COURT UPHOLDS FCC PAYPHONE RULES AGAINST CHALLENGES FROM BOTH SIDES
The U.S. Appeals Court, D.C., denied challenges to the FCC’s payphone rules by both the Bell companies and payphone service providers. The Bells had argued that the FCC didn’t have authority to regulate the payphone lines because they were intrastate. The payphone providers supported the rules but wanted them applied to CLEC lines as well as Bell lines. In a decision released Fri. (02-1055), the court said the Telecom Act clearly authorized the Commission to regulate Bell intrastate payphone line rates, but not those of non- Bell LECs.
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At issue are the rates charged to payphone providers by the Bells and other LECs for use of the phone lines to which the payphones were attached. Sec. 276 of the Telecom Act required the FCC to assure that the Bells, which once had a monopoly on payphones, charged fair rates to competitive payphone providers. The case was heard by Chief Judge Douglas Ginsburg and judges Judith Rogers and David Tatel, who wrote the opinion. Denying the Bell companies’ challenge, Tatel said Sec. 276 “unambiguously and straightforwardly authorizes the Commission to regulate the [Bells'] intrastate payphone line rates.”
The court also denied a Bell challenge to the FCC’s use of a forward-looking, cost-based methodology to examine the Bells’ payphone line rates. The Bells argued that even if the Commission had authority over those intrastate rates it didn’t have authority to prescribe any particular rate-making methodology. The court agreed with the FCC that the Bells didn’t properly raise this issue at the Commission before bringing it to the court: “The BOCs point out that they did in fact raise all of these arguments before the Commission, but they neglect to mention that they made each argument in the course of challenging the Commission’s authority to set intrastate payphone line rates and never presented the type of substantive challenge they make here… The BOCs should have filed a petition for reconsideration to afford the Commission an opportunity to pass on their arguments before they turned to this court for review.”
In denying the challenge of the payphone providers, brought by the New England Public Communications Council, the court said the providers might be “correct as of policy” that the rules should apply to CLECs. However, “the fact remains” that Sec. 276 “expressly” applies only to the Bells, Tatel wrote: “We must presume that when Congress referred to ‘Bell operating companies’ rather than ‘local exchange carriers,’ it acted deliberately.”