WASHINGTON-In an amici curiae brief submitted by four members of Congress, the Federal Communications Commission is taken to task for taking telecommunications law into its own hands in the currently stayed interconnection and local competition order.
And speaking at a gathering of regulatory utilities commissioners in San Francisco last week, retiring chairman of the House Telecommunications and Finance Subcommittee Jack Fields (R-Texas) minced no words as he criticized FCC Chairman Reed Hundt and his role in the interconnection order, going so far as to suggest Hundt’s resignation or dismissal.
The Nov. 15 document to the U.S. Court of Appeals for the Eighth Circuit in St. Louis from Reps. Billy Tauzin (R-La.), Rick Boucher (D-Va.), John Dingell (D-Mich.) and Dennis Hastert (R-Ill.) cut right to the heart of the matter. “The FCC’s first report and order is an act of extraordinary arrogance. The order blatantly disregards congressional intent in two material respects: it asserts federal jurisdiction in areas that Congress intended to reserve for state control, and it establishes rules for the unbundling of network elements that are contrary to congressional intent and that threaten the viability of established telecommunications networks … It appears to believe that it isn’t accountable to anyone and should be free to substitute its own judgments for congressional directives.”
The congressmen surmised that the FCC either decided to ignore Congress’ intentions in the Telecommunications Act of 1996 or that the agency believed “Congress doesn’t know enough about legislative drafting to explicitly amend sections of the law that it wanted to change.”
The brief blasted the commission’s foray into states’ rights, saying that Congress vested the states with specific authority over the regulation and pricing of intrastate communications, including separate pricing methodologies for facilities-based or resale service providers. In fact, the congressmen cited a 1986 Supreme Court decision (Louisiana Public Service Commission v. FCC), which ruled that “any attempt by the FCC to regulate intrastate matters, even to effectuate a federal policy, would constitute an agency conferring power on itself.”
“The commission’s rules eviscerate this important distinction by making the more attractive cost-based pricing method available to other types of competitors,” they wrote. “The result of the commission’s failure to respect Congress’ distinction between the two types of competitors is that the pricing benefits Congress intended to insure to those who invested and created jobs will instead be available to pure resellers.”
The four pointed out that “a rational new entrant” to the local loop would rather buy services from the established local exchange carrier than to sink money into embedded infrastructure; in contrast, a LEC would not be inclined to improve the existing network if competitors get the same or better pricing break.
By being able, under the FCC’s interconnection order, to pick and choose network elements, a reseller “can make money by undercutting the incumbent’s price for any offering that the incumbent must-under state regulatory policies-price above cost. As long as they can accumulate risk-free profits with minimal investment, competitors will not build their own networks to provide competing services.” According to the brief, long-distance giant AT&T Corp. would be able to resell unbundled LEC elements “without having a single foot of local telephone wire of its own.”
In a final twist, the congressmen accused the FCC, which it said was “behaving like a renegade agency,” of adopting interconnection and competition strictures that Congress “specifically rejected and that will slow the very private-sector deployment of advanced telecommunications and information technologies and services that Congress meant to accelerate … If Congress did make policy mistakes, they are for Congress to fix. The commission may not override our legislative judgments.”
It appears that GTE Corp., Bell Atlantic Corp., BellSouth Corp., Pacific Telesis Group, SBC Communications Inc. and U S West Inc. read the congressmen’s brief, because several of the points raised by Dingell, Hastert, Tauzin and Boucher were echoed almost word for word in the consolidated brief submitted by the companies Nov. 18.
Agreeing with the congressmen, the LECs told the court that the FCC was given no pricing role in the telecom act, only a directive to complete non-pricing mandates by August.
The LECs hope to sway the three-judge panel toward pulling all FCC pricing rules and to prevent that agency from reimposing any non-pricing rules unless it can prove it has the authority to do so. They also hope to prove that so many pieces of the order are illegal that the whole thing should be vacated.
If this were to happen, it is not clear whether the commission would have to start all over again on crafting new local competition rules or if the states could follow long-standing Telecommunications Act of 1934 rules combined with newer 1996 rules to get the competition ball rolling.
