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Court may annul phone rules

July 09, 2008|From Bloomberg News

A U.S. appeals court threatened Tuesday to strike down Federal Communications Commission rules that exempt phone companies from paying some connection fees.

The U.S. Court of Appeals in Washington gave the agency until Nov. 5 to provide "valid legal justification" for the rules, which shield carriers from paying when they use rivals' networks to connect subscribers to Internet service providers.

In 1999, the FCC said local phone companies didn't have to pay competitors for connecting subscriber calls to dial-up Internet service, saying those count as interstate traffic rather than local phone calls. Core Communications Inc., a closely held company in Annapolis, Md., challenged the rules and urged the court to force the FCC to justify them.

Core, which competes with such larger telephone carriers as AT&T Inc. and Verizon Communications Inc., had sought a response within 60 days. The court said it opted for the longer deadline after an FCC attorney told the judges at a May 5 hearing that Chairman Kevin Martin planned to overhaul the inter-carrier competition system within six months.

FCC spokesman Robert Kenny said the agency was working to meet the court's deadline.

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