AT&T, MCI Take Access-Fee Case To Supreme Court

AT&T and MCI--stung by the Bush Administration's decision to abandon a course that would keep telephone-access fees at discounted rates for long-distance service providers--have taken the issue to the Supreme Court.

In addition, some state regulatory agencies and smaller telecommunications companies joined in filing with the highest court.

When the FCC and the Solicitor General announced that they would not join in an appeal to the Supreme Court earlier this week, the long-distance companies' chance of keeping the discounted rates received a crippling blow. The FCC reversed its earlier stance on the issue.

In the wake of the Wednesday's decision by the Administration, MCI suggested that it may be forced to abandon its local service. MCI stated: "If the FCC's rules are allowed to lapse and wholesale rates rise, MCI may be forced to raise prices in some markets and pull out of others."

The Wall Street Journal reported that MCI has begun drawing up plans to withdraw from the consumer business. MCI recently emerged from bankruptcy and changed its corporate name back to MCI, leaving its previous corporate name-Worldcom--behind. The firm is in a relatively strong financial position, having erased most of its debt in bankruptcy proceedings. Its consumer business represents almost 20 percent of its $21 billion in annual revenue.AT&T also painted a dreary picture, saying that "phone service for 20 million customers and small businesses now hangs in the balance [and] it is going to take more than words on a piece of paper for the Bush Administration to prove they are serious about protecting consumers and preserving local phone competition."

Access fees have been a source of contention among the former regional Bell operating companies (RBOCs) ever since the Telecommunications Act of 1996 paved the way to give long-distance firms the right to connect to the RBOC's local lines at discounted rates. At the same time, the RBOCs were given the right to offer long-distance service to their subscribers. The decision in March by the Federal Appeals Court in the District of Columbia in effect negated the ability of long-distance providers to reach telephone subscribers at rates they say enable them to make a profit.

The RBOCs hailed the Administration's decision to refrain from taking the case to the Supreme Court. A statement from the largest RBOC--Verizon Communications--complimented the Bush Administration on its "tough call." In a statement, Verizon said, "Verizon stands ready to negotiate commercial agreements with our wholesale customers as quickly as possible and to compete in serving consumers and business by providing value backed by great service and innovation."

The regulations governing access fees are scheduled to expire next Tuesday--the date set by the appeals court. Without the backing of the Administration, most telephone-industry analysts expect the case won't get much traction at the Supreme Court. However, telephone subscribers aren't likely to see their phone bills increase until after the national election.