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FCC Head Calls For Negotiations Between Local Phone Companies

Chairman Michael Powell's suggestion came one week after a panel of the D.C. Circuit Court of Appeals struck down rules designed to foster competition for local phone service
WASHINGTON (AP) -- The head of the Federal Communications Commission called Wednesday on the former Bell telephone companies to negotiate with their competitors for the use of their local telephone lines.

Chairman Michael Powell's suggestion came a week after a three-judge panel of the D.C. Circuit Court of Appeals struck down rules designed to foster competition for local telephone service. The judges said the FCC acted improperly by leaving it to state regulators to decide whether to spur competition between the former Bell companies--Verizon, BellSouth, Qwest, and SBC--and others wanting to provide local phone service.

"The commission may not, unlike Huckleberry Finn, recruit somebody else to do the job Congress directed it to do," Powell told the National Association of Regulatory Utility Commissioners.

Powell said the companies should spend the next 30 days trying to negotiate fees and conditions for allowing competitors to use their wires and switches, and that state utility regulators should encourage the talks.

BellSouth spokesman Bill McCloskey supported Powell's suggestion.

"We endorse that idea because the current system doesn't work," McCloskey said. "It's just a sensible way to handle it."

But a coalition of groups and companies, including AT&T, that supported the FCC rules said the former Bell companies were not willing to negotiate before the court decision.

"Now that the law has been struck down, they have even less motivation," said Peter Arnold, a spokesman for Voices for Choices.

State utility commissioners also applauded Powell's position.

"He has a realistic, practical, and progressive approach that we need to rethink the issues rather than continue to litigate at the federal level," said Ohio Public Utilities Commissioner Donald L. Mason.

The dispute dates from 1996, when Congress ordered the FCC to write rules to encourage competition with the former Bell phone companies, which have held a near monopoly in local markets. In a bitterly contested 3-2 decision last August, the FCC voted to let state regulators require Verizon, BellSouth, SBC, and Qwest to lease parts of their networks to competitors like AT&T and MCI at low prices.

The idea was that competitors couldn't afford to build their own networks, but allowing them to use existing infrastructure would make it attractive to get into local markets. The former Bell companies successfully challenged the rules, saying they left them at a competitive disadvantage and took away the incentive to build better networks.

Three of the five commissioners have supported appealing the decision to the Supreme Court. Powell, who voted against the rules last August, opposes the appeal.