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FCC Presses Phone Companies

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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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The stakes are also high for Powell. Last year, he suffered a political setback when three of the FCC's five commissioners voted against his proposal to take the regulations off the books. The opposition was led by Martin, who has since been viewed as Powell's rival at the agency.

If the current talks succeed, it could vindicate Powell's view that agreements can be reached without government regulation.

Powell returned from a trip to South Dakota and Martin from Alaska to attend the weekend talks.

Among the issues on the table yesterday was a proposal to do away with so-called non-disclosure agreements in deals, according to sources familiar with the discussions. The regional phone companies want to keep the details of their agreements private while the long-distance companies and other competitors want the deals to be public to ensure companies are treated equitably.

The parties also considered whether the talks should focus on a global agreement that would include all companies, or whether the FCC would facilitate agreements between individual companies.

The FCC-initiated negotiations have been criticized by industry trade groups that include CompTel/Ascent, a coalition of approximately 300 telephone companies that lease network capacity from local phone giants.

CompTel/Ascent chief executive H. Russell Frisby Jr. said yesterday that his group has been excluded from the meeting and that it was considering a possible lawsuit against the FCC. Another group, the Association for Local Telecommunications Services, also said it had been barred from the meetings.

"There may be a secret deal between the larger companies that will lead to dramatic price hikes for a majority of Americans," Frisby said.

FCC officials declined to comment on the trade groups' complaints, saying only that the agency supports the current negotiations.

Frisby's coalition includes AT&T and MCI, which has led to internal tensions within the organization.

Earlier this week, an advertising agency completed a series of television spots aimed at putting pressure on the Bush administration to appeal the D.C. court's decision to the Supreme Court. Sources say the ads are being targeted for states where President Bush is in a tight contest with Sen. John F. Kerry (D-Mass.), the presumptive Democratic nominee.

"The message is that this decision needs to go to the Supreme Court, and it's a decision that this administration needs to make, or else prices go up," Frisby said.

AT&T wants to hold off airing the ads, fearing that the commercials may alienate the White House just as it decides on a potential appeal.

But Frisby said other members of his trade group feel that they have run out of time.

"A number of the CEOs of smaller companies feel like their backs are against the wall," Frisby said.

Frisby insisted his members are not motivated by partisan politics in pushing the ad campaign. "A number of the CEOs are staunch Republicans, but their feeling is that the Republican White House is leaving them in the lurch."

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