Bells Challenge FCC’s Latest Line-Sharing Rules

Verizon and Qwest rushed to court Monday to challenge the Federal
Communications Commission’s (FCC) latest ruling on
line sharing and access fees between incumbent telcos and their competitors.

Late last Friday, the FCC decided to extend for six months rules tossed out by a federal appeals court. The interim FCC action freezes into place all current line-sharing and access fee agreements until the end of January. If the FCC is unable to craft new regulations by then, the rules will be extended another six months with price hikes capped at 15 percent.

By Monday afternoon, Verizon and Qwest were in the U.S. Appeals Court for the District of Columbia seeking to overturn the FCC ruling.

“It is simply inexcusable for the FCC to flout a binding judicial determinationand to extend those never-lawful requirements for nearly another year,” states the Verizon and Qwest petition.

As part of its triennial review in February 2003, the FCC ruled that incumbent Bells must continue to lease their narrowband, copper-based lines at discounted prices to local competitors. The FCC also allowed the incumbents to close off their high-speed broadband lines to competitors.

A year later, the D.C. Federal Appeals Court rejected the copper line-sharing rules. The decision represented the third time since 1996 the courts have bounced some elements of the FCC local competition rules.

“Qwest has asked the court to direct the FCC to comply with the court’s mandate entered earlier this summer,” Steve Davis, Qwest SVP for public policy, said in a statement. “Inexplicably, last Friday, the FCC adopted the very rules which the court vacated as unlawful.”

The petition claims the FCC action condemns “incumbents to a continued loss of hundreds of thousands of customers every month.” According to Verizon and Qwest, the Baby Bells have lost more than one million customers since the March ruling by the D.C. Appeals Court.

Both companies say competitors, known as competitive local exchange carriers (CLECs), are targeting the incumbents’ “best, high volume customers” with below market rates subsidized by the Baby Bells.

“Turning to the courts isn’t our preferred choice, but the commission has left us with little option. Now we find ourselves having to join with others in challenging the FCC’s so-called interim rules that extend the illegal status quo with no clear end in sight,” Verizon SVP and deputy general counsel Michael Glover said in a statement issued Tuesday. “The indefinite extension of this failed policy means more uncertainty and more harm to the industry.”

Glover said the purpose of Monday’s petition was to “get the FCC to comply with three successive decisions of the federal appellate courts and correct the errors the judges told them to fix nearly six months ago with a deadline that is already more than two months past.”

Since the 1996 Telecommunications Act passed Congress, the FCC has consistently tried to pass rules generally known as “unbundling,” which allow competitors to lease Bell lines at a discount. The courts have consistently rejected the FCC’s efforts.

“Fundamentally, the FCC erred once again in finding that Qwest must provide components of its network to competitors at below-cost rates without any finding that competitors are impaired without access to those facilities — the standard established by Congress,” Davis said. “This action is inappropriate, and the FCC’s rules should again be vacated.”

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