Lawsuits Challenge Telecom Act

By eweek  |  Posted 2001-10-08

The U.S. Supreme Court last week heard the first of several arguments that could lead to huge dips and spikes in the relative fortunes of regional Bells, competitive carriers, cable companies, wireless providers and the Internet itself.

The high court is reviewing 10 lawsuits grouped into three cases that challenge the Telecommunications Act of 1996, marking the culmination of litigation that has characterized the law until now. Carriers trying to compete with the regional Bells said the landmark laws formulas and the lax enforcement of its penalties have let the incumbents maintain a near monopoly on local service.

If a lawsuit focusing on the prices that the established carriers can charge their competitors for sharing infrastructure tips the regional Bells way, "prices would go through the roof," said Charles Hunter, general counsel of the Association of Communications Enterprises.

The regional Bells maintain that the cost of building their infrastructure should be considered when determining how much the competitors should pay when sharing the lines.

On Oct. 2, the Supreme Court heard arguments in a separate case about the rights of telecommunications companies to attach their equipment to power companies utility poles.

Established telephone companies hope the justices will conclude that when cable providers offer high-speed Internet service, they should be regulated. The Bells said regulations have been burdensome to them, and are a key reason why cable providers have a 70 percent market share in bringing broadband to the home.

"If we were all operating under the same set of rules, the market would determine which among the competitors would win the hearts and minds of customers," said Lawrence Sarjeant, general counsel of the U.S. Telecom Association, which represents the large established carriers.

The Supreme Court will hear arguments on the pricing case this week. Arguments in a third case, focusing on whether federal courts can review regulations set by state regulators, are scheduled to be heard Dec. 5.

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