The Federal Communications Commission acted illegally in its attempt to impose pricing restrictions on local phone operators in the US, according to an 8th Circuit Court decision announced on Friday. In a ruling that further complicates the FCC’s attempts to speed up competition within local markets, the St Louis-based court said the FCC did not have the authority to issue rules stipulating the pricing of local phone services. Instead the court ruled the State regulators, not the FCC, have that power. Local carriers including the Regional Bell Operating companies and GTE Corp celebrated the decision to overturn key parts of landmark FCC rules designed to open up competition to the $100m local telephone market. The FCC rules had set out the price the new entrants should pay for using local networks as well as setting out provisions that the local carriers should offer competitors seeking to hook up their local phone networks. The rules were initially adopted last August but were suspended by the court in the fall. Long-distance operators including AT&T Corp and MCI Communications Corp has been lobbying for the court to uphold the rules. However the court ruled that although the FCC demands for allowing competitors to connect to RBOC’s local networks were within the FCC’s jurisdiction, it did not have the power to set maximum prices for the local operators charges. The FCC had ordered the Bells and other local carriers to offer big discounts by leasing lines in bulk to competitors at rates of 17% to 25% below retail prices. The decision is likely to be reviewed by the US supreme court.
