NEW YORK (CNNfn) - The Supreme Court on Monday overturned a lower court decision and revived federal rules designed to promote competition in local telephone markets.
The decision marked a win for the Federal Communications Commission (FCC), which wrote the rules, but a defeat for the regional Bell companies that brought the lawsuit challenging the rules.
The Bells had successfully convinced an appeals court that the FCC had overstepped its authority in drafting local competition rules based on the 1996 Telecommunications Act.
The FCC's rules required the Bells to lease to competitors, including major long distance companies like AT&T Corp. and MCI WorldCom Inc., portions of their local telephone networks at deeply discounted prices.
Writing for the court in Monday's decision, Justice Antonin Scalia said Congress had given the FCC ambiguous instructions so the agency should be given some leeway in interpreting the 1996 law.
With the federal rules thrown out by the lower court, states have enacted a wide array of differing regulations, many of which are also being challenged in court, and little competition has developed in the $100 billion local market.
Under the Telecommunications Act of 1996, the incumbent regional Bell operating companies (RBOCs) are required to open up the various components of their networks to would-be competitors, including the long-distance companies that previously were locked out of the local-service market.
The two sides have been locked in court battles ever since. Long-distance carriers believe the regional Bell operating companies should open up their lines at about cost, while the Baby Bells argue they should be able to charge, in cases of direct competition, much higher access fees.
Conversely, the Act maintains that the Baby Bells -- formed by the federally mandated break-up of the AT&T monopoly -- are barred from offering long-distance and data services within their local regions until they open their own networks to competitors.
-- from staff and wire reports