US WEST says it wants competition for local telephone service, but the company filed a notice of appeal Thursday with the Washington, D.C., Circuit Court, asking it to overturn some rules adopted to provide that competition.
The Federal Communications Commission rules were adopted to implement competition in local telephone markets under the Telecommunications Act of 1996.The company also planned to ask the court today for a stay on portions of the rules while US WEST's appeal is pending.
US WEST is the first local telephone service provider to seek a court ruling on what it believes are unfair advantages the FCC's rules give competitors entering local telephone markets. Last week, GTE and Southern New England Telephone Co. said they also plan to appeal the rules.
US WEST Chairman and CEO Richard D. McCormick said the FCC's rules require the company to sell its network to competitors at below-cost rates. He said, as an example, competitors will be able to buy basic phone service from US WEST at about one-half the price customers pay and then resell the service at a significant profit.
"Our main concern is that the FCC has taken a law we support, the '96 act, and a concept we strongly support - full-blown telecommunications competition - and turned it on its head," McCormick said.
The '96 act, passed by Congress and signed into law by President Clinton earlier this year, paved the way for telecommunications companies to begin offering local telephone service. The FCC es-tab-lished rules to govern how those companies would interconnect their services in local telephone markets.
The rules address such issues as resale of local telephone service, joint marketing, prices and profits, access to advanced communication services and how disputes over interconnection will be negotiated.
In Utah, more than a half-dozen companies are in various stages of entering the local telephone market. US WEST has signed an interim interconnection agreement with one of those companies - ELI, which has already begun offering business service.
US WEST has been unable to reach agreements with other telecommunications companies on how to interconnect services. Four companies - AT&T, TCG, MCI and Phoenix FiberLink - have each asked the Utah Public Service Commission to intercede in the negotiations.
US WEST also has asked the commission to resolve the disputes. But if it succeeds in getting the U.S. Circuit Court to throw out some of the FCC rules, that help won't be necessary.
In its appeal, US WEST will charge that the FCC overstepped both its statutory authority and the intent of Congress with the rules it set up for the interconnection process. US WEST says the FCC rules:
- Substantially interfere with state prerogatives to control pricing and interconnection agreements, undermine the ability of companies to negotiate deals and discourage investment in the local telephone network.
- Violate the Fifth Amendment of the Constitution by prohibiting companies from recovering the cost of past investments in the local telephone network by establishing an inadequate price structure.
Ron Serrano, president of Southern New England Telephone Co., compares the situation to requiring a local pizza parlor to let a national pizza chain use its brick ovens whenever it wants without paying anything for using the ovens.
US WEST also says the FCC violated administrative law requirements by not considering relevant information submitted to it at the time it created the rules.
"The FCC made it a disadvantage to own a local telecommunication network," said Lois Leach, director of corporate communication for US WEST. "We've got a very large investment (in the network) that would not be reflected in the interconnection rates."
US WEST has made a total capital investment of $1.9 billion in the Utah network alone. It spent $209 million on the Utah network last year, according to the company.