DC Circuit Decision a Victory for Telecom Freedom

Published April 1, 2004

On March 2, the U.S. Court of Appeals for the District of Columbia handed down its widely anticipated decision in the case of United States Telecom Association v. Federal Communications Commission and overturned a recent key decision by the FCC. The commission had ruled that local carriers had to share their networks with competitors at sharply reduced rates and delegated certain regulatory authority to the states.

The ruling rejects the Romper Room economics behind an FCC decision that essentially argued that sharing is always better than competing. The decision vacates, or remands to the FCC for reconsideration, actions the commission took in August on the grounds that it had overstepped its authority to issue sweeping infrastructure-sharing mandates.

Further, the Court issued a stinging rejection of the logic behind the FCC’s decision to delegate decision-making authority to state regulatory commissions. The Court saw past facile FCC explanations that this delegation of authority was largely “fact-finding” in nature, when, in reality, important regulatory determinations were delegated to state regulators that put them in a position to make policy that impacted the interstate market for telecommunications service. All in all, the Circuit Court’s decision should help avoid the establishment of a hyper-balkanized telecommunications marketplace.

The Circuit Court’s important decision should serve as another wake-up call for members of Congress, who must now realize that it is time to revisit the Telecom Act of 1996 and clarify the law and ensure that the FCC is never again allowed to so egregiously overstep its bounds of authority.

Adam D. Thierer ([email protected]) is director of telecommunications studies for the Cato Institute.