Still No Truce in Baby Bells’ Battle Over the Telecommunications Act

Years of phone industry warring over the Telecommunications Act of 1996 appeared to end in January when the Supreme Court reinstated federal rules opening local phone markets while preserving the bans against regional Bell companies’ offering long-distance service.

The decisions put pressure on the Baby Bells to end their protracted court challenges to the landmark act, which deregulated the cable, broadcasting and telephone industries with the aim of bringing consumers lower prices, greater choice and more innovative services.

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But hopes of a telecom truce proved premature.

Last week, another dispute about the federal law erupted as U.S. District Judge John Parker in Louisiana declared parts of the 3-year-old statute unconstitutional. The judge threw out a lawsuit filed by subsidiaries of AT&T; and E.spire that alleged that Louisiana regulators set “excessive” rates for AT&T; and E.spire to connect their communications facilities with BellSouth’s local phone network.

Meanwhile, Federal Communications Commission Chairman William E. Kennard last week signaled he might oppose a planned merger of SBC Communications and Ameritech. In a letter to the chairmen of the two Baby Bells, Kennard said the combination raises concerns about “the companies’ willingness and ability to fully open their local markets to competition in accordance with” federal communications laws.

Congress struggled mightily to make compliance with the 1996 act a simple affair. The federal statute requires a regional Bell company seeking to enter the $80-billion-a-year long-distance market to first meet a 14-point checklist indicating that it has opened its local phone markets to outside competition by sharing their facilities on a nondiscriminatory basis.

Although the Baby Bells say they are making every effort to do that, the ongoing legal disputes reflect how contentious the task of breaking up the telephone monopoly has become.

“With the exception of some of the work Bell Atlantic has been doing in New York, the rest of the Bell community is not working aggressively to come in compliance with the long-distance entry checklist and clearly [are] devoting most of their resources to thwarting local competition,” said Brian Moir, a Washington lawyer and lobbyist who represents large business telephone customers.

As part of opening their local markets to competitors, the Baby Bells must negotiate terms for everything from the rates they will charge others to connect to the local telephone network to how third-party billing computers will talk to the Bell systems so that phone service can be quickly and easily transferred to new customers.

If differences can’t be worked out, the Telecommunications Act gives state telephone regulators the option of arbitrating disputes. The state public service commission can decide what the terms of interconnection will be, or can decline to act, in which case the dispute would be handled by the FCC.

In the Louisiana case, AT&T; and E.spire brought suit challenging a decision by the state’s public service commission to set a $19.95 monthly rate for leasing Bell South’s telephone circuits. The long-distance carriers claimed rates as low as $4 a month are charged in other cities.

The bid to overturn the commission’s rate decision infuriated Louisiana officials, who maintained that under the state immunity provisions of the 11th Amendment, the Louisiana Public Service Commission and officers cannot be sued in federal court.

Judge Parker, contradicting several previous federal court rulings that upheld the right of parties to sue states under the telecom act, sided with Louisiana.

AT&T; said it is weighing whether to appeal the decision. And though AT&T; and industry experts are divided about the effect of the Louisiana case, they agree it is symbolic of the continued legal disarray surrounding the telecom act.

“The overwhelming majority of courts that have considered this issue have rejected this position,” said Mark Rosenblum, vice president of law at AT&T.; “It is a plainly erroneous decision.”

Nevertheless, Rosenblum said, the case signals how little progress has been made in opening up local phone markets since the Supreme Court ruling earlier this year.

“The pace has slackened,” Rosenblum said. The move toward open markets “has taken a bit of a hiatus since the Supreme Court decision.”

Jube Shiver Jr. can be reached via e-mail at jube.shiver@latimes.com.