Federal appeals court overturns FCC telecom ruling

Telecom deregulation is predictably being determined again by the courts.

While the FCC gave a ruling last year about key provisions such as line-sharing by the big local phone companies and how much they charge competitors for switching services, the federal appeals court in Washington, D.C., has overturned it.

Specifically, the court says the FCC can’t let states decide to what extent the big local carriers that own the phone lines – BellSouth, Qwest,, Verizon, – must share them with competitors.

SBC

The court also says these companies don’t have to share new access lines such as fiber-to-the-home that they may build in the future.

The bottom line of the decision is that the cost to competitors for network access will go up if the ruling stands. Whether the ruling stands is up in the air; it could be appealed to the U.S. Supreme Court.

Meanwhile, spin masters are jumping in with divergent interpretations of the decision. FCC Chairman Michael Powell, who opposed the FCC ruling that was overturned, said the court was actually upholding the FCC’s wishes. Other commissioners have asked Powell to appeal the decision.

Competitors of the big local phone companies say the ruling will make it harder for them to compete against the giants. This makes sense because if they have to pay more for providing a service, it will put more pressure on their profit margins and could threaten their viability.

The big local phone companies say the ruling will encourage more advanced services. This also makes sense, because if they don’t have to share new technology with competitors, it’s more likely their profits will be higher on the services the technology enables. Wall Street apparently agrees, because the stock prices of all the major local phone companies rose after the appeals court issued its decision.

The court gave the FCC 60 days to rewrite its regulations or appeal the decision, so there is no immediate change in the way the service providers do business. And this limbo could last a lot longer if the case gets picked up by the U.S. Supreme Court, which wouldn’t start hearing it until October.