Court Voids Phone Rules

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Washington-A federal court last week tossed out Federal Communications Commission rules governing how much phone companies can charge competitors for leasing essential parts of their networks and for exchanging traffic.

The decision, by a panel of the U.S. Court of Appeals for the Eighth Circuit, could mean that Baby Bells can charge more to new entrants like AT & T Corp. to lease lines needed to hook up customers.

About 375 companies-competitive local-exchange carriers-rely on Baby Bell facilities to provide competitive voice and data service to business and residential consumers.

The Telecommunications Act of 1996 voided state laws that protected phone monopolies from competition and required incumbents to share facilities with new players. But FCC rules concerning how much incumbents can charge CLECs have been litigated all the way to the Supreme Court.

A 1999 decision confirmed FCC authority to set national pricing standards, to be implemented by the states.

Last week's decision dealt with specifics of many FCC rules. They required incumbents to charge rates based on an economic model that reflected the most efficient technology available today, regardless of whether that equipment was actually being used.

The court found that the 1996 law required the FCC to allow phone incumbents to recover real costs, and not just costs some imaginary carrier would recover using the most efficient technology available.

"Congress was dealing with reality, not fantasizing about what might be," the court added.

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