An appeals court has thrown out a large chunk of the Federal Communications Commission rules governing what parts of their networks the incumbent local exchange carriers must share with their competitors.
In a ruling released Tuesday, the U.S. Court of Appeals for the District of Columbia Circuit overturned much of the so-called triennial review order approved by the FCC in February 2003 and released in final form in August. The decision directs the FCC to rewrite the rules for how ILECs must share parts of their networks with CLECs.
The court decision is a setback for the CLECs and for state public utilities commissions, which had power under the FCC plan to set some of the network-sharing rules. The ILECs, which had joined the United States Telecom Association (USTA) in the lawsuit, expect to benefit from the court's decision to send the rules back to the FCC. Incumbent carriers had criticized the FCC's decision to leave some rule-making up to the states, arguing that forcing them to comply with 50 separate sets of rules would cause uncertainty in the industry.
The appeals court decision, the third court ruling overturning FCC telecom rules since 1996, doesn't affect the FCC's decision to allow the four ILECs to stop sharing most of their broadband networks, including DSL infrastructure and new fiber rollouts, with competitors. But the ruling overturned the FCC's decision on sharing switching facilities and some high-capacity DS-1 and DS-3 network loops. The court ruled that the FCC did not comply with the 1996 Telecommunications Act when it left some decisions affecting the sharing of unbundled network elements (UNE) to states instead of providing federal guidelines.
The court decision was cheered by the USTA, which brought the lawsuit against the FCC, and by the incumbent carriers. Tuesday's "court action is a victory for consumers, and should help this industry move forward in developing healthy, sustainable and economically rational competition that will extend telecommunications innovations farther and faster in the marketplace," said William Daley, president of SBC, in a written statement. "The country, the industry and consumers nationwide have been waiting eight years for a clear and legally sound set of rules... This appears to be a victory for those who support markets free of rules that have repeatedly been judged illegal and which have eliminated jobs, shrunk investment and hurt fair competition."
In the February 2003 FCC decision, the regional carriers were no longer required to share switching facilities with CLECs at a discount. But for residential and small-business customers, state public utilities commissions had the power to determine whether CLECs' ability to compete with the regional carriers would be impaired without the sharing of switching facilities. States also had the power to review the sharing of DS-1 and DS-3 loops.
Jim Cicconi, AT&T general counsel, criticized the court's decision. "At a time when consumers and small business owners are just beginning to realize the benefits of competition, the D.C. Circuit today held up a stop sign and halted eight years of progress," he said in a statement. "This decision is not in the public interest, but is instead in the interest of four Bell monopolies."
Cicconi accused the court of being an "activist panel" that made a decision that "substitutes its judgment for that of the expert agency."
"The right of all Americans to choose their local telephone service provider is at stake, and the advancement of competitive broadband services is at risk," he added. "Consumers across the nation should be outraged at the prospect of being unplugged and underserved if the D.C. Circuit decision is left unchallenged. This is especially true for those 19 million consumers and small business owners who have already chosen an alternative provider, and who could find their choice taken away from them by today's decision."
FCC Chairman Michael Powell, who opposed the commission's switching decision, said Tuesday he already has directed FCC staff to start work on new UNE rules. "I dissented from the majority's decision on local telephone competition because it was inconsistent with the law and would result in years of regulatory uncertainty and unrealized consumer promise," Powell said in a statement. "My fellow commissioners and I need to expeditiously get to work to produce a set of judicially sound rules, once and for all. I have already directed the staff to begin preparing new rules that will provide the sorely needed clarity and guidance essential to bringing consumers the benefits they were promised and deserve."
Powell and Commissioner Kathleen Abernathy applauded the court's decision to leave the FCC's broadband unbundling rules intact. "This is a big victory for American consumers," Abernathy said in a statement. "The commission's framework will help promote greater investment by removing regulatory barriers to broadband deployment."