WASHINGTON (REUTERS) — The U.S. Supreme Court said today it would hear an appeal of a ruling that ordered a rewrite of rules on how much dominant local telephone companies can charge competitors to use their networks.
The appeal is related to the fee structure set up to determine how much new competitors must pay for access to existing phone networks. The fee structure is the result of the 1996 Federal Telecommunications Act, which made it possible for other phone companies to use elements of the local networks at a price.
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Since the law was passed, telephone companies have disputed what the price for using those elements should be. Local phone companies such as Verizon Communications and BellSouth Corp. have argued that the pricing model developed by the FCC, which is based on the current and future worth of the network and its services, is unfair because it does not reflect the actual historical costs companies incurred to provide competitors access.
A U.S. appeals court in St. Louis agreed in part, ruling that the FCC’s model was arbitrary because it was based on hypothetical costs. The court ordered that part of the FCC’s pricing plan be rewritten, but rejected the local telephone companies’ argument that prices should be based on past costs for building the networks. The appeals court also ruled that the FCC could not require local phone companies to make available various unbundled network elements to competing firms and at the same time allow the elements to be combined as desired by the competitor.
The ruling triggered a total of five separate appeals to the Supreme Court by the various parties asking the justices to review the different issues at stake in the case. The cases are Verizon Communications v. FCC, 00-511; FCC v. Iowa Utilities Board, 00-587; General Communication Inc. v. Iowa Utilities Board, 00-602; AT&T Corp. v. Iowa Utilities Board, 00-590; WorldCom Inc. v. Verizon, 00-555. The Supreme Court consolidated the five cases and allotted one hour for oral arguments.
According to a Supreme Court spokesman, the court will hear arguments and issue its ruling during the term that begins in October.
