Verizon, Qwest Seek to Overturn FCC Rate Freeze
Wednesday, August 25, 2004; Page E05
The legal action comes after the Federal Communications Commission issued the temporary rate freeze on Friday. The rivals, including AT&T Corp. and MCI Inc., have no local network of their own and depend on the regulated rates to offer their own brand of local phone service.
"It is simply inexcusable for the FCC to flout a binding judicial determination yet again, and to extend those never-lawful requirements for nearly another year," the regional giants stated in their motion. Also joining the legal brief was the United States Telecom Association, a trade group representing the nation's four major regional phone companies, often referred to as the Baby Bells because they were formed from the breakup of AT&T, long known as Ma Bell.
Although the rules have been a source of legal controversy since Congress passed the Telecommunications Act of 1996, the latest court decision appears to be a turning point for the industry. In the wake of the March court order, AT&T announced it would no longer market long-distance service to consumers, a dramatic statement by a company that effectively founded the telephone industry in the early part of the 20th century.
In just the past three years, regional phone giants have been able to take millions of customers from long-distance carriers including AT&T and MCI by selling local and long-distance service in a single package. AT&T said that without the ability to offer local service at competitive prices, it could not compete for consumers against the regional phone giants and would instead focus on the business market.
In June the Bush administration essentially sealed the fate of the rules when it decided not to appeal the appeals court's decision to the Supreme Court. As the Bush administration weighed the decision, the four regional phone giants made a voluntary commitment to keep the current rates in place at least through the November presidential election. The regional giants made the commitment after AT&T and other competitors threatened to air advertisements pointing out that any rate hikes would be the result of the Bush administration's decision to forgo an appeal.
Competitors, including AT&T, say yesterday's filing was an effort by the regional phone giants to back away from their public commitments to the FCC.
"Obviously, the Bells' promise that they would freeze wholesale rates was empty. The FCC shouldn't be surprised that when you play with snakes, you get bitten," said AT&T spokeswoman Claudia Jones.