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AT&T, Regional Firms Fail to Agree on Access

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Federal Communications Commission Chairman Michael K. Powell wants long distance and regional telephone companies to iron out their differences over access to local networks. (Matthew Cavanaugh -- AP)


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By Christopher Stern
Washington Post Staff Writer
Saturday, May 15, 2004; Page E01

AT&T Corp. said yesterday that it has yet to make a deal with the four regional phone companies for access to their local networks, and it called on all parties involved to submit to binding arbitration.

The long-distance giant needs to maintain access to the networks of companies such as Verizon Communications Inc. and BellSouth Corp. to continue offering local phone service. But that cooperation is uncertain after a federal court threw out government rules that set the terms of line-sharing agreements.

The rules are scheduled to be taken off the books on June 15, although the Federal Communications Commission may seek an extension from the U.S. Court of Appeals for the D.C. Circuit. With a deadline looming, the FCC urged local telephone companies and their competitors to negotiate deals among themselves to head off any possible disruptions in service.

In a statement yesterday, AT&T said that if agreements cannot be reached, regional phone companies will probably increase rates, leading to higher bills for millions of business and residential consumers.

"We must not lose sight of the real purpose of these negotiations -- to ensure that consumers and small businesses continue to realize the benefits of local telephone competition today," AT&T chief executive David W. Dorman said in a prepared statement.

Neither MCI Inc. nor Sprint Corp. have deals with the regional phone companies, either.

The companies were quick to reject the AT&T proposal for binding arbitration. SBC Communications Inc., the dominant phone company in 13 states including Texas, California and Illinois, said yesterday that AT&T should first try submitting negotiations to a non-binding mediator.

"Before we move to the drastic step of binding arbitration, let's see if a mediator can help us bridge our differences" Paul Mancini, SBC's assistant general counsel, said in a prepared statement.

Among the nation's largest regional phone companies, Verizon, SBC and BellSouth have been at a standoff with AT&T and MCI, their two largest rivals. Qwest Communications International Inc., has at least been willing to take part in mediated talks with the long-distance giants for several weeks.

"There is a big difference between Qwest and the other three," said Jim Lewis, senior vice president for global policy and planning for MCI. "At least we are at the table -- but I'm not telling you we have a deal with them."

The FCC has until June 1 to appeal the federal court decision to throw out the rules. If the Supreme Court accepts the appeal, the current rules would likely remain in place for at least another year.

AT&T, MCI and other long-distance companies are lobbying the Bush administration to appeal the ruling, but the local companies are lobbying the White House to allow the decision to stand.

FCC Chairman Michael K. Powell, a key ally of the regional phone companies, has yet to embrace an appeal. Powell called on the industry to try to work out its differences voluntarily, hoping that a series of deals would undercut the need for an appeal.

FCC spokesman Michael Balmoris noted yesterday that the FCC was an early proponent of mediated negotiations. He declined to comment on AT&T's call for binding arbitration. "The commission supports all genuine efforts to break the logjam," Balmoris said.


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