Supreme Court to Review FCC Regulations

(Utility Business) The Supreme Court plans to settle a feud among traditional local phone companies and their competitive local competitors. The outcome of the trial could affect consumer choices and prices for basic phone service.

The court will be looking at the fee structure set up to determine how much new competitors must pay for access to the network of existing phone lines.

Local phone companies, their telecom rivals and the Federal Communications Commission all asked the Supreme Court to get involved, each for a different reason.

Local phone companies would like portions of the FCC price rules eliminated. Rival telecom companies and regulators want the court to clarify the price rules or clarify conflicting lower court interpretations of them.

This dispute stems from the 1996 Telecommunications Act, in which Congress came up with new rules for competition and service across many communications fields. One of the goals of the act was to eliminate the monopoly control over local phone service, a $110 billion market, with the idea that consumers would benefit from lower prices and greater choice.

Supporters of local phone competition hope the overhaul will one day mean the same kind of choice that consumers now have for long-distance service. However, more than 90 percent of the country still gets local service from a Bell company that was a part of AT&T before it was broken up.

New local phone companies typically use all or portions of the same network of lines and switches that Bell companies use.

In response to the 1996 law, the FCC set up a fee structure for new telecom companies to gain access to the Bell networks. The FCC decided the new companies should pay according to the current and future worth of the network and its services.

The local phone companies argued that in doing that, the FCC ignored the phone companies' cost to build and maintain the phone systems.

Lawyers for Verizon Communications argued in court papers that the FCC acted like "an omnipotent central planner."

The local phone companies also object to the way the FCC required them to combine elements of existing phone networks for sale to companies that want to enter the market, if those companies request it.

Lawyers for the new telecom companies believe Congress and the FCC took the correct approach.