AT&T must provide local competitors with transit traffic...

competitors at the lower regulated rates, but a federal district court in 2011 said that requirement would undermine the Act’s preference for voluntary negotiations. The unanimous circuit court reversed, finding that most new entrants interconnect indirectly through direct interconnection with the ILEC. “Transit service is essential to ensuring that directly interconnected entrants can exchange traffic,” wrote Circuit Judge Barrington Parker. As an interconnecting carrier, AT&T is obligated under Section 251(c)(2) to provide this routing of traffic at “lower TELRIC rates” rather than charging “higher negotiated rates,” the court wrote. “It would be inconsistent with the stated purpose of the [Act] to allow AT&T to charge higher negotiated rates for this service because this would impose additional costs and competitive disadvantages upon new entrants. Such an imposition would allow AT&T to further exploit its status as a former monopolist.” The ruling “establishes a precedent in the Second Circuit for other CLECs to seek regulated rates for transit from state regulators if their new commercial negotiations are unsuccessful,” said Stifel Nicolaus analyst Christopher King. But it does “not allow them to automatically enjoy such relief if they had negotiated higher rates,” he said. The other judges on the case were Rosemary Pooler and Richard Wesley. AT&T could appeal the ruling to the full circuit en banc, or directly to the Supreme Court, but “such appeals are generally uphill,” King said. AT&T did not comment by our deadline.