FCC Appeals Phone-Competition Case

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The Federal Communications Commission is hoping to return to court and regain
broad authority to craft rules designed to promote competition in the local
phone and high-speed-data markets.

On Monday, the agency filed an appeal with the U.S. Court of Appeals for the
D.C. Circuit seeking rehearing in a case that broke in favor of the giant local
phone companies by limiting the FCC's power to order the lease of network
elements.

The court also tossed the agency's line-sharing rules, which required
incumbent phone carriers to lease just the data portion of a copper loop to
competitors.

In a 15-page brief, the FCC said the D.C. Circuit's decision ran counter to a
recent ruling by the Supreme Court that gave the FCC broad discretion in
fashioning the prices of network elements furnished by incumbents.

The commission said that because the Supreme Court empowered it to set
prices, the D.C. Circuit should not have placed limits on the number of elements
incumbents must make available to rivals.

The FCC's brief said the D.C. Circuit stepped into the 'debate for economists
and regulators' and engaged in precisely the kind of 'freewheeling policy
inquiry' that the Supreme Court has told lower courts to avoid.

Nevertheless, the agency's appeal struck some as curious because the D.C.
Circuit's decision was viewed as consonant with FCC chairman Michael Powell's
view that local-phone-competition policies have not been properly tailored to
market conditions and need to be overhauled.

The United States Telecom Association, which won the case in the D.C. Circuit
against the FCC, issued a statement voicing disappointment with the commission's
appeal, claiming that it would delay the agency's ongoing effort to craft a new
competition policy.

Republican FCC commissioner Kathleen Abernathy told reporters the appeal
would not delay the agency's triennial review of its network-elements
policies.

Phone companies that want to see the FCC's authority preserved applauded the
agency decision to seek rehearing.

'The Supreme Court read the law correctly. The D.C. Circuit has misread both
the law and congressional intent and, in this case, is actually thwarting the
will of Congress,' said H. Russell Frisby Jr., president of CompTel, a trade
association for competitive carriers.

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