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FCC Presses Phone Companies
Negotiated Leases for Competitors Could Head Off Higher Prices for Service

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  Michael K. Powell summoned phone company representatives to meetings at FCC headquarters yesterday. (Donn Young -- Bloomberg News)


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By Christopher Stern
Washington Post Staff Writer
Saturday, May 29, 2004; Page E01

Federal Communications Commission Chairman Michael K. Powell is increasing the pressure on regional telephone giants and their rivals to reach new network leasing agreements in hopes of avoiding sudden price increases for millions of people.

Powell called representatives of the nation's largest regional and long-distance companies late Thursday night, summoning them to meetings at the agency's headquarters yesterday, according to sources at several companies involved in the talks.

Powell and Commissioner Kevin J. Martin presided over the day-long meeting, sources said. The talks included high-level executives from long-distance giants AT&T Corp. and MCI Inc., and also from regional phone companies Verizon Communications Inc., BellSouth Corp. and SBC Communications Inc. The executives are set to continue negotiating through the weekend, sources said.

Verizon confirmed yesterday that the company is complying with the FCC's request for face-to-face negotiations at the agency. The nation's largest phone company also said that it is holding individual talks with dozens of other firms.

"Our participation in the FCC initiative in no way deters us from continuing our efforts with all wholesale customers who wish to work with us to reach agreements," said Larry Plumb, a Verizon spokesman.

The phone companies have been at an impasse since March, when a federal appeals court in Washington threw out FCC regulations that effectively guaranteed rivals discounted rates for access to the regional phone companies' telephone networks and equipment. Companies such as AT&T and MCI have relied on those regulations in recent years to launch their own brands of local telephone service to more than 20 million customers.

Powell prodded the parties to the negotiating table just as the Justice Department faces a decision on whether to appeal the D.C. court's decision to the Supreme Court. That decision, which could come as early as next week, forces the White House to decide between two powerful interests: the long-distance companies that support an appeal and the regional telephone companies that oppose one. A negotiated agreement would effectively eliminate the need for an appeal.

"We believe that commercial agreements are preferable to litigation, and we encourage the parties to work together to resolve their differences," said Claire Buchan, a White House spokeswoman. Buchan declined to comment on the potential for an appeal. "I am not going to speculate beyond that," Buchan said.

AT&T, MCI and other rivals of the regional phone giants say that without a viable agreement that provides reasonable leasing terms or a Supreme Court appeal, they will likely be forced out of the local phone business. Such a move would inevitably lead to higher rates for consumers and more layoffs in an already troubled industry, they said.

Some competitors are even threatening to elevate the debate to a presidential campaign issue with a series of television advertisements aimed at battleground states.

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