Court affirms part of plan for phone service competition

WASHINGTON -- The Supreme Court on Monday upheld a key part of the government's effort to give Americans choices for local telephone service.

The ruling keeps costs low for companies that want to get into a market and could eventually lead to cheaper service for consumers.

Congress approved a plan to open up the $110 billion local telephone service market to competition in 1996. Since then, companies ordered to make lines available to upstart competitors have been contesting the details in court, and many people still have no options.

Justices affirmed the way the government requires companies that were part of the old Bell system to lease their lines. They also ruled that regulators could require the former Bells to make more network connections available to competitors.

The loser in the case was a conglomeration of former Bells, including Verizon Communications, which wanted to be able to charge other telephone companies higher fees to use their lines. Verizon contested the fee system set up by federal regulators, arguing that it cannot recover it own construction costs.

Consumer advocates had said if the pricing rules were overturned, competition efforts would stall. So far, less than 10 percent of the old Bell system is being leased by rival companies for residential service, they said.

"This preserves a glimmer of hope for the development of local telephone competition," said Gene Kimmelman, of the Consumers Union.

Federal Communications Commission Chairman Michael Powell said the ruling "brings much-needed additional certainty to the legal landscape."

'Unfortunate status quo'

Bob Bishop, Verizon spokesman, said the system has not worked and the FCC should now consider other options.

BellSouth Inc. said in a statement that the "decision maintains an unfortunate status quo: BellSouth must continue to provide pieces of its network to competitors at below-cost prices. This status quo discourages investment by both us and our competitors, resulting in poorer choices for customers."

The decision in the complicated case has been the slowest of this term. Justices heard arguments six months ago.