Bells Rivals Fear Disconnects

Competitors see threat to customer service in court's decision.

Rivals to the RBOCs planned last week to ask the U.S. government to preclude the Regional Bell Operating Companies from cutting off service to hundreds of thousands of customers in light of two contradictory court decisions regarding Bell obligations.

The rival companies— often called CLECs (Competitive Local Exchange Carriers) or DLECs (DSL Local Exchange Carriers)—prepared a request for the Federal Communications Commission to extract a promise out of the Bells not to disconnect competitors customers while the commission reviews the connection obligations. The Bells have not indicated that they plan to cut off rivals customers, but the competing carriers dont want to take any chances, according to Russell Frisby, president of the Competitive Telecommunications Association, in Washington.

"It would be folly for the RBOCs to try to disconnect upward of a quarter-million customers," Frisby said in a briefing for reporters last week. "But we just cant depend on the Bells goodwill."

The concerns about disconnection stem from a decision late last month by the U.S. Court of Appeals for the District of Columbia Circuit, which overturned FCC rules requiring the Bells to lease elements of the local telephone network to competitors and to share lines with them for DSL, or digital subscriber line, services. The case was brought by the Bells, which heralded the decision as a great victory.

The appeals court decision seems to conflict, however, with a U.S. Supreme Court ruling last month, which upheld the FCCs method of pricing the network elements that the Bells lease to rival carriers.

Representatives for the Bells rivals were quick with assurances that the confusing legal situation does not imply imminent danger for the rivals or their customers. The appeals court did not automatically release the Bells from their network-sharing duties but instead directed the FCC to revisit the rules regarding those duties.

"Until the FCC alters its rules, the [Incumbent Local Exchange Carriers] must comply with existing obligations," said Jonathan Nadler, a lawyer with the Washington-based firm Squire, Sanders & Dempsey LLP and a CLEC advocate.

From the CLEC and DLEC perspective, the Supreme Court ruling essentially trumps the appeals court decision. Although the ruling of the nations highest court did not specifically address the Bell obligations to lease network elements, it addressed the pricing of such elements, which by implication supports the availability of the elements, according to CLEC advocates.

"The D.C. circuits decision is a slap in the face to the Supreme Court and to the FCC," Nadler said. "Im hoping the FCC is going to see this as a matter of honor."

The FCC is entitled to seek Supreme Court review of the appeals court decision, but some industry observers do not expect it to take that course because the decision appears generally in line with the direction of the commissions own self-initiated re-examination of its local competition rules.

If the FCC forgoes the option of Supreme Court review, the competitive carriers themselves will go to the Supreme Court, the Competitive Telecommunications Associations Frisby said.

One option Bells are considering is renegotiating their agreements with the competitors using a change-of-law provision in the contracts.

"We have not decided what well do when the courts order goes into effect sometime a little over a month from now," said Bill McCloskey, spokesman for BellSouth Corp., in Washington. "We are considering reopening the line-sharing pricing part of the contracts so that we could get a reasonable rate for the high-frequency portion of the line."

Renegotiating existing contracts is not likely to be welcomed by the CLECs and DLECs. The competing carriers intend to turn to a number of FCC regulations regarding Bell commitments, in- cluding those agreed to under merger approvals, to maintain the status quo, according to Frisby.