Posted: 3/2004
Triennial Review Goes to Appeals Court
By Josh Long
Local phone companies expressed a sigh
of relief last year when the FCC voted to let states decide whether to preserve
phone rules allowing AT&T Corp. and smaller telcos to lease the regional
Bell networks at discounted rates.
But a federal appeals court has indicated it plans to reverse the FCC order, in part, because the judges expressed their reservations with delegating rulemaking authority to the states, Washington analysts say. On Jan. 28, the U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments over the appeal of the FCCs Triennial Review Order, the nearly 600-page document governing new phone and broadband rules.
The judges said the law directed the FCC, not the states, to make determinations on whether competitors would be impaired without access to cost-based UNEs, Legg Mason analysts say in a report.
The federal judges also appeared skeptical over other aspects of the regulatory order, the analysts say, including the FCCs national finding that competitive local phone companies are impaired without being able to lease the Bells switches at UNE rates state regulators set.
Sources in Washington say the court could rule as early as this winter, but they cautioned that wouldnt end the legal battle. Analysts say the telcos are likely to ask for an appeal before the entire federal court, and ultimately ask the U.S. Supreme Court to make a final ruling.
In recent years, the Bells have suffered deep losses in their core local phone business to rivals leasing their networks at discounted rates under a controversial resale platform abbreviated in industry jargon as the UNE-P. The local phone companies insist they are being required to lease their networks to competitors below their own costs, and SBC Communications Inc., the second largest local phone company, has aggressively lobbied state lawmakers to pass legislation allowing the company to raise its wholesale rates. SBC also has asked local regulators in numerous states to adjust the rates.
Precursor Group analysts say a court decision in the favor of BellSouth Corp., SBC, Qwest Communications International Inc. and Verizon Communications Inc. would not change the bottom line anytime soon.
Legal procedures aside, the FCC majority and the states could use whatever policy discretion theyre afforded on remand, or long transition times, to keep UNE-P around for a while, they say in a report. This is especially likely in a presidential election year. Bottom line, we believe UNE-P remains available for at least a couple years.
Jonathan Lee, senior vice president of regulatory affairs with the CompTel/ASCENT Alliance, says it is not practical to require the FCC to study local phone competition in every market. It would paralyze the agency to have to examine in a very granular fashion every market for every UNE, he says.
| Bells Submit Testimony to State Regulatory,
Goal to Ax UNE-P Josh Long
State regulators have until the summer to comply with the FCCs Triennial Review Order and determine whether there is adequate competition to phase out the local-phone resale platform, UNE-P, over three years. A federal appeals court is expected to rule shortly on whether the order governing new phone and broadband regulations is legal (see story above). In the meantime, the regional Bells have submitted testimony across the country to prove such competitors as AT&T Corp., Sprint Corp. and Z-Tel Communications Inc. are not impaired if they are restricted from leasing local switches at the UNE rates state regulators set. A switch is the nucleus of the resale platform. In our testimony we believe we present evidence sufficient to allow our state commissions to rule that switching should be removed as an element from the UNE-P in markets where at least three competitive switches are in place, BellSouth Corp. spokesman Joe Chandler says. Chandler says Atlanta, where BellSouth is headquartered, is one such place. The Triennial Review Order listed specific criteria state regulators must evaluate in determining whether to preserve the UNE-P or remove it in a market. The FCC said states must eliminate switching as a UNE if they find there are three or more facilities-based telephone companies serving the mass market in a specific region. The companies must have no affiliation to the Bells. States can petition the FCC for a waiver even if the Bells document such evidence if regulators find exceptional circumstances impairing the ability of competitors to provide consumers and small businesses local phone service. Under the FCCs rules, states also must eliminate switching as a UNE if there are two or more wholesale carriers (with no affiliation to the Bells) providing local phone companies with switching to route the traffic of consumers and small businesses. Under this trigger, the FCC does not grant states the option of seeking a waiver to preserve UNE switching. During an interview in late January, Qwest Communications Inc. spokesman Bill Myers said the company had submitted testimony in five states, Arizona, Colorado, Minnesota, Utah and Washington showing the FCCs triggers have been met, or in cases where they have not, that it was still economically feasible for competitors to provide customers local service using their own switches. Qwest also planned to present testimony in Iowa, Nebraska, New Mexico, North Dakota and Oregon to justify the elimination of UNEs, Myers said, but the company does not plan to file such documents in Idaho, Montana, South Dakota or Wyoming. Verizon Communications and SBC Communications Inc., the No. 1 and No. 2 local phone companies, did not immediately respond to questions on the testimony they have submitted to the states. |
A pending court decision has not
stopped
state regulators from gathering testimony in order to resolve whether to
preserve the wholesale phone rules the biggest local phone companies
vociferously oppose.| Links |
| AT&T Corp. www.att.com BellSouth Corp. www.bellsouth.com FCC www.fcc.gov Legg Mason www.leggmason.com Precursor Group www.precursorgroup.com Qwest Communications International Inc. www.qwest.com SBC Communications Inc. www.sbc.com Sprint Corp. www.sprint.com U.S. Court of Appeals for the District of Columbia Circuit www.cadc.uscourts.gov/ Verizon Communications Inc. www.verizon.com Z-Tel Communications Inc. www.z-tel.com |
