Appeals court nixes pick-and-choose stay request

A federal appeals court this week denied an emergency motion by CLECs to prevent the FCC’s new “all-or-nothing” rule regarding interconnection agreements from replacing the agency’s previous “pick-and-choose” guidelines.

Under the 1996 Telecommunications Act, incumbent carriers are required to offer interconnection terms to competitive carriers on a nondiscriminatory basis. In July, the FCC adopted the all-or-nothing rules, which allow CLECs to opt into existing interconnection agreements, but only if the carrier accepts all terms of the deal.

The all-or-nothing regime is a stark contrast to the previous rules, under which CLECs were allowed to “pick and choose” any portion of an existing interconnection agreement with a given ILEC and the ILEC was obligated to provide it under the nondiscrimination clause.

Incumbent carriers disliked the pick-and-choose rule, claiming it undermined efforts to reach commercial negotiations because it precluded ILECs from engaging in the typical “give and take” process that is characteristic in business deals. ILECs such as Verizon Communications expressed concern that a third-party CLEC would opt into the portion of an accord that favored them but would decline to accept the less favorable aspects.

Meanwhile, CLECs argued the new all-or-nothing rules will greatly increase their costs to negotiate interconnection agreements, because they cannot simply opt into an existing deal.

Making matters more difficult is the fact that the FCC recently adopted interim rules for unbundled network elements, according to Lisa Butler, president of Cove Communications Group. Under those rules, existing UNE rates will be frozen for a six-month period but are not eligible for third-party CLECs to adopt in its own accord, she said.

“[The all-or-nothing rule] is further complicated in that just about any agreements you want to opt into are frozen,” Butler said during a conference call yesterday.

With this in mind, CLEC association CompTel/Ascent and four competitors this month asked the U.S. Court of Appeals for the Ninth Circuit to grant an emergency stay to prevent the all-or-nothing rules from taking effect as scheduled this week, which prompted this week’s denial.