Court Case Rattles Bells' Rivals

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Competitive telecommunications carriers last week implored the Federal Communication Commission to fight a court ruling that could hurt the firms' ability to gain access to the networks of giant phone companies on reasonable terms.

Two groups that represent telecom startups have asked the FCC to seek a stay of the decision and obtain assurances from companies such as Verizon Communications Inc. and SBC Communications Inc. that they won't use the ruling to terminate access agreements.

Executives heading CompTel and the Association for Local Telecommunications Services said in a June 5 letter to FCC chairman Michael Powell that they were "extremely concerned about the disruption that may occur," if the large carriers decided to deny access.

An FCC spokesman said agency lawyers were currently reviewing the case and weighing possible legal steps.

The legal case, in a May 24 decision by the U.S. Court for the D.C. Circuit on May 24, either remanded or eliminated the FCC's line sharing rules. Under those rules, Verizon and SBC were required to lease the high-frequency portion of a copper loop to data competitors that were not interested in providing local phone service.

Leasing essentially half a line saved the competitors money.

Based on the ruling, data competitors are worried that line-sharing rights could disappear while the D.C. Circuit's ruling is on appeal.

"We haven't specifically heard [the incumbents] say they are going to try to get out from the contracts they are under, but that could be coming," ALTS president John Windhausen said.

Verizon and SBC officials noted that the court's ruling does not take effect for at least 45 days. Action by the FCC or further litigation could postpone the 45-day period for many months.

Competitors control about 500,000 digital subscriber lines for the provision of high-speed Internet access. Of that total, about 170,000 customers are reached through line sharing. Line sharing is the fastest growing segment for data competitors, Windhausen said

SBC spokeswoman Saralee Boteler claimed her company, the second-largest local phone company in the U.S. with 42 million access lines, is not trying to escape line sharing deals.

"To the best of my knowledge, we are not informing [competitors] that we are no longer going to provide line sharing," she said.

ALTS members plan to appeal the D.C. Circuit's decision to the Supreme Court with or without the FCC's help.

The FCC has not revealed its litigation strategy. Often the agency declines to appeal a case, preferring to rewrite its rules.

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