FCC stands pat

The Federal Communications Commission has set the stage for its latest legal defense by denying three Bell regional holding companies' requests to freeze parts of a recent order on access charges and price-cap reform.

Southwestern Bell, Pacific Bell and Nevada Bell asked the FCC to stay major parts of the order earlier this month. The FCC denied their petition June 17, a day after Southwestern Bell filed a lawsuit to block or at least delay the order from taking effect. GTE Corp., MCI Communications Corp. and Cable & Wireless Inc. filed related suits.

The FCC fired back, saying, "a stay order would needlessly and seriously delay the development of local competition - in direct contravention to the goals Congress sought" in the Telecommunications Act of 1996.

The FCC ruled that the three RHCs failed to meet the legal standards for a stay, including proof that the order would cause them "irreparable injury.

The latest legal battle signifies the money and power at stake in deregulating the telecommunications industry. Carriers have challenged two of the FCC's three major rules - on interconnection and access charges - as a way to either protect their turf or get a leg up on the competition. GTE filed suit last week over the universal service rule as well.

The latest tiff concerns two aspects of telecom reform: a change in the formula for calculating access charges and a decision to exempt buyers of unbundled network elements from paying access fees. The FCC wants to cut access charges as part of a plan to reduce long-distance rates that consumers pay.

The three RHCs contend that the formula change - technically an increase in the so-called "X factor" that reduces access charges - was arbitrary and will hurt them financially. But the FCC said the X factor hike accurately reflects the industry's increased productivity and that carriers will derive higher revenues from more phone calls.

VIRGINIA HEADED FOR INTERCONNECTION Bell Atlantic-Virginia last week wrapped up an interconnection and resale agreement with MCI, but the deal must still be approved by the Virginia State Corporation Commission and faces other hurdles. The deal marks the 15th interconnection agreement for Bell Atlantic-Virginia.

COMPETITION HEATS UP IN PHOENIX MCI Local Service started serving medium-sized and large businesses in the Phoenix area last week. The businesses will get one point of contact for their communications needs and 24-hour customer service. MCI is delivering the service over its own network.

RED TAPE CUT ACROSS BORDERS The U.S. and the European Union have agreed to cut the time it takes new products to reach the market. The agreement lets European and U.S. telecommunications equipment makers test their products to each other's standards before the products are exported.