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Nevadans Split After Decision in Phone Case

Posted on: Wednesday, 16 June 2004, 06:00 CDT

By JOHN G. EDWARDS

REVIEW-JOURNAL

Nevadans were divided Monday after the U.S. Supreme Court declined to stop the government from discarding rules that forced regional phone companies to lease their networks to rivals at steep discounts.

"I am disappointed, because I think it was based on a faulty appeals court decision," state consumer advocate Tim Hay said. "Over the long haul, it will have the result of reducing the amount of competition in the (telephone) market," he added.

In the decision, Chief Justice William Rehnquist declined to grant a stay sought by AT&T, MCI and an association of state utility regulators.

The decision means that government rules intended to make local phone service more competitive will expire today. The rules had been thrown out by an appeals court, and the Bush administration decided not to ask the Supreme Court to review that decision. The head of the Federal Communications Commission, Michael Powell, said last week that work was beginning on new rules.

AT&T Corp. spokesman Gordon Diamond said the decision will result in higher prices, less competition, less choice, fewer jobs and less investment in the telecommunications industry. AT&T said it may abandon local service in two markets by the end of the week, but declined to identify the markets or further elaborate.

Carolyn Tyler, a spokeswoman for MCI Communications, offered similar sentiments.

"If prices rise, MCI Communications may be forced to raise rates in some markets and exit other markets," she said.

She said MCI owns its own facilities in some markets, but pays for use of the switches and other equipment of another company in Southern Nevada.

Bob Jankovics, manager of Nevada Telephone, however, applauded the Supreme Court's refusal. He said it benefits companies like his, XO Communications and Mpower Communications which invested millions of dollars in their own switches.

Nevada Telephone, he said, only relies on Sprint Corp., the incumbent local exchange service, for access to lines that lead to customers' homes and businesses.

Companies that don't own their own equipment can lease the equipment belonging to other telephone companies, such as his, he said. But he said that is not really feasible because profits are too small to divide among two companies unless prices are raised.

Sprint spokesman Detra Page said the refusal will not affect her company's Southern Nevada operation because it is the former monopoly phone company and owns its own equipment, as it does in 16 other states.

Don Soderberg, chairman of the Public Utilities Commission, also said he favored doing away with requirements that former monopolies provide competitors with use of their equipment at discounted prices.

The Washington Post and The Associated Press contributed to this report.

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