Justices Reject Phone Rate Challenge

The U.S. Supreme Court on Tuesday rejected a bid by AT&T; Corp. and MCI Inc., the largest U.S. long-distance companies, to preserve rules that give them discounted access to local-phone networks owned by competitors.

The justices let stand an appeals court ruling invalidating Federal Communications Commission regulations that AT&T; and MCI say they need to compete in the $127-billion U.S. market for local calling. The rules, which remain in place on a temporary basis, may be revised as soon as December.

The high court rejection, issued in Washington, is a victory for the nation’s largest local phone companies, Verizon Communications Inc. and SBC Communications Inc. Since the March appeals court decision, AT&T; has said it will quit trying to compete with those firms for new residential customers.

“The high-stakes game is at the FCC now, and the big wild card is what happens with the election,” said Scott Cleland, chief executive of Washington-based research company Precursor, of the agency’s proceeding to rewrite the regulations.

FCC officials, amid fierce lobbying from the companies, will decide how quickly to phase out the discounts and what system should replace them, Cleland said. A victory by Massachusetts Sen. John F. Kerry in the presidential election Nov. 2 would hand control of the FCC from Republicans to Democrats, who tend to support the discounts.