U.S. communications regulators on Friday issued interim rules that would put a six-month freeze on wholesale rates for leasing access to the Baby Bells' networks, to try to preserve competition.
The Federal Communications Commission had required the four major U.S. local telephone carriers, known as the Baby Bells, to lease network access to rivals at government-set rates in order to promote competition for local service. But in March, an appeals court threw out those rules.
The FCC has been trying to draft new regulations. It ordered the Bells to keep the rates at the present prices while final rules are hashed out. The Bells had argued the prices were below cost and have sought to eliminate them.
After the first six months, if final regulations have not been set, the FCC said lease rates for existing customers could rise as much as 15 percent. New customers would have to negotiate lease rates with the Bells.
"I have committed to push the commission to complete this proceeding in six months, before the freeze expires," FCC Chairman Michael Powell said in a statement. "As a sign of that commitment, I have already scheduled the decision for a vote at our December 2004 open meeting."
The rules were adopted about a month ago by a vote of 3-2, with the two Democrats on the panel dissenting. The details were not released until Friday.
Because the four big local carriers--BellSouth, Verizon Communications, SBC Communications and Qwest Communications International--own the wires into most homes, competitors have to lease access to offer their own service. Those rival providers have said the government-set leasing prices were needed for them to be able to compete.
The Bells have agreed to maintain prices until year end, but analysts expect hikes to follow--a move that could affect consumers. BellSouth said it was troubled by the FCC decision to extend the freeze beyond the end of the year.
"We will thoroughly review the particulars of this order to determine what further action may be required," the company said in a statement.
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Competitors fear that under the regulations, new customers could be charged prices between 300 percent and 500 percent more than current rates and that this increase could be passed on to consumers.
AT&T said it stopped seeking new local and long-distance customers because of the rule changes and MCI is scaling back marketing.
"The current commission is on track to butcher the pro-competitive vision of the 1996 (Telecommunications) Act," said Commissioner Michael Copps, one of the two who voted against the new rules. "And it is sticking consumers with higher telephone rates and fewer choices."
