- The Washington Times - Tuesday, May 14, 2002

The Supreme Court yesterday sided with the government in its push to promote competition in the area of local phone and Internet service.
The 5-3 ruling kept in place the current method of determining the price competing companies must pay to lease the networks of incumbent phone companies.
"This gives customers a glimmer of hope that we may see some competition in the local telephone market," said David Butler, spokesman for Consumers Union.
Baby Bell companies like Verizon had fought for the right to charge higher fees for leasing of their networks. The 1996 Telecommunications Act forced phone companies to open their networks to competitors.
Phone companies say the pricing method, called Total Element Long Run Incremental Cost (TELRIC), forces them to give access to competitors at below cost, which in turn could stifle investments in upgrades, an argument made repeatedly by Verizon before the Supreme Court more than six months ago.
One high court judge conceded yesterday that it was not clear if TELRIC would lead to competition, and left open the possibility that the pricing method could be changed.
"We cannot say whether the passage of time will show competition prompted by Telric to be an illusion, but Telric appears to be a reasonable policy for now, and that is all that counts," Justice David H. Souter, wrote in the ruling for the court. "The incumbents have failed to show that Telric is unreasonable on its own terms."
Verizon says it will now ask the Federal Communications Commission to consider other pricing methods offering greater compensation, and will challenge in federal court any specific instances where the company is not compensated fairly for leasing its network.
"We think it's critical the commission adopt policies that promote investment," said Verizon vice president and lawyer John P. Franz.
Yesterday's ruling does not guarantee local telephone competition or cheaper rates. But competing carriers say they will be more inclined to expand their businesses now that there is more certainty about pricing.
"The ruling provides competitors with greater certainty concerning the prices they pay the phone companies and should accelerate competition," said Charlie Hoffman, president and chief executive officer of Covad, of Santa Clara, Calif., a high-speed Internet-service provider.



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