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Judges back FCC rules on network sharing

EarthLink loses appeal over regulators' decision to exempt regional phone companies from "unbundling" fiber lines.

A panel of federal judges on Tuesday dealt a blow to EarthLink, upholding federal rules that exempt regional telephone companies from sharing portions of their broadband networks with competitors.

The U.S. Circuit Court of Appeals for the D.C. Circuit denied the Atlanta-based Internet service provider's request for review of a 2003 Federal Communications Commission order. Those rules left Verizon Communications, BellSouth, Qwest Communications International and the pre-merger SBC Communications free, with respect to fiber-based networks, from requirements in a 1996 federal telecommunications law that generally forced such companies to "unbundle" network elements for access by potential competitors.

"The FCC reasonably concluded that the benefits of unbundling were 'modest,'" Circuit Judge Janice Rogers Brown wrote in a 25-page opinion (click for PDF) for the three-judge panel.

The Bells are generally required by law to lease access to their traditional copper lines. The idea behind scaling back the rules for fiber-based networks was to encourage telephone companies to deploy more advanced broadband services--and to boost their competitiveness against dominant cable broadband companies. The regulators had argued that mandatory unbundling would discourage investment in new, pricier ventures like .

During oral arguments in May, a lawyer for EarthLink argued that the FCC had behaved illegally in enacting the exemptions because it hadn't adequately assessed the state of competition in the broadband industry.

The judges dismissed those arguments, saying federal law "imposes no particular mode of market analysis or level of geographic rigor."

The same appeals court ruled two years ago that federal regulators had been justified in saying that the big phone companies would not have to share or unbundle their new "advanced broadband networks," which use technology such as fiber optics, with potential competitors. Consumer groups at the time objected to that ruling.

Chris Putala, EarthLink's executive vice president for public policy, downplayed the impact of the court's decision. He said in an e-mail message that the company would "continue negotiating our commercial agreements with the RBOCs (regional Bell operating companies) to include fiber to the home when we have products and services to deliver."