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Communication Law Keyed to Benjamin, 2nd Ed.
AT&T Corp. v. Iowa Utilities Board
Citation:
525 U.S. 366 (1999)Facts
Until the 1990s, local telephone service was considered a natural monopoly, with states typically granting exclusive franchises to local exchange carriers (LECs). The Telecommunications Act of 1996 fundamentally restructured local telephone markets by prohibiting states from enforcing laws that impede competition and imposing on incumbent LECs the duty to share their networks with competitors. The Act required incumbents to: (1) interconnect their networks with competitors; (2) provide access to network elements on an unbundled basis; and (3) sell services at wholesale rates for resale. Six months after the Act’s passage, the FCC issued its First Report and Order implementing these local competition provisions. Incumbent LECs and state utility commissions challenged the FCC’s rules, arguing that primary authority to implement local competition provisions belonged to the states, not the FCC. The Eighth Circuit agreed and vacated several aspects of the order, including pricing rules based on TELRIC. The court also vacated Rule 315(b), which forbade incumbents to separate already-combined network elements, and the “pick and choose” rule, which allowed competitors to select favorable terms from existing agreements without accepting the entire agreement.
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