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Archive for Tuesday, January 1, 2002

Court orders FCC to rethink SBC plan

January 1, 2002

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— A federal appeals court ordered the Federal Communications Commission to reconsider whether SBC Communications Inc. should be allowed to offer long-distance phone service in Oklahoma and Kansas.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit ruled that the FCC did not pay enough attention to competitors' claims that SBC charged rivals too much for access to its network.

A 1996 federal law allows local telephone companies such as SBC to sell long-distance service in states where it offers local phone service, but only if they persuade regulators they have opened the local-service market to real competition for instance by renting their networks to rivals.

On Jan. 22, 2001, the FCC approved SBC's request to offer long-distance service in Oklahoma and Kansas. SBC also offers long-distance in Texas, Arkansas and Missouri, the rest of the five states served by its SBC Southwestern Bell subsidiary.

Sprint Corp. challenged the FCC decision in court, saying that SBC's prices were too high and amounted to a "price squeeze" on smaller competitors.

The court rejected most of Sprint's arguments, and did not endorse its claim that prices were too high. Because it did not overturn the FCC approval, the decision also does not revoke SBC's ability to offer long-distance in the two states. It only ordered the FCC to more comprehensively evaluate whether the company's pricing effectively doomed competition, saying the agency "gave appellants' claim rather a brush-off."

"We can hardly find the commission's rejection of appellants' proposal unreasonable," the decision said.

But, it continued, "The commission should pursue their price squeeze claim, or at the very least explain why the public interest does not require it to do so."

An FCC spokeswoman said Monday the agency had no comment on the ruling.

A Sprint spokesman also would not comment. SBC representatives did not immediately return a call for comment.

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