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High Court Dismisses Verizon Case

November 03, 2000|From Bloomberg News

WASHINGTON — The U.S. Supreme Court, acting on a request from Verizon Communications, canceled a Dec. 6 showdown over the $4.5-billion program that subsidizes local phone companies for serving remote areas.

The largest U.S. regional phone company asked the high court last month to dismiss its appeal, which argued that the "universal-service" payments are inadequate. The Justice Department said last week it, too, supported dismissal.

Both Verizon and the government still are seeking high court review in a second case that raises similar issues, with perhaps even higher stakes. That fight centers on the prices that established local phone companies may charge new rivals for access to existing networks.

The universal-service program requires local phone companies to offer affordable rates in isolated areas where line installation is expensive.

Under the Federal Communications Commission rules, all providers of telecommunications services contribute to a fund, and the proceeds are allocated to companies that serve high-cost areas.

States and the federal government share responsibility for doling out the subsidies. In its motion to dismiss, Verizon contended the FCC narrowed the dispute recently--making Supreme Court consideration unnecessary--when the agency "expressly disclaimed supervisory authority over the states' universal-service activities."

The appeal was lodged by GTE Corp., which combined with Bell Atlantic Corp. in July to form Verizon.

GTE contended the payouts are inadequate, potentially running afoul of the U.S. Constitution's "takings clause," which bars government confiscation of private property without compensation.

Verizon shares rose $2 to close at $57.75 on the New York Stock Exchange.

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