The largest U.S. telephone companies last year asked regulators to kill limits on the rates smaller carriers can be charged for connecting to the giants’ networks.

Now the small carriers are claiming they have successfully defended the regulations as the Federal Communications Commission nears conclusion of a proceeding it has acted on in parts.

“We see it as a huge victory,” said Chip Pickering, chief executive officer of the trade group Incompas. Its member companies that offer broadband service and need to connect through lines controlled by companies such as AT&T Inc. and Verizon Communications Inc.

The regulations are designed to ensure small companies have access to lines that carry traffic for businesses, schools and homes -- and can use those connections to expand broadband competition by building new fiber links.

USTelecom, a trade group with members including AT&T and Verizon, filed the petition with the FCC to eliminate rules in May 2018 and is claiming a partial victory.

“We’re thrilled about the steps taken by the FCC to grant important parts” of the petition, Jonathan Spalter, chief executive officer of USTelecom, said in an interview.

Eliminating the rules clears the way for more investment in modern networks, according to the trade group.

1996 Rules

In its petition, USTelecom said more companies are offering service, undermining the need for the rules put in place in 1996, as the U.S. opened communications markets to more competition.

For instance, companies subject to the rules served 186 million wholesale and retail land lines in 2000 compared with 35 million in 2018, according to the petition, which added that some 60% of U.S. households have turned to wireless service.

“The mandates at issue here -- principally involving access to old copper network facilities and protections related to an extinct ‘long distance voice market’ -- are not necessary to protect competition or consumers,” USTelecom said in its petition.

The agency eliminated some reporting requirements in April, and earlier this month lifted pricing regulations for lines that carry bulk business traffic in most of the country -- decisions that together represented “substantial and meaningful” progress, according to a blog post by Spalter.

In June, USTelecom withdrew its request to remove rules around fiber lines that can carry signals from town to town, usually in less populated areas. And in July it withdrew its request to kill rules about local lines that can carry broadband.

Copper Lines

The FCC must act on the remainder of USTelecom’s petition by Aug. 2, and Chairman Ajit Pai has recommended the agency remove rate mandates on old copper lines that provide voice service, according to a background document provided by the FCC.

The FCC, while not commenting on the outcome, said in a statement that the issues that remain to be decided “were intended to open monopoly local phone companies to competition in voice services” and are no longer necessary.

Incompas, representing the small service providers, says it scored victories with the withdrawals by USTelecom of portions of the petition in June and July. The trade group led a campaign that included letters from more than 9,000 customers to the FCC, where Pai has emphasized creating more broadband connections.

“When it comes to fiber, they’re removing barriers,” said Pickering, the Incompas leader. “We won the case by being consistent with the commission’s priorities.”

Spalter, the USTelecom chief, said his group would continue to make the case for lifting old rules. “As surely as the sun sets in the west, there will be time and space for the FCC to modernize the outdated rules, to make them reflect the competition that exists,” Spalter said.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, John Harney

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