FCC Urges Compromise on Phone Line Lease Rates

The Federal Communications Commission (FCC) will try to forge a compromise on rules under which local phone companies lease their telephone lines to competitors.

FCC Chairman Michael Powell said that he asked other members of the commission to work on finding a compromise that would allow changes to existing rules. One proposed change would once again allow consumers to have separate carriers for local telephone service and high-speed Internet access.

“All we’re doing is making an effort to find a bipartisan consensus to tackle this difficult issue in an expeditious way,” Powell said on Wednesday. Powell, one of three Republicans on the five-member commission, urged Democrats Michael Copps and Jonathan Adelstein to propose a compromise solution.

The commission was thrust back into the local phone leasing issue when an appeals court tossed out a set of rules that called for the so-called Baby Bells – SBC, Verizon, BellSouth and Qwest — to lease their lines to long-distance carriers such as Sprint and AT&T at government-set rates.

With those rules – which had been backed by the long-distance companies – tossed out, many carriers expressed fear that local companies would sharply increase rates and snuff out competition from the long-distance companies.

Clock is Ticking

FCC spokesperson Rick Chessen told the E-Commerce Times that the chairman did not set a time frame for new rules to be worked out. He noted that the existing rules were frozen in place by a split vote of the commission last month.

Chessen said those interim rules contain a provision for a 15 percent hike in the lease rate for existing customers if permanent rules are not yet in place. In that scenario, the Bells could set market rates for new customers wishing to switch carriers.

The Baby Bells have argued that the rates tossed out by the appeals court were actually below their own costs and gave their competitors an unfair advantage. AT&T said when it released earnings recently that it would stop seeking new local and long-distance home customers, in part because of the rules changes.

Price Hikes

Peter Arnold, spokesperson of the Voices For Choices coalition, which lobbies on behalf of consumers and smaller telcos, told the E-Commerce Times that new rules are needed to avoid “a return to constant price hikes” by the Baby Bells.

“The only reason calling prices dropped in recent years is because competition emerged to the Bell monopolies,” Arnold said. “If changes are not made to the fall-back rules, the higher prices will impact all ratepayers.”

Busy Day

Powell’s comments came after a meeting in which the commission made several noteworthy decisions.

It cleared the way for users of TiVo and other digital recording devices to share their recorded TV programs over the Internet.

It also allowed law enforcement to place wiretaps on broadband and Voice over Internet Protocol (VoIP) calls and issued an order extending parts of the CAN-SPAM Act to wireless devices.