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Illinois Supreme Court Declares Market Competition Will Set Telecom Rates

Posted on: Sunday, 4 December 2005, 18:00 CST

By Jon Van, Chicago Tribune

Dec. 2--A legal cloud hanging over phone rate deregulation for Illinois business customers was swept away by the state's supreme court Thursday in a significant victory for the Illinois operation of AT&T Inc., formerly known as SBC.

The high court affirmed an Illinois law enabling AT&T to set rates for business customers without approval by state regulators. The law allows the company to declare that market competition, rather than state regulation, will set rates for business phone users.

Last month, AT&T petitioned the Illinois Commerce Commission to apply the same rate deregulation to residential phone customers.

The company has operated under deregulation for business customers since 1998, but last year a circuit court in downstate Madison County ruled the law enabling deregulation was unconstitutional. The Madison County court agreed with lawyers for Big Sky Excavating Inc. and other phone customers who sought what could have been millions in phone rate refunds dating back eight years.

The Illinois Supreme Court, however, disagreed with the lower court's finding that state legislators had overstepped their authority in deregulating phone rates for business customers.

The high court noted that the state law enacted in 2001 spelling out deregulation was passed with bipartisan support and had the backing of groups as diverse as the Illinois Manufacturers Association and the Citizens Utility Board.

Big Sky's lawyers argued that AT&T Inc. continued to enjoy near monopoly power despite the legislation and its customers needed protection through state regulation of rates. The high court said that judges cannot second-guess lawmakers in that way.

"Whether a statute is wise or whether it is the best means to achieve the desired result are matters left to the legislature, not the courts," the Supreme Court opinion said.

Carrie Hightman, president of AT&T Illinois, said that her firm "wanted to have this resolved to have certainty in the law." She said most business customers are unaware of the regulatory status of their phone rates or the challenge that it faced.

"Customers are too busy looking at the various service offers available to them," she said. "This is a very competitive business. The law recognizes that, putting us all on a level playing field."

While several companies started offering competitive local phone service to business customers in the 1990s, competition came more slowly to the residential local phone market. Until it was acquired by SBC last month, AT&T Corp. was a major competitor.

Even with SBC and AT&T merged, the company contends that it still faces serious competition from phone service offered by cable TV operator Comcast Corp. and from wireless phone carriers.

CUB and other consumer advocates have objected that AT&T maintains such a dominant position in this market that consumers need protection through rate regulation. The ICC will decide next year whether AT&T will achieve the deregulation of consumer phone rates it seeks.

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Source: Chicago Tribune

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