Policy Issues Alert! FCC Adopts All-Or-Nothing Rule To Replace Pick-And-Choose Rule

Wednesday, September 1, 2004 - 01:00

Robert J. Aamoth, John J. Heitmann and Stephanie Joyce
Kelley Drye &Warren LLP

On July 13, the Federal Communications Commission released its Order requiring a telecommunications carrier seeking particular terms in another carrier's interconnection agreement to adopt the agreement in its entirety, taking all rates, terms and conditions.

The Order effectively abolishes the statutory right of competitive local exchange carriers (CLECs) to adopt discrete portions of previously approved interconnection agreements with incumbent local exchange carriers (ILECs) as a means of entering the local telecommunications market. The Order expressly states that it applies to all existing interconnection agreements, regardless of when approved.

The Commission's principal rationale for abolishing "pick-and-choose" rests on assertions in the rulemaking record that negotiations are actually hindered, rather than streamlined, by CLECs' exercise of this right. Several ILECs had represented to the FCC that CLECs abused the pick-and-choose rule by "cherry-picking" portions of interconnection agreements without taking the trade-off that the underlying carrier had conceded.

On the basis of these representations, the Commission held that it should reverse its earlier determination, made in the Local Competition Order, that pick-and-choose was a competitive necessity. The Supreme Court's opinion in Iowa Utilities Board, reasoned the FCC, indicates that the text of Section 252 (i) is sufficiently ambiguous to permit this reversal of policy.

Barring a stay, the rule will be effective on August 23, 2004.

Several carriers have appealed the July 13 Order. A motion for a stay of the FCC's Order has been filed in the U.S. Court of Appeals for the Ninth Circuit, which will, by lottery, hear the consolidated appeals.

Robert J. Aamoth is Chair and a Partner and John J. Heitmann is a Partner in the Telecommunications Practice Group. Stephanie Joyce is an Associate in that Group in the Tyson's Corner/Washington, DC office of Kelley, Drye &Warren LLP.

For more information, please contact raamoth@kelleydrye.com, jheitmann@kelleydrye.com or sjoyce@kelleydrye.com