The Federal Communications Commission yesterday released a set of stop-gap rules governing local phone competition that requires regional telephone companies to continue leasing their lines to rivals at discounted rates for six months.
After that, the mandated discounts are likely to disappear. The FCC is in the process of drafting new rules for governing access to local phone networks, and it wanted to give companies time to prepare for the transition.
FCC Chairman Michael K. Powell sees no long-lasting consumer benefits in local phone line leases.
(David Scull -- Bloomberg News)
Opponents say the new rules threaten to reduce competition and raise rates for 19 million consumers and small businesses when carriers could be forced to pass on higher costs to their customers. Some companies, such as AT&T Corp., have already announced plans to stop marketing residential services.
But the regional phone giants had argued that the discounts could not be legally justified and earlier this year successfully persuaded a federal court to throw out the rules
The Republican majority of the FCC's five-member commission ultimately moved to redraft the regulations, reasoning that the industry would ultimately be stronger if rivals were less dependent on the networks of their competitors.
Leasing lines "is a synthetic form of competition that would never have proved sustainable, or have provided long-lasting consumer benefits," FCC Chairman Michael K. Powell said in a statement.
In his dissent, Commissioner Michael J. Copps said the agency "is on track to butcher the pro-competitive vision" of policy makers who set the stage for discounts in 1996. "And it is sticking consumers with higher telephone rates and fewer choices."