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Technology Stocks : LAST MILE TECHNOLOGIES - Let's Discuss Them Here -- Ignore unavailable to you. Want to Upgrade?

To: Bernard Levy who wrote (2112)	10/12/1998 2:35:00 AM
From: Stephen B. Temple	Read Replies (1) \| Respond to of 12823

SUPREME COURT HEARS INTERCONNECTION ARGUMENTS TODAY October 12, 1998 COMMUNICATIONS DAILY via NewsEdge Corporation : As telco industry prepared for today's oral argument before U.S. Supreme Court on FCC's interconnection order, competitors had sharply different views on what effect court's decision would have on telephone market. MCI WorldCom (MCIW) official said decision could stimulate growth of competition while Bell Atlantic executives said outcome wasn't as important as it once was because state regulators were using price methodologies that were similar to FCC guidelines. Argument today is expected to center on 3 issues: (1) FCC's authority to establish guidelines for states to follow in setting prices for competitive access to incumbent LEC (ILEC) facilities. (2) Whether FCC can require incumbents to "rebundle" unbundled network elements (UNEs) for competitors. (3) Legality of so- called "pick-and-choose" requirement that allows competitive LECs (CLECs) to adopt parts of other companies' interconnection contracts with incumbents if those provisions are more favorable. Case comes to Supreme Court on appeal from 8th U.S. Appeals Court, St. Louis, which in July 1997 overturned FCC's national pricing guidelines, limited pick-and-choose options and said ILECs can't be required to offer competitors packages of rebundled UNEs. Justice Dept. on behalf of FCC petitioned Supreme Court in Nov. 1997 to review case, as did several CLECs and incumbents. Large incumbents raised additional issues such as arguing that combined UNEs should be treated like resale. Bell Atlantic Senior Vp Thomas Tauke said pricing issue has become less " significant" because "the difference between the state and federal approach to pricing is almost minimal." States have tended to set prices that are based on FCC model, he said. MCIW Chief Litigation Counsel Thomas O'Neill told reporters in briefing last week that state adoption of FCC's forward-looking pricing standard is "by no means uniform" and those that have adopted FCC-like pricing have faced challenges from ILECs. Overturning court's limitations would eliminate uncertainty that has slowed competition, he said. MCIW has brought suit in 14 states where regulators set pricing at level that makes service " unprofitable," said Donald Verrilli, Jenner & Block attorney who represents MCIW. In another 16 or 17 cases "we're defending the choice of state commissions that use TELRIC [FCC's total element long run incremental cost standard]," he said. "This is the uncertainty that results when there is no pricing standard," he said. Likewise, limit on rebundling UNEs has stymied rise of facilities-based local competition in residential and small business markets, Verrilli said. " Most of the states have said we're right and are trying to figure out a way to do it [require rebundling] under state jurisdiction," he said. Verrilli said 8th Circuit's ruling on UNEs discriminates against competitors by letting incumbents "rip apart" their own network combinations, creating added cost for competitors who have to put them back together. ALTS, which represents facilities-based CLECs, issued background paper explaining that it departs from other CLECs on UNE platform issue. If competitors want to develop network solely from UNEs, they should be required to pay higher resale rate, ALTS said. Otherwise, competitors won't have incentive to build their own networks, it said. Even if High Court upholds FCC action, debate might not be over, O'Neill warned, pointing out that St. Louis court never ruled on substance of FCC's pricing standard, only on its authority to set one. It's possible that ILECs could go back to court and ask for ruling on TELRIC standard itself, he said: "I wouldn't be surprised to see further litigation." Argument will run for 2 hours, starting at 10 a.m. with discussion of pricing jurisdiction featuring Seth Waxman of U.S. Solicitor General's Office, arguing FCC case; Bruce Ennis, attorney for MCIW; Laurence Tribe for ILECs; Dianne Munns, Ia. Utilities Board gen. counsel, for states. Other issues, such as UNE rebundling, will be discussed at 11 a.m. by Waxman, AT&T attorney David Carpenter and GTE Gen. Counsel William Barr.

To: Bernard Levy who wrote (2112)	10/12/1998 3:31:00 AM
From: lml	Read Replies (2) \| Respond to of 12823

Bernard: Interesting comments regarding possible gov't intervention to force competition over the 'last mile.' If taken to the extreme, I would presume the gov't, if it thought prudent, could acquire the copper you speak of under the law of eminent domain, or at least sufficiently regulate the copper to constitute a regulatory taking. I would think even the threat of such govt action would encourage LECs to be more forthcoming to opening the CO doors to competition.