Bell companies want court to end wholesale price freeze
August 24, 2004
After winning a long-running battle with rivals two months ago in what looked like a rout, the Bell phone companies are back in court seeking to nail down the victory.
Rules requiring incumbent phone companies, such as SBC Communications Inc., to open their networks to competitors would be invalid under a petition filed by Bell operating companies late Monday in a Washington federal appeals court.
If issued, the order could lead to chaos for some 19 million consumers who rely on local phone service from AT&T, MCI and other Bell rivals, said the head of a trade group representing them.
“You’re going to have absolute chaos on what the rates are and whether customers will receive service” if the court does as the Bells ask, said H. Russell Frisby Jr., chief of CompTel/ASCENT, a trade organization of carriers that compete with the Bells.
Representatives of the Bell companies countered they will maintain current service rates _ even without new rules _ to competitive carriers through the end of the year, implementing rate increases in 2005. Rates for high-speed lines used to serve businesses could rise sooner, however.
The legal action is an extension of litigation stretching back several years that came to a head in March when a federal appeals court overturned rules enacted by the Federal Communications Commission to govern competitive phone service. In June the Bush administration decided against appealing the decision to the Supreme Court, setting the stage for higher phone rates next year.
But interim rules enacted by the FCC last week sent Verizon Communications Inc., Qwest Communications International Inc. and the United States Telecom Association back to court Monday to ask for an order to negate existing rules requiring the Bells to sell service to competitors at wholesale rates.
In June, Qwest, Verizon, SBC Communications Inc. and BellSouth Corp. sent letters to FCC Chairman Michael Powell offering to freeze wholesale rates for the rest of this year to give the FCC time to write new rules to comply with the March court order.
But the FCC’s interim rules issued last week irked the carriers because they extend the scope and scale of the proposed voluntary rate freeze, said Steve Davis, a senior public policy vice president at Qwest.
Qwest fears that without a new court order, the FCC will perpetuate interim rules and rate freezes indefinitely, he said.
“The FCC has given itself another six months, and we’re already about five months past the last court order,” said Davis.
“There’s no reason to believe the commission will complete this process in six months. Given its track record, it will probably give itself another extension six months from now.”
Consumer advocate Mark Cooper said the Bush administration cut a deal with the Bells, giving them a victory over competitors, so long as they held off on raising phone rates until after the election.
“This is a sham and a scam,” said Cooper, who is research director of the Consumer Federation of America.
Frisby, who represents the Bell rivals, said the incumbent carriers have gone back to court “because they cannot wait to try to force us out of business.”
Cooper said the Bells will probably honor their election year pledge to Bush.
“If they get their court order, they could raise prices next week. But they won’t raise rates before the election,” he said. “They’ll do it right after the election.”
Spokesmen for Verizon and SBC said their firms will honor commitments to freeze wholesale rates for consumer service until 2005.