A U.S. appeals court on Friday upheld the Federal Communications Commission's latest attempt to require the large telephone companies to lease their networks to competitors at government-set rates.
A divided FCC in December 2004 rolled back rules standing since the 1996 Telecommunications Act that required local carriers such as BellSouth and Verizon Communications to provide discount rates for network access to long-distance and start-up rivals. Under the 2004 rules, the big carriers were required to provide the discounts only when, in an area where competition was deemed lacking, such a company planned to use a big carrier's networks to serve business customers.
At the time, the local carriers, known as the Baby Bells, largely applauded the FCC's decision to ease mandates for government-set discounts. However, they expressed disappointment over the requirement to offer wholesale prices for business lines, a decision they appealed.
The FCC has tried for almost a decade to set local telephone rules to promote competition for service, but its three previous attempts were struck down in court.
"Because we conclude the commission's fourth try is a charm, we deny all of the petitions for review," a three-judge panel on the U.S. Court of Appeals for the D.C. Circuit.
"The commission is pleased that the court has upheld its pro-competitive rules governing network unbundling. The court's decision provides long-awaited certainty for the telecommunications industry and consumers," an FCC spokesman said in a statement.
Jim Kirkland, Covad's general counsel, said the decision added to recent stability in the industry, and any price increases the company has seen were absorbed and did not have a material impact on its business.
Covad rents local telephone lines from Verizon and AT& companies to sell business customers high-speed Internet access and voice over Internet Protocol, or VoIP, telephone service.
"You've seen a whole new era of stability and (an) increase in investor interest in the competitive sector," he said.
The earlier battles over the rules pitted the Bells against Covad and long-distance telephone service giants AT&T and MCI. But in the last year, SBC Communications acquired AT&T and kept that company's name, while Verizon bought MCI, which ended much of the fight.
