15:18 BellSouth Argues Against 1996 Telecommunications Act; MCI Says Appeal Ill-Founded
WASHINGTON (Dow Jones)--One of the five remaining regional Bell telephone
companies renewed its attack Friday on a law it says is keeping the company
from getting into the lucrative long distance business.
The 1996 Telecommunications Act singles out the regional Bells for
punishment, said noted constitutional lawyer Laurence Tribe, arguing before the
U.S. Court of Appeals on behalf of BellSouth Corp. (BLS). That amounts to an
unconstitutional "bill of attainder," Tribe said.
But attorneys for the Federal Communications Commission argued the
restrictions were not a punishment because they were less onerous than a
consent agreement signed by the companies following the breakup of Ma Bell. By
singling out the Bells, Congress was simply telling them to open their markets,
said FCC attorney Christopher Wright.
It's not clear when the three-judge panel will rule. But Chief Justice Harry
T. Edwards said the case, which is a BellSouth appeal of a FCC decision, is a
difficult one that "goes to a core concern in the Constitution." Singling out
specific companies in a law is the "type of arrangement we have never
historically permitted."
The impact of the case is potentially enormous. While an appeal to the
Supreme Court by either side is all but certain, a final ruling in favor of the
Bells could lift what they call onerous restrictions keeping them out of the
$80 billion long distance market.
And it would overturn Congress' efforts to entice the Bells into opening
their local phone service monopolies to competition in return for the right to
sell long distance and other services.
The Fifth Circuit Court of Appeals in September ruled against three regional
Bells in a similar case. BellSouth lost an earlier case in which it claimed
that the telecommunications act had unconstitutionally barred the company from
the electronic publishing industry.
But that case was different, a BellSouth spokesman said, because the
companies could enter the publishing business by setting up separate
corporations. There is no such option for getting into long distance.
BellSouth wants the Court of Appeals to reverse the FCC's rejection last year
of the company's application to provide long-distance service in South
Carolina. Although the state had given Bell South the green light, the FCC said
the company had not sufficiently opened its local service market to
competition.
The 1996 telecom act promotes competition by requiring existing local phone
companies to allow new companies to use their facilities and services. But
while regional phone companies like GTE Corp. (GTE) that were not part of the
former AT&T Corp. (T) monopoly were allowed to go into long distance and other
markets immediately, the act singled out the erstwhile Ma Bell companies "alone
and by name for onerous burdens," says Bell South.
The Bells must satisfy a 14-point competitive "checklist" to get FCC
permission to sell long distance services. These provisions "impose significant
burdens on BellSouth and other Bell operating companies at a crucial time in
the development of telecommunications markets," the company said.
But Thomas F. O'Neill III, chief counsel for long-distance carrier MCI
WorldCom (WCOM), said BellSouth "is attempting to use the same ill-founded
constitutional justification to gut key pro-competitive and pro-consumer
provisions of the telecom act. These arguments have already been squarely
rejected by this and another appeals court."
The three judges reserved their sharpest questions for the FCC's attorneys.
The constitutional mandate against a bill of attainder "is pretty strong,"
Judge Edwards said.
Alluding to the flood of litigation from the 1996 act, Edwards jokingly
suggested a compromise for the two sides. "How about we strike the whole act
and do it over," he said.
Mark Wigfield 202-828-3397
(END) DOW JONES NEWS 09-25-98
03:18 PM
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