With phone pricing rules headed for another spin through the legal system, at least one Bell says it's willing to talk things over with its marketplace rivals.

San Antonio phone giant SBC ( SBC) said Wednesday that it will notify competitors next week that it is willing to start negotiating wholesale prices. The move comes a day after the U.S. Court of Appeals for the District of Columbia overturned mandatory discount rules determined by the Federal Communications Commission this summer.

The appeals court decision Tuesday was seen as a win for SBC, Verizon ( VZ), BellSouth ( BLS) and Qwest ( Q), as it reversed the cut-rate wholesale prices the Bells were forced to charge rivals that sell local phone service, such as AT&T ( T), Sprint ( FON) and MCI.

Last summer, the FCC, in a 3-2 vote, decided that states should determine unbundled network elements platform, or UNE-P, pricing. The agency called for a three-year phaseout of the discounts. The rules stem from the Telecommunications Act of 1996, which attempted to foster competition by reducing the dominance of the Bells in the local phone service market.

Industry observers say that beneath the obvious ploy by SBC to show it is a fair-minded competitor lies a more important need: The company wants to strike pricing agreements with rivals before a new set of rules gets forced on them.

"I think SBC is trying to give regulators some assurance that if they take UNE-P away, they won't cut off competitors completely," says Precursor Group analyst Pat Brogan. "But I'd be surprised if the competition jumped on the market rates if they still had the option to take regulated pricing."

Bell rivals say the SBC's press release is merely taunting after the appeals court win.

"Before you can have market-based rates there must exist a market, not a monopoly," wrote AT&T in a statement Wednesday.

And an MCI representative said that the company hadn't seen SBC's proposal, but called the timing suspect. In general, "past attempts to negotiate with the Bells have been unsuccessful," said the MCI rep.

Analysts and industry experts expect the issue of wholesale pricing will next go to the Supreme Court and then get handed back to the FCC for fixes. That process could take another year or more, raising the likelihood that the various players could reach their own price agreements before then.

Meanwhile, the weak demand for conventional phone service combined with price rule uncertainty has caused a surge of interest in voice-over-Internet technologies that are cheaper to offer and not subject to regulation. That interest has sparked solid 2004 rallies in the VoIP gearmakers, namely Juniper ( JNPR) and Nortel ( NT), among others.

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