Regulatory Watch : Supreme Court Nixes Antitrust Suit Against ILECs

ILECs that fail to open their networks to competitors cannot be sued under the Sherman Antitrust Act, the Supreme Court ruled in January. The decision derailed dozens of lawsuits against ILECs by consumer groups and competitors. The outcome of Trinko v. Verizon, which was filed by a citizen represented by the New York law firm of Curtis V. Trinko, makes it much more difficult, if not impossible, to win a case for non-compliance of the tenets of the 1996 Telecom Act. The ruling also severely limits the money plaintiffs in such cases can collect; antitrust suits award triple damages.

The basis of the lawsuits claim ILECs declined to enter into reasonable negotiations with CLECs over network access, a violation of the “refusal to deal” portion of antitrust laws. But Justice Antonin Scalia, writing for the majority, argued that Verizon’s insufficient assistance to CLECs trying to provision services isn’t a refusal to deal as defined under the antitrust statutes.

Covad, which has antitrust suits against Verizon and BellSouth, says the ruling won’t stop their suits from going forward. There is movement afoot by CLECs to get Congress to equate violations of the Telecom Act to violations of the antitrust statutes, but they face a well-known and predictable roadblock that goes by the name Rep. Billy Tauzin, R-La. Any legislation to accomplish that would have to pass through the House Energy and Commerce Committee, of which Tauzin is chairman. He made his opinion of the ruling known in a statement following the court’s decision: “I hope that this decision sends a clear signal that complaints arising from an ILEC's alleged failure to comply with the Act's interconnection and access requirements are properly addressed to the FCC and to state public utility commissions.” Tauzin has announced that he will not seek reelection when his 12th term expires at the end of this year. He stepped down as chairman of the Energy and Commerce Committee effective Feb. 16.

A CLEC industry group, meanwhile, says it will seek a reversal of the Supreme Court’s decision—though it’s unclear how that will be accomplished. “ALTS will throw its full support to efforts to overturn this erroneous decision,” says Jonathon Askin, spokesman for ALTS. Askin sees a link between the ruling and an alleged meeting between ILECs and network equipment makers that many believe was illegal; competitors and legal groups believe the meeting was held to end competition.

“It is particularly ironic that the Supreme Court decision comes on the heels of Bell companies’ clandestine meetings with some of their largest vendors to ostensibly support a $40 million campaign to end competition in the telecom industry,” Askin says. “Consumers should beware, and policy-makers should act now, or the Bell companies will believe that they have carte blanche to exercise their monopoly power in even more insidious ways.”

AT&T Slaps on 99-Cent Regulatory Fee

AT&T long distance has determined that it needs to collect 99 cents from each of its subscribers to pay for regulatory expenses it incurred for fighting regulations it disagreed with or to cover the cost of regulations with which it has to comply.

Subscribers saw the charge—dubbed a “Regulatory Assessment Fee”—on the first bill of 2004. The company says it’s passing on the costs to customers to cover “expenses associated with regulatory proceedings and compliance.” Some groups, such as the Telecommunications Research and Action Center (TRAC) believe part of the fee probably goes to paying lawyers, the largest cost associated with regulatory proceedings. AT&T says the fee will also cover interstate access charges (usually already part of the per-minute rate) and property taxes.

“TRAC has long insisted that these sorts of non-tax fees amount to a deceptive trade practice by the long distance carriers,” the group says.