What's a telco to do?: Lawmakers weigh FCC authority, long-distance approval

Several issues close to the hearts of regional Bell operating companies, competitive local exchange carriers and interexchange carriers were laid out before lawmakers last week. While the U.S. Supreme Court listened to arguments concerning FCC authority on pricing and interconnection agreements, two key House Telecommunications Subcommittee members introduced a bill regarding the rights of incumbents to offer interLATA service.

The Supreme Court hearing, AT&T vs. Iowa Utilities Board, was an effort to re-evaluate stipulations of the 1996 Telecom Act that were overturned by an Eighth Circuit Court ruling last year. At hand were debates over how much authority the FCC should have in establishing pricing for competitive access to incumbent facilities, as well as whether the FCC can require incumbents to rebundle unbundled network elements for competitors.

Although a ruling is not expected before June 1999, observers said the justices appeared to be quite "engaged." "They seem to have had an enormous capacity to argue with both sides," said a GTE spokesman who was present.

The RBOCs and GTE feel that the states-not the FCC-should determine the pricing of network elements. The carriers also oppose what Harvard law professor Laurence Tribe called "sham unbundling." Tribe, who represented the RBOCs, said sham unbundling circumvents the resale provision of the act.

CLECs and IXCs, on the other hand, believe the FCC should set guidelines for states to follow for incumbent pricing. Where they differ is on unbundled network elements, said a spokesman for the Association for Local Telecommunications Services, which submitted a brief for the hearing.

IXCs "want the [Bell companies] to rebundle the unbundled network element platforms, but they want to pay the unbundled rate," he said. "They should pay the resale rate."

But because many CLECs have been building their own networks during the time these issues have been disputed, the final ruling may not have a large effect on their business, the ALTS spokesman added.

Also last week, House Telecommunications Subcommittee Chairman W.J. "Billy" Tauzin, R.-La., and Rep. John Dingell, D.-Mich., introduced the InterLATA Communication Improvements Act of 1998. If enacted, the law would limit the FCC's authority in prohibiting the RBOCs from offering in-region long-distance.

The bill's introduction two days before the session ended suggested it is intended to alert the FCC that Congress may revisit some points of the telecom act, said Paul Glenchur, an analyst with Schwab Capital Markets & Trading Group.