Supreme Court strikes down blanket unbundling rules and opens door for challenge to TELRIC pricing scheme.

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Background: The United States Supreme Court today issued its ruling in AT&T; v. Iowa Utilities Board, Nos. 826 et al.

By a vote of 7-1, the Court ruled that the FCC failed to construe properly the legal standards in section 251(d)(2) of the Telecommunications Act of 1996 that govern which network elements incumbent carriers must make available. It therefore vacated in its entirety the FCC rule (51.319) that sets forth the network elements that incumbent carriers must provide.

By a vote of 5-3, the Court upheld the jurisdiction of the FCC to issue rules purporting to implement the pricing provisions of sections 251 and 252. The Court did not rule on the substantive validity of the pricing rules.

GTE Corp. issued the following statement regarding the ruling:

"Today's ruling on network elements is a smashing victory," said GTE's Executive Vice President and General Counsel William P. Barr, who argued the network elements issues on behalf of incumbent carriers before the Court. "The Supreme Court has said clearly and forcefully that the FCC unlawfully imposed blanket unbundling requirements on incumbent carriers. This ruling sounds the death knell of sham unbundling."

Barr added: "While the Court, by a bare majority, upheld the FCC's jurisdiction to impose pricing rules on the States, the substantive validity of those pricing rules is now open to challenge on remand in the Eighth Circuit. We will vigorously contest the lawfulness of the FCC's total element long - run incremental cost (TELRIC) pricing methodology, and we expect to prevail."

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