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Chief justice rejects telecom case

Local phone competition rules are surely a goner Tuesday--now that the U.S. Supreme Court won't intervene.

The U.S. Supreme Court won't stop local phone competition rules from sunsetting on Tuesday, ending the best chance AT&T, MCI and other long-distance phone companies had of keeping the rules alive.

Chief Justice William Rehnquist's clerk was notifying attorneys involved in the case of his decision on Monday, but nothing had been released yet by the court, according to a source familiar with the situation.

The decision was expected. A spokesman for the National Association of Regulatory Utility Commissions, which filed the stay request alongside AT&T, didn't give the case much hope because it didn't have the backing of the Bush administration, which decided last week not to seek a U.S. Supreme Court review.

The rules required the Bells to lease their local phone lines to competitors at rates set by the government. The FCC imposed the rules eight years ago to open the market for local phone service to competition and lower the cost of a home phone line.

Now that the rules are all but certain to be lifted Tuesday, debate has begun on the aftermath. While it's likely the local carriers will charge competitors more, how much is subject to much disagreement. Some analysts say long-distance companies will be paying $10 more for a local phone line that they can resell, which could trigger a rise of 25 percent to 50 percent in the rates they charge their customers. Others say the effect will be small.

Representatives of the four Bell operating companies--Verizon Communications, Qwest Communications International, SBC and BellSouth--were not immediately available for comment.

The Bells argued that the amount AT&T, Sprint, MCI and other long-distance phone companies were paying for a local phone line was $10 below what it cost the Bells to maintain it. The Bells said they were losing money, along with customers.

Long-distance phone companies argued that, left to their own devices, the Bells would raise fee for access to their networks to uncompetitive levels.

The Bells fought the rules in court, emerging victorious in March when a U.S. Court of Appeals set the rules aside as of Tuesday.