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In another blow to upstart phone companies, Chief Justice William Rehnquist declined Monday to stay a federal court order absolving the Baby Bells from having to lease their networks to rivals at wholesale rates. The decision by the chief justice means it is very unlikely that the Supreme Court will accept the appeal for argument this fall, said Andrew Lipman, a partner at Swidler Berlin Shereff Friedman in Washington. The highest court is expected to decide by October whether to hear the appeal, which Bell rivals and the National Association of Regulatory Utility Commissioners are making. At stake is the continued viability of many rival telecom companies, which have relied on so-called UNE-P regulations to give them access to the local networks run by BellSouth Corp., Qwest Communications International Inc., SBC Communications Inc. and Verizon Communications Inc. Small and medium-sized telecom companies such as Talk America Holdings Inc. and Z-Tel Technologies Inc. had used UNE-P rules to offer competing local and broadband service without having to rely only on their own local switching systems. These companies contend dropping UNE-P could bankrupt them. Rehnquist’s decision lumps more bad news onto Bell rivals, who learned last week that U.S. Solicitor General Theodore Olson would not support the appeal. Having the solicitor general on board would have increased the odds of the justices taking the case. The Bells want to eliminate UNE-P, arguing that it deprives them of the incentive to invest in new services because rivals can lease that updated technology for bargain-basement prices. In March, the U.S. Court of Appeals for the D.C. Circuit remanded the UNE-P rules to the Federal Communications Commission to revise after concluding the agency inappropriately delegated its power to supervise the forced leasing of the systems to state utility commissioners. Lipman said FCC Chairman Michael Powell is working with Commissioner Kevin Martin on revised regulations. Martin had led the three-member majority that rejected Powell’s prior UNE-P plan and passed the rules that the appeals court eventually struck down. Lipman said Bell rivals are overstating their woes, adding that a wave of bankruptcies is unlikely. “The new rules will require some long-distance and other phone companies to rethink their business plan and perhaps consider consolidation,” Lipman said. Copyright �2004 TDD, LLC. All rights reserved.

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