Former Bells challenge part of new phone rules

Friday, August 29th 2003, 12:00 am

By: News On 6

DENVER (AP) _ Fulfilling a promise to challenge new federal regulations for telephone competition, three communication giants and an industry group appealed in a court filing for the Federal Communications Commission to reconsider its rules.

The former Bell companies _ Qwest Communications International Inc., SBC Communications Inc., BellSouth Corp. _ and the U.S. Telecom Association filed their appeal with the U.S. Court of Appeals for the District of Columbia on Thursday.

Verizon Communications Inc. was preparing a similar filing.

The companies have long bemoaned FCC rules that require them to lease elements of their networks, such as lines and central office switching capabilities, to competitors at wholesale rates. The lower rates were aimed at giving consumers more choices for local phone service.

The latest FCC order allows states to continue discounting switching leases, except in markets already deemed to be competitive.

The local phone companies contend that the FCC ``punted'' the issue to states and failed to follow previous court orders that said the FCC needed to limit what discounted elements the former Bells had to provide. They contend the FCC should create a single, national policy.

The companies are asking the court to require the FCC to follow the previous court orders.

FCC spokesman Richard Diamond said the agency had no immediate comment.

The latest rules were approved in a 3-2 decision, with FCC Chairman Michael Powell dissenting and leaning toward phasing out the low-cost leases.

Rules over the network elements have been a contentious issue between local and long-distance phone giants vying to provide local service.

``Our customers are being required to subsidize huge corporations like AT&T and MCI, and the subsidies need to end,'' said Steve Davis, Qwest senior vice president of policy and law.

``We're required to provide switches to MCI and AT&T at prices that are below cost. There's no reason these companies can't purchase and install switching equipment on their own. It's unfair to us and unfair to our customers,'' Davis said.

MCI spokeswoman Carolyn Tyler said her company was not surprised by the court filing.

``The Bells just can't stand the thought of any competition in their monopoly markets,'' she said.

Between August 2000 and June 30, 2003, Qwest said it lost $413 million in revenues associated with the FCC rules. SBC said it lost $1.6 billion since the rules went into effect seven years ago. BellSouth said it lost $670 million.