interim plan being considered by regulators.
The wholesale pricing regimen would temporarily replace one struck down by a federal appeals court in March, with the ruling taking effect in June. AT&T Corp. (T) and other companies that lease regional Bell lines have announced they won't seek new local customers in some states because of potential wholesale price increases.
The Federal Communications Commission could act on the plan as early as the end of this week, before FCC Chairman Michael Powell leaves for a two-week vacation. Powell has expressed hope that the agency could write permanent wholesale rules by the end of the year, which would override the interim rules.
The information was provided by a person close to the matter who spoke on the condition of anonymity. The FCC had no comment.
But telephone industry officials have given the plan mixed marks as some details have leaked out.
"It's very good that the FCC is issuing a (freeze) for the next six months," said John Windhausen, president of ALTS, a trade association representing competitors like McLeod USA Inc. (MCLD). ALTS members provide their own network facilities but lease high-capacity lines and bulk transport capacity from the regional Bell companies.
But the group opposes the 15% price increase for the high-capacity lines and transport, and feel confident that low, regulated rates will be reinstated when the FCC rewrites its permanent rules.
"We are working on a letter opposing the 15% increase," said Windhausen.
The 15% increase would also pertain to the leasing of the full compliment of Bell network elements known as "UNE-P," the strategy used by AT&T and MCI Inc. (MCIA) to enter local markets. AT&T is moving away from that strategy by providing more of its own network facilities or leasing them from companies like McLeod since the March court decision is expected to make it impossible for the FCC to restore UNE-P long-term.
AT&T spokeswoman Claudia Jones said the interim plan still doesn't provide much certainty even for companies trying to use more of their own facilities.
"Chances are the competitive industry will be looking at significant price increases," Jones said.
BellSouth Corp. (BLS) lobbyist Bob Blau noted that the regional Bell companies had already promised to freeze prices until the end of the year. But if the FCC doesn't approve its interim rules soon, the wholesale price freeze would extend into next year.
"At some point the FCC has to get off the dime and do what the court said," Blau said. And while the 15% increase "is in the right direction," he added, "it would be much better to let the market decide."
The FCC wholesale rules were meant to spark competitive local service through discount leasing of the regional Bell lines. But the courts have repeatedly struck down the rules, saying the FCC in many instances failed to show they were necessary for competition.
The issue has become politically sensitive after the Bush administration in June decided not to appeal the case to the Supreme Court, threatening possible telephone price increases as the presidential election loomed. About 16% of the nation's 181 million lines are served by competitors to the Bells, and about 60% of them lease network elements from the Bells.
The interim rules would carry the matter safely beyond the November elections. |
