Supreme Court Refuses to Grant Line-Sharing Stay

The U.S. Supreme Court refused Monday to grant a temporary stay of a lower court decision striking down rules forcing incumbent telephone companies to provide discounted access to their competitors.

Chief Justice William H. Rehnquist’s decision not to grant the stay request by AT&T and other long distance providers, along with a number of competitive local exchange carriers and public utility commissions, means that after midnight Tuesday, the carriers must negotiate at market rates for access to the Baby Bell lines.

“This is not surprising given the Bush Administration decision to abandon the litigation. It confirms that the administration has set the industry on a path to higher prices, less competition, fewer jobs and depressed investment,” AT&T said a statement.

Last week, both the Bush administration and the Federal Communications Commission (FCC) decided not to appeal a March decision by the D.C. Circuit Court of Appeals rejecting the FCC’s latest line-sharing plan, setting into motion the temporary stay request by AT&T on Thursday afternoon.

The rejection of the stay request does not preclude a formal appeal to the Supreme Court by AT&T and the other long distance carriers.

The long distance carriers and consumer advocates claim the D.C. Court’s decision will inevitably result in higher consumer telephone prices. Supporters of the court ruling contend subsidized long distance and local telephone rates are no longer necessary in a telecom industry increasingly characterized by competition among wireline, wireless, cable and satellite communications providers.

In August of last year, the FCC issued rules allowing the Bells to close off their high-speed lines to competitors while continuing to require the incumbent telecoms to share their voice copper lines with competitors at steeply discounted prices. The U.S. Telecom Association (USTA) and three Baby Bells appealed the rules.

In March the D.C. Court tossed out the discount line pricing provisions but upheld all other parts of the FCC ruling. While the Department of Justice and FCC considered an appeal of the decision, FCC Chairman Michael Powell urged the incumbents and the long distance carriers to negotiate on their own to reach agreement on line rates.

While MCI cut a deal with Qwest Communications, the other long distance carriers have been unable to strike a compromise with the incumbents.

After the Department of Justice decided not to appeal the D.C. Court decision, FCC Chairman Michael Powell said his agency would immediately begin drafting new line-sharing rules and predicted the FCC would have new regulations in place by the end of the year.