FCC eases Texas resale law

The Federal Communications Commission has overruled buildout provisions in a Texas law that limit competitors' ability to lease and resell parts of the existing phone network. The decision marks one of the few times the FCC has overruled a state PUC.

Although the provisions were not being enforced, the FCC ruling may indicate that the agency will be more aggressive in eliminating anti-competitive laws.

"We hope it's a signal to other states," said Charles Land, executive director of the Texas Association of Long-Distance Providers. "When that buildout provision was adopted, it was done at [Southwestern Bell's] urging, and it was clearly a means to keep competitors out of their markets."

Because the Texas PUC has been granting waivers to the buildout requirement for the last year, some think this was an easy case for the FCC to put its foot down.

"I don't know how much of a signal this was," said Terry Monroe, director of state affairs for the Competitive Telephony Association. "You could see it as the FCC taking the easy way out."

MCI officials called the pre-empted provisions in the 1995 Texas telecommunications law "the single most anti-competitive statute passed by a state legislature." The company plans to offer local phone service in parts of Texas by year's end, and the state law essentially would have required it to build its own local network.

The Texas decision was not the first time the FCC has wielded its power under the 1996 Telecommunications Act. Earlier in the week, the FCC pre-empted part of a 1995 Wyoming telecommunications law. But Chairman Reed Hundt said the Texas case is noteworthy because Texas is such a big state.

"The FCC is being very selective in the cases in which they will pre-empt the states," Land said. "Congress needs to give them a lot of support."