High Court Will Hear Telecom Act Appeal

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The Supreme Court last week agreed to review a lower court
decision barring federal regulators from setting interconnection rates for new entrants
into the local-exchange market.

At stake is an Eighth Circuit Court of Appeals ruling last
year vacating pricing rules authored by the Federal Communications Commission. The
three-judge panel found that the 1996 Telecommunications Act 'directly and
straightforwardly' handed that power to the states.

However, legal experts were not surprised by the Supreme
Court's decision to review the Eighth Circuit ruling, given the fact that the appeal
was being pushed by the FCC, the nation's long-distance carriers and the Solicitor
General of the United States.

'The news would have been if it [the court] had gone
the other way,' said Chris Savage, an attorney with cable law firm Cole, Raywid &
Braverman.

Nevertheless, the news was another nonevent for cable
operators, as their interest in the local-exchange market remains relatively modest.

Savage said those operators that are pursuing a telephony
strategy already benefit from being facilities-based competitors that only need
'vanilla' interconnection agreements.

'Most cable operators are not aggressively pursuing
the [telephone] business,' Savage said. 'The ones that are have stand-alone
networks. The agreements that they need are being set by the states at close to what the
FCC determined, which are rates not so prohibitively high as to keep any operator out of
the market.'

Meanwhile, the Supreme Court's decision to review the
case doesn't necessarily mean that the FCC will be successful in convincing the court
to rule in the agency's favor, despite claims that the lower court ruling is
preventing implementation of the 1996 act.

'It takes four Supreme Court justices to take a case,
but five to get an opinion,' Savage said. 'The FCC has a reason to be happy. But
it's more of a nature of still being alive to fight another day.'

The wild card in the game may be the Solicitor General,
which reportedly has a two-thirds success rate in getting its cases heard by the Supreme
Court and an equally impressive history of having its position affirmed.

'If I were a betting man, I'd bet that the Eighth
Circuit is going to be reversed,' Savage said.

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