Claiming a recent court decision will prevent any real
competition from developing in the local phone market, the three leading
long-distance companies and their trade association filed a motion with an
appeals court to delay the finding.
AT&T, Sprint, WorldCom and the CompTel trade association filed a motion
this week with the 8th Circuit Court of Appeals in St. Louis to stay that
court's ruling of July 18. That ruling stated the Federal Communications
Commission's (FCC) formula for calculating what Bells should charge for
access to their equipment is too hypothetical and needs to be revisited. The
FCC has already filed a motion to stay that ruling.
Not only is the local phone market considered a strong source of revenue
for competitors, but it's critical for any company that wants to offer
bundled services, including Internet access and long-distance.
Federal regulations intended to open the telecommunications market
dictated that Baby Bell phone companies such as SBC Communications and Bell
Atlantic had to make their sprawling networks available to third-party
"The prompt reinstatement of the FCC's pricing guidelines is critical if
consumers are to finally have a choice of local phone carriers as promised
by the Telecom Act" of 1996, WorldCom general counsel Michael Salsbury said
in a statement.
The 8th Circuit Court has been a thorn in the side of the FCC and
competitive carriers since the adoption of the Telecom Act, which charged
the FCC with establishing a pricing structure for competitors to gain access
to incumbent phone systems. Shortly after the FCC adopted a pricing model,
the court struck it down, saying the commission had unlawfully taken
jurisdiction away from state utility commissions.
The Supreme Court reversed that decision, siding with the FCC. Now the 8th
Circuit Court has ruled that the FCC's forward-looking pricing model for
unbundled network elements needs to be reworked. Under what the commission
called a "forward-looking model," prices are based largely on the market
value of the incumbent's equipment and for the most part don't include
costs the incumbent incurred in building the network.
Local phone competitors essentially have three ways to provide residential
service: They can resell service provided by an incumbent, they can build
their own network, or they can combine their network with select pieces of
the incumbent's network to spare the cost of having to run new lines to
individual homes. The latter model is the one being pursued by the large
competitors such as WorldCom and is the one affected by the latest court
Legal experts said it's possible the July ruling by the 8th Circuit Court
also could end up before the Supreme Court, as the appeals court's previous