FCC Files Appeal Over Line-Sharing Defeat

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

On July 8, 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 out the agency's line-sharing rules, which required incumbent phone carriers to lease just the data portion of a copper loop to competing data carriers.

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

The FCC 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 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 FCC's appeal struck some as curious, because the D.C. Circuit's decision was viewed as consonant with chairman Michael Powell's view that the agency's 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 in which it voiced disappointment with the agency's appeal. The USTA claimed it would delay the agency's ongoing effort to craft a new competition policy.

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

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

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