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Bells can hike competitors' leases as of Friday

Price caps set in 1996 end Friday, but only a small increase is allowed in the next 12 months.

New telecommunications rules slated to go into effect on Friday will allow local phone giants to hike the prices at which they lease their lines to competitors. The new rules would free the Baby Bells--Verizon Communications, SBC Communications, BellSouth and Qwest Communications International--from leasing their phone lines to third parties at government-mandated discounts.

The phase-out of these requirements began last year after a court ordered the Federal Communications Commission to discontinue these set leasing rates, which were established as part of the Telecommunications Act of 1996. AT&T, MCI and other long-distance phone operators used the act to enter the local-phone business, luring millions of home phone customers away from the Bells.

But the rules were struck down last year after a long battle initiated by the Bells. The U.S. Court of Appeals order forced the FCC to draft new rules about competitive access to the Bells' network. Those new rules were adopted in December.

Consumers and businesses shouldn't experience dramatic price hikes right away because the FCC capped how much extra the Bells can charge over the next 12 months. For residential lines, the Bells can charge at most $1 a month on top of what operators were previously paying. Businesses telephone operators will see up to a 15 percent increase, according to the FCC.

A year from now, the Bells will be able to charge whatever they want, the FCC added.