As a result, it appears that the Federal Communications Commission also will not seek a Supreme Court review of the issue.
Commissioner Kevin Martin said Wednesday that he no longer wants to ask for the court review, and his change of heart means the five-member FCC commission is unlikely to favor the move.
The FCC has yet to announce whether it will, as a group, seek the appeal. A representative could not be reached Wednesday for comment. An FCC-led appeal is considered the strongest legal effort left to keep the rules in place.
Martin's comments came after U.S. Solicitor General Theodore Olson, who represents the federal government in cases before the Supreme Court, earlier Wednesday handed the FCC his decision against the appeal. The move is one of the first indications that the Bush administration is in favor of throwing out the rules.
Martin, in a statement, said he's following the Bush administration's lead, which earlier in the day said it would not to seek a court review. "Because the solicitor general decided not to support the FCC's appeal, I no longer support appealing the D.C. Circuit's decision," Martin said.
There is still a U.S. Supreme Court appeal in the works, albeit one with little chance of success. On Thursday, utility regulators in Arizona, Michigan and California are expected to file their own appeal, according to a representative for the effort. "Ours is the weakest of the alternatives right now," the representative concedes.
The Bell operating companies have promised little immediate impact, saying service will continue uninterrupted.
"We applaud the Bush administration for making a tough call today, but one that will bring the benefits to consumers of a stepped-up investment in advanced telecommunications networks by competing providers," Verizon said in a statement.
AT&T, MCI and other long-distance providers say that left to their own devices, the Bells will ultimately raise their rates to anticompetitive levels.
The Computer Technology Industry Association, or CompTIA, agreed. "Most assuredly, this lack of leadership will have broad, negative repercussions for consumers and the IT industry," Tom Santaniello, manager of U.S. public policy for CompTIA, said in a statement. "Local phone rates will rise, service quality will fall, and IT innovation will vanish."
The dispute centers on a decision the FCC made in August, when it said states could set rules that force the big local phone companies to share portions of their networks with AT&T, MCI and other competitors to spur competition.
The local phone companies protested, and, the U.S. Court of Appeals for the District of Columbia said that the FCC was wrong and threw out the rules.
On Wednesday, AT&T promised to continue its legal maneuvering and keep the pressure on state public utility commissions. The carrier said the decision has "in one stroke changed the legal and policy position (the Bush administration) has maintained since it took office."
A representative for one of the four Bell operating companies had no immediate comment. A representative for President Bush could not immediately be reached for comment.
The Bush administration decision to try to end the legal infighting comes as no surprise. Nearly every attempt by the FCC to write rules enforcing competition in the local phone companies' territories has prompted years of lawsuits and bitter criticism from all sides.