News

SBC Foes Sue Over Illinois 'Reform'

5/25/2003 8:00 PM Eastern

Competitive telephone providers in Illinois — some backed by the cable industry — have sued to block a new state law that could let SBC Communications Inc. double the rates it charges for unbundled network elements.

Alternative carriers argue the legislation, signed by Gov. Rod Blagojevich on May 9, usurps roles assigned to the Federal Communications Commission and the Illinois Commerce Commission.

The suit was filed May 16 in U.S. District Court for the Northern District of Illinois, Eastern Division by the Association for Local Telecommunications Services — a group that includes MSO-affiliated Adelphia Business Solutions, Cox Enterprises Inc. and Time Warner Telecom, as well as AT&T Communications of Illinois Inc. and MCI Metro Access Services LLC.

They want an injunction to block the law from taking effect on June 9.

SBC has floated similar legislation in a handful of states, seeking to prevent future rate regulation by state utility boards.

Prior developments in Illinois present a glimpse at what will happen once the law takes effect, the lawsuit said. SBC, its competitors and the ICC for years have been haggling over the price of network elements, especially the cost to use the "local loop."

The ICC in 2000 shot down an SBC-proposed tariff which determined that the higher rates sought by SBC were artificially inflated

Last December, SBC filed another tariff, proposing a 150% increase in the costs of unbundled network elements. That tariff was under review when the state legislation surfaced.

Now that the law has passed, SBC has filed for a 100% increase in its network tariffs, the lawsuit claimed.

Currently, 600,000 customers in Illinois get phone service from companies other than SBC. Their rates could rise substantially, the lawsuit argues.

"The Bell companies used to maintain that the state regulators were the experts that deserved deference," said ALTS president John Windhausen Jr. "Now, it appears SBC is willing to use back-room tactics to undermine the experts when they reach a decision SBC does not like.

SBC officials say the legislation ended a "subsidy" for AT&T and MCI in Illinois, where the global telco giants pay the lowest unbundled network rates of any state.

September