Let them decide: Supreme Court revives FCC authority for pricing rules

The Supreme Court last week reinstated the authority of the FCC for setting local rules when it overturned a 1997 8th Circuit Court decision. Competitive local exchange carriers, long-distance companies and the FCC immediately applauded the decision, while regional Bell operating companies faced yet another disappointment in their race to provide long-distance.

In short, the Court decided that the FCC-not the states-has the right to implement the local provisions of the 1996 Telecommunications Act. It declared that the 8th Circuit Court was incorrect in ruling that a network element leased by a competitor must be part of the physical facilities and equipment used to provide local service, so services such as directory assistance and caller ID must now be available to competitors. It upheld the FCC's conclusion that RBOCs must make network elements available whether or not a competitor owns facilities, and it reinstated an FCC rule that forbids incumbents to separate already-combined elements before leasing them to competitors. In addition, the court revived the FCC's "pick-and-choose" rule, meaning that competitors can select portions of previous interconnection agreements.

CLECs see the move as a victory.

This decision is several years in the making, and the wait has stymied competition," said Robert Taylor, president and CEO of Focal Communications Corp., a Chicago-based CLEC. "Overturning the 8th Circuit Court decision shows that the FCC's rules are valid, and that's great news for CLECs."

Because many states were already using the FCC's rules as guidelines, business for facilities-based CLECs won't change dramatically, said Cronan O'Connell, vice president of industry affairs for the Association of Local Telecommunications Services. But it's good that these issues have been addressed and carriers can move on, she said.

Heartening some RBOCs is the Supreme Court's request that the FCC re-evaluate its "necessary and impair" standards for incumbent-provided elements. It said that the FCC did not consider whether incumbents should provide elements even if they are also available from another source.

In a statement, GTE General Counsel William Barr referred to this part of the decision as a "smashing victory" that "sounds the death knell on sham unbundling."

A strong benefit of the ruling for CLECs is the revival of the FCC's forward-looking, or TELRIC, pricing, said Brian Thomas, vice president of external affairs for CLEC GST Telecommunications.

GTE, for one, says it will continue to contest the lawfulness of TELRIC pricing methodology.

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