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To: Frank Ferrari who wrote (14895)	1/26/1999 11:06:00 AM
From: Chemsync	Read Replies (1) \| Respond to of 21342

Exactly right Frank. After a 3 year battle the customer has a choice. Supreme Court upholds FCC on local competition Victory for long-distance carriers, CLECs means users may see more local options; RBOC stocks sink on defeat. By DAVID ROHDE Network World, 01/25/99 The regional Bell operating companies have to do what the Federal Communications Commission tells them to do after all. In a major victory for long-distance carriers and new local carriers, the U.S. Supreme Court Monday ended a three-year battle over telecom-reform rules by reinstating the FCC's basic blueprint for local competition. The FCC's 1996 rules direct RBOCs and other incumbent local exchange carriers to provide local loops, switching ports and other network elements to competitors at specified prices. A federal appeals court threw out those regulations in 1997, ruling that only the states could set prices for RBOCs to sell network elements to competitive local exchange carriers (CLECs). The Supreme Court decision, which overturns the appeals court ruling, means users in many more markets may enjoy local-service options from competitive carriers that haven't built their own local networks. It may also spur long-distance carriers to complete their spotty national buildouts of local networks. AT&T and MCI WorldCom had asked the Supreme Court to reinstate the FCC rules. Organized telecom user groups had generally supported the long-distance carriers' position. However, users may not see any immediate benefits. The FCC and the states have to rewrite some of their rules to conform to the Supreme Court ruling. And some clauses in interconnection agreements between RBOCs and CLECs may have to be renegotiated. The Supreme Court split 5-3 on the major question of whether the FCC has the right to set national wholesale prices for local loops and other network pieces that new local carriers typically can't afford to build. Those national prices are not so much specific numbers as they are a methodology that forces RBOCs to use only costs based on current technology - not higher historical or "embedded" costs - in devising a wholesale price for network elements. The Telecommunications Act of 1996 makes contradictory statements on this issue, at some points appearing to say the FCC has the right to make the call and at others saying the states have that right. Writing for the majority, Justice Antonin Scalia said the FCC has the right to interpret the law. Writing for the dissent, Justice Clarence Thomas stressed the states' historic role in setting local prices back to the beginning of the Bell System. He was supported by Chief Justice William Rehnquist and Justice Stephen Breyer. Justice Sandra Day O'Connor did not participate in the case because she owns AT&T stock. The Supreme Court also sorted out some other disputed issues on a more unanimous basis. For example, the justices decided that new local carriers did not have to show that they have invested in at least something - a fiber loop or a telephone or data switch - to get the best available wholesale prices on everything else. The RBOCs had argued that without such a requirement, there would be little incentives for CLECs to invest in any new facilities, since they could get all of them cheap from RBOCs. Scalia actually agreed that could happen, but added that Congress wanted it that way. "This maximizes the number of entryways that new carriers have into the local market," says Jack Nadler, a Washington, D.C. telecom attorney with the firm of Squire, Sanders & Dempsey. Ruling on other matters The Supreme Court did invalidate one FCC rule. That rule specifies a strict set of seven network elements - including operator service - as the ones that RBOCs must make available to CLECs. The carriers should have more flexibility to come up with a different list, the court ruled. Unlike some other officials in the acrimonious telecom-reform debate, Scalia did not criticize either side for litigating telecom reform instead of implementing it. He said politicians must take the blame for the delay. "It would be a gross understatement to say that the Telecommunications Act of 1996 is not a model of clarity," Scalia wrote. "It is in many important respects a model of ambiguity or indeed even self-contradiction." Still, the decision is a vindication for former FCC Chairman Reed Hundt, for whom the 1996 local-competition rules were the capstone of his tenure. It's also a win for current FCC Chairman William Kennard, who was general counsel under Hundt and whose department lost the case before the appeals court in 1997. The ruling is likely to increase political pressure on the long-distance carriers to get moving on entering local markets, including full service to residential customers. Among the Big 3, MCI WorldCom has been the most active in local network services, though its more than 100 local networks almost exclusively serve business customers. AT&T has followed a middle course, buying one major CLEC for business access while attempting to buy a cable-television provider for future residential access. Sprint has been the meekest of the three, investing in almost no major local markets beyond the collection of smaller towns in which it is already the incumbent local carrier. Paradoxically, the ruling may ease pressure on the RBOCs in one key area: mergers. SBC Communications and Bell Atlantic have endured criticism for attempting to reduce the number of potential competitors with their attempted takeovers of Ameritech and GTE, respectively. Now the two super-RBOCs may be able to argue that the potential local competitors have only themselves to blame if they fail to attack the local market. The ruling may also assist in the RBOCs' applications to enter the long-distance market if it's viewed as resolving the local-competition debate. "I'm sure the RBOCs will find some way to make lemonade out of lemons," Nadler says. Nevertheless, Wall Street viewed the Supreme Court ruling as a defeat for the RBOCs, hammering their stocks at midday Monday. For example, BellSouth was down 2 3/16 to 45 7/8 despite reporting better-than-expected earnings earlier in the day.

To: Frank Ferrari who wrote (14895)	1/26/1999 6:04:00 PM
From: Vladimir Zelener	Read Replies (1) \| Respond to of 21342

Frank, I believe you are one day behind the news. It was yestarday Jan. 25th, that Supreme Court declared that FCC has the control over the Local Bells regulations, and not the Local Public Utility Comissions, which are Baby Bells puppets, since they tax the local phone customers anything they want. I think this was the main reason for yestarday's WSTL's and ORCTF's drop, as well as almost all Baby Bells slide. I am not sure if Baby Bells can proceed right now with their own propriatary ADSL service, because the data is carried between LATAs (long distance call), but FCC supposedly might permit that to them pretty soon. Besides their agreement with AOL and possibly other Portals/ISPs like YHOO should be profitable for them.