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FCC's Powell tells phone companies to negotiate

Posted on: Thursday, 11 March 2004, 06:00 CST

WASHINGTON -- The Federal Communications Commission chairman said Wednesday the former Bell telephone companies and competitors should negotiate an end to the legal dispute over how best to encourage competition for local service.

Michael Powell asked the companies to try to agree, within 30 days, on fees and conditions for competitors to use the Bells' wires and switches. Without a deal, Powell said he would urge other FCC commissioners to delay for 18 months any changes to existing telephone service.

"I call upon both sides to work earnestly to arrive at commercially negotiated rates for access," Powell told the National Association of Regulatory Utility Commissioners. "It would be irresponsible for the critical industry players not to make meaningful efforts to do so."

The FCC, over Powell's objections, put in place rules in August that allow states to require that Verizon, BellSouth, Qwest and SBC lease parts of their networks at low prices to competitors such as AT&T and MCI.

The idea was that competitors could not afford to build their own networks, but the use of existing ones would be an incentive to break into local phone markets.

The former Bell companies said the rules left them at a competitive disadvantage and took away the incentive to build better networks. A federal appeals court in Washington agreed.

The three commissioners who supported the rules said they would appeal to the Supreme Court. Powell said such an appeal could delay new rules for two years.

Powell's call for talks drew support from the local phone companies.

"We've always believed that it would be best for consumers, the nation's economy and the telecom sector if rates were driven by the market instead of arbitrary regulation," said Walter B. McCormick Jr., president of the U.S. Telecom Association, the phone companies' trade group.

State utility commissioners also applauded Powell's position.

"He has a realistic, practical and progressive approach that we need to rethink the issues rather than continue to litigate at the federal level," said Ohio Public Utilities Commissioner Donald L. Mason.

The Bells' competitors questioned whether talks would prove fruitful.

"The only certainty afforded by Chairman Powell's proposal is the certainty that most consumers will have no choice of a local service provider," AT&T General Counsel Jim Cicconi said. "Frankly, we would rather stand up for our current and future customers' right to competition and fair prices instead. Millions of consumers and the industry need the certainty and finality that only a Supreme Court review can bring."

The dispute dates from 1996, when Congress ordered the FCC to write rules to encourage competition with the former Bell phone companies, which have held a near monopoly in local markets.

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