The Supreme Court has agreed to resolve a circuit split caused by the Sixth Circuit’s decision in Michigan Bell Telephone Co. v. Covad Comms. Co., No. 07-2469.pdf (consolidated with Isiogu v. Michigan Bell (10-329) for Supreme Court review). In Michigan Bell, the parties debated the meaning of some of the FCC’s regulations under the Telecommunications Act of 1996, which requires incumbent local telecommunications companies, (like Michigan Bell, a division of AT&T), to allow new competitors to connect to the incumbent companies’ existing networks or to purchase or lease incumbent companies’ existing networks.
At issue in Michigan Bell was the rate charged by incumbent companies for competitors’ use of entrance facilities (cables or wires used to transport calls from a competitor’s switch to an incumbent’s switch). The incumbent companies argued that the applicable FCC regulation permitted them to charge competitive (high) rates for competitors’ use of entrance facilities, instead of the regulated (wholesale) rates required for other equipment.
After an extensive analysis of the regulation, and in contravention of the FCC’s own interpretation, the Sixth Circuit held that the incumbent companies could charge competitive rates for entrance facilities in light of the cheaper cost to build such facilities, the wide availability of entrance facilities from alternative providers, and their greater revenue potential. In short, the Court held that “there is nothing monopolistic about entrance facilities,” unlike telecommunications equipment subject to regulated pricing.
The Supreme Court’s decision on the matter will resolve the conflict between the Sixth Circuit and the Seventh, Eighth and Ninth Circuits.
