CLECs ask Supreme Court to overturn D.C. Circuit UNE order

AT&T, WorldCom and Covad Communications jointly filed a petition with the U.S. Supreme Court asking it to overturn the D.C. Circuit’s May 2002 decision that remanded the FCC’s local competition and line sharing orders. The commission previously had asked the D.C. Circuit in July for a rehearing of its decision, but did not join in the petition. The D.C. Circuit denied the rehearing request in September.

According to AT&T, the petition was based on previous Supreme Court decisions that affirmed the FCC’s authority in setting the TELRIC pricing formula used to set UNE rates and that upheld the commissions rules which allow competitive carriers to lease unbundled network elements from incumbent carriers. AT&T said the D.C. Circuit’s ruling contradicted the Supreme Court’s decisions.

“In its rulings, the Supreme Court confirmed the ‘common sense’ conclusion that giving competitors the right to lease capacity at fair prices will create competition and prod the Bell companies and their competitors alike to invest and improve their services to meet the competitive challenge,” said Mark Rosenblum, AT&T’s vice president – law, in a statement.

In remanding the local competition order, the D.C. Circuit took issue with the FCC’s decision to make its unbundling requirements “uniformly applicable” to all elements in every geographic or customer market. The court determined that this approach unjustifiably required incumbent carriers to make unbundled network elements (UNEs) available in violation of the Telecom Act’s necessary and impair standard, which requires the FCC to remove a network element from the list of those required to be unbundled when the absence of the element would not impair a CLECs ability to participate in a local market. The RBOCs have argued that switching should be removed from the UNE list because it is available on a nationwide basis.

In remanding the line-sharing order--which required the unbundling of the high frequency spectrum of the copper loop in order to make it possible for CLECs to provide DSL service--the court criticized the FCC for failing to consider the relevance of competition coming from cable and, to a lesser extent, satellite.

The Bells were quick to criticize the petition. James Smith, senior vice president-FCC for SBC Communications, characterized the appeal as an effort to prevent “real reform” that would benefit all consumers.

“The courts, economists and industry analysts have all recognized that excessive unbundling inhibits investment by incumbents and competitors alike,” Smith said in a statement. “By their appeal, AT&T and MCI WorldCom show that they are more interested in continuing to exploit regulatory arbitrage than building their own facilities, thereby providing the competition that the Act envisioned and American consumers deserve.”