The federal government has decided to stand behind its disputed federal rules aimed at opening up the $90-billion local phone market, only days after a top federal official expressed resignation over the rules.
In a brief filed Monday with a federal appeals court, the Federal Communications Commission said it believes it has the legal authority to set pricing guidelines for both the resale of local phone service and the leasing of pieces of existing local phone networks to rival companies.
The FCC approved the disputed rules in August. State regulators joined GTE Telephone and several other local phone companies in a federal court challenge. As a result, the U.S. 8th Circuit Court of Appeals in St. Louis, suspended the rules, pending a ruling on the merits of the case. Arguments are scheduled for Jan. 17.
FCC Chairman Reed Hundt has said at several public meetings recently that he was not optimistic that the rules would survive the court challenge, even though he said he believes the rules are sound.
The landmark telecommunications law passed by Congress in February allowed local, long-distance and cable companies for the first time to enter each others' businesses. Congress directed the FCC to, among other things, write detailed rules to spur more local phone competition. It was hoped that the competition would result in lower prices and better service.