More Urge Justice Department to Appeal Phone Ruling

In a strongly worded letter, leaders of the Senate committee overseeing the Federal Communications Commission asked the Justice Department on Monday to appeal a court’s reversal of telephone competition rules.

The letter from coauthors of the Telecommunications Act of 1996, which was designed to spur local phone competition, joins a growing chorus calling the March 2 ruling bad for the economy, competition, innovation, investment and jobs.

“The decision is fundamentally at odds with the statute, and we urge you to appeal it and seek an immediate stay before the current rules expire on May 3,” Sens. Ted Stevens (R-Alaska), Conrad R. Burns (R-Mont.), Ernest F. Hollings (D-S.C.) and Daniel K. Inouye (D-Hawaii) wrote in their letter to Atty. Gen. John Ashcroft.

Meanwhile, White House aides meet this week to thrash out what the Bush administration should do about the decision by the District of Columbia U.S. Circuit Court of Appeals.

“We are reviewing the circuit court’s opinion and reviewing the issues,” said Claire Buchan, a White House spokeswoman. She would not say, however, when or whether the White House would make a decision. The U.S. solicitor general, which usually handles appeals for federal agencies, could act on his own, she noted.

The circuit court’s decision reversed FCC rules that had allowed competitors such as AT&T; Corp. to pay regulated wholesale rates for using local network lines and equipment owned by Baby Bells like SBC Communications Inc. So far, more than 19 million customers nationwide have switched local service to Bell rivals.

The circuit court gave the FCC 60 days to appeal the decision and get a stay of its order. Without a stay and without new rules, each state probably would step in to regulate competition under the 1996 federal law.

Both sides have waged a fierce lobbying campaign to White House aides and to the Justice Department, which oversees the solicitor general.

FCC Chairman Michael K. Powell had dissented from the competition rules adopted by a 3-2 majority and doesn’t want to appeal. He wants the Bells and rivals to negotiate pricing and other terms. The majority has said it wanted the case appealed.

The Bells expect a letter signed by as many as 120 members of Congress to be delivered today to the White House urging support of Powell’s position.

“We are talking to a whole range of people in Washington about the harmful effects and uncertainty these regulations have had on the telecom industry,” said J. Barry Hutchison, director of regulatory affairs for SBC. “The court decision once and for all may provide the certainty the industry needs and consumers deserve.”

Competitors don’t see it that way.

“If it stands, the [circuit] court decision will ... translate into higher phone bills for consumers and will produce the same drag on the economy as a multibillion-dollar tax hike,” said Peter Karoczkai, chairman of the Promoting Active Competition Everywhere Coalition, a trade group for smaller Bell rivals.

In separate letters to the White House, a group of retailers and a dozen economists warn that, if left uncontested, the circuit court’s opinion would hurt the economy and eliminate choice of carriers.