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Ex-FCC Lawyer Warns About Phone Rules

September 10, 2004|James S. Granelli | Times Staff Writer

A former chief lawyer for the Federal Communications Commission issued a cordial but firm warning Thursday that interim telephone competition rules would be overturned in court unless the agency moved quickly to shore up its legal rationale.

Former General Counsel Bruce Fein, now a Washington lawyer who follows FCC issues closely, said in a letter that the agency should quickly adopt simple changes that would make the rules "bulletproof" from a pending court challenge by regional Baby Bell phone companies.

"The last thing the telecommunications industry needs is additional legal chaos or tumult," Fein, who has represented Bell competitors, wrote in his letter to FCC General Counsel John Rogovin.

He also urged the agency to move quickly in order to dispel concerns that it acted cynically. Some in Washington, he wrote, suspect that the FCC adopted a set of rules that, on one hand, satisfied the White House's desire to avoid price increases until after the election and, on the other, catered to the Bells by issuing an order vulnerable to court attack.

In an interview, Fein said there was a high risk that the temporary rules, as written, would be thrown out.

FCC spokesman David Fiske said the agency welcomed all input and had received much of it on phone competition rules, but "doesn't respond to any one letter." All views, he said, are taken into account in the decision-making process.

The interim rules call for a six-month freeze on the wholesale rates the regional Bell phone companies can charge competitors to use their lines. After that, they allow the Bells to hike rates 15% or more for six months.

They were released three weeks ago as a stopgap measure after a March federal appeals court decision. That decision had thrown out previous rules governing the ability of competitors to rent basic Bell network gear at low regulated rates to serve their customers.

Verizon Communications Inc. and Qwest Communications International Inc. challenged the interim rules immediately, saying they were an effort to get around the court decision. FCC Chairman Michael K. Powell has said that Bells can't argue about the freeze since they had voluntarily agreed to a similar ban on rate increases.

A Bell court victory would again leave the nation without key federal rules governing local phone service and would allow SBC Communications Inc. and other Bells to raise wholesale rates immediately. That, in turn, rivals say, would lead them to raise consumer rates or leave the market.

But the agency could quickly and easily change the wording, Fein said, to assure the court that the rules are temporary and consistent with existing federal laws and that final rules will follow the court's order. Courts have tossed out key FCC rules three times since the monopoly-busting Telecommunications Act of 1996 took effect.

Instead of more local competition, competitors that have relied on leasing Bell lines and gear now are pulling back or withdrawing as the Bells recapture local customers and make big inroads in long-distance service.

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