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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (21220)	7/8/1998 4:06:00 PM
From: Andrew Brockway	Read Replies (1) \| Respond to of 70976

Jacob OT, In regards to your US West short, you may want to consider the following: WASHINGTON, July 7 (Reuters) - Regional Bell telephone companies will ask a federal appeals court this week to toss out parts of a 1996 telecommunications law and allow them to offer long-distance service immediately. If the court agrees, the Baby Bells could become big players in the $80 billion long-distance market while important incentives in the law to promote competition in the $100 billion local market would be erased, attorneys and analysts said. San Antonio-based SBC Communications Corp., which provides local service in seven states from Texas to California, filed the lawsuit a year ago in a bid to overturn parts of the Telecommunications Act of 1996. Few in the industry thought SBC, later joined by US West Inc. and Bell Atlantic Corp., had much chance of success until a surprise New Year's Eve ruling in the company's favor by a federal judge in Texas. The decision by U.S. District Judge Joe Kendall rocked the stocks of the telecommunications companies, sending the Baby Bells higher and knocking the shares of AT&T Corp. and MCI Communications Corp. lower. The long-distance companies had joined the government and urged the courts to uphold the law. The ruling upset the delicate balance struck by Congress in the 1996 law requiring the Bells to open their local networks to competitors before being allowed to offer long-distance service to customers within their regions. So far, the Federal Communications Commission has rejected all four long-distance applications by Bells, including one by SBC, finding the companies had not opened their local networks enough. While the Bells have sued, they are also trying to further open their networks to comply with the act. "The case goes right to the fundamental premise of the 1996 Telecommunications Act," said Kathy Wallman, a former top telephone regulator at the FCC and now a consultant in Washington. "Upholding it would be a very troubling change to that basic premise," she said, referring to Kendall's ruling. On Thursday, a three-judge panel of the U.S. Court of Appeals for the 5th Circuit will hear arguments in the case, with a decision expected a few months later. Constitutional scholar and Harvard University law professor Laurence Tribe, representing the Bells, will square off against Assistant Attorney General Joel Klein in the hourlong session. Although a decision either way will almost certainly be appealed to the Supreme Court, investors are likely to bid up the Bells if they win again, according to industry analyst Scott Cleland at the Legg Mason Precursor Group. "SBC and the Bells have a better chance at victory in this court that most anticipate," Cleland said, noting the three judges hearing the case were all appointed by Republicans. "The Bells got very lucky in the draw. They need judges who are more skeptical of government for their argument to gain traction." SBC's legal argument is based on an obscure clause in the Constitution designed to prevent Congress from acting as judge and jury. Under the clause, Congress is prohibited from passing laws aimed at punishing specific individuals. The so-called bill of attainder clause has been used only five times by the Supreme Court to strike down laws such as those barring employment of former members of the Communist Party. Unlike most regulations enacted by Congress, the 1996 telecommunications act does specify by name the 20 Bell companies that were created in the 1984 break-up of the old AT&T and now constitute units of the five regional Bell corporations. "The essence of our case is that Congress has made a judicial-type distinction of who's good and who's bad," said SBC general counsel James Ellis. "If Congress is permitted to single out these 20 companies, then God help us when they go after less-favored people." Government lawyers respond that the clause has never been read to prohibit economic regulations on companies. And, they argue, the Telecom Act's restrictions on the Bells are actually less severe than those contained in the 1982 breakup agreement and therefore cannot be considered punishment. The challenged restrictions "are no different from any number of statutes that prohibit corporations from engaging in specified lines of business in order to preserve or foster competition or other economic goals, none of which has been thought to be punitive or to implicate the Bill of Attainder clause," the Justice Department said in its court filing. P.S. At what price are you a buyer of KLIC? 15 range?