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Local phone competitors seek court relief

Claiming a recent court decision will prevent phone competition in the local phone market, the three leading long-distance companies and their trade association file a motion to delay the finding.

    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 companies.

    "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 ruling.

    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 ruling did.