Background:
The U.S. Supreme Court today affirmed the FCC's nationwide
authority to implement the local competition provisions of the
Telecommunications Act of 1996. In a long-awaited decision, the High
Court ruled that the FCC may:
- Issue local competition pricing rules that apply nationwide;
- Require incumbent local carriers (ILECs) to offer combinations of
unbundled network elements for competitors; and - Require ILECs to allow requesting carriers to "pick and
choose" individual pieces of interconnection agreements and use
them in their own pacts.
The Court's decision invalidates several rulings by the U.S. Court
of Appeals for the 8th Circuit that had overturned key portions of
local competition rules adopted by the FCC in August of 1996. The
challenges in the 8th Circuit to the FCC rules were brought by a group
of ILECs led by GTE Corp. and, separately, by several state regulatory
commissions.
The lower court's decisions delayed the rapid development of
local competition contemplated by the Telecom Act by forcing
competitive carriers to fight for cost-based rates on a state-by-state
basis. Perhaps more importantly, the decisions stymied the rise of
facilities-based local competition in the residential and small
business markets by preventing competitive local carriers from
purchasing unbundled elements of ILECs' networks in combined
packages. Another key impact of the decision will be the de-averaging
by states of local loop rates, which will dramatically reduce what
local competitors must pay for unbundled loops in many major urban
markets.
The FCC, through the Justice Department, asked the Supreme Court in
November of 1997 to review the 8th Circuit's rulings. MCI WorldCom
(then known as MCI Communications Corp.) filed its own petition
focusing on the pricing rules and unbundled element issues. Separate
petitions also were filed by AT&T and a group of smaller
competitive local carriers. The Supreme Court heard oral arguments on
Oct. 13, 1998.
The following statement should be attributed to Michael H. Salsbury,
General Counsel of MCI WorldCom, Inc.:
"Today's ruling by the Supreme Court frees the FCC to
implement Congress's national framework for local competition. The
decision essentially returns us to August 1996 when the FCC's rules
were first issued. The question now is whether the incumbent local
carriers will comply with the law of the land or subject consumers to
additional years of litigation delays. MCI WorldCom stands ready to
work with incumbent carriers to bring residential and small business
customers the benefits of local choice. Compliance with federal rules
by the monopolies combined with vigorous enforcement by the FCC will
enable us to expand our local market presence more quickly, providing a
choice for the first time in local telecommunications
services."
