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As Washington braces for another blizzard, the tempest over telecom rules is gathering strength.

The rhetoric heated up Wednesday as Congress grilled regulators over last week's decision to parcel industry pricing authority out to the states. Some members of the House Committee on Energy and Commerce displayed their frustration over a pending Federal Communications Commission order that would deliver a mix of victories and defeats to the local Bell phone companies and their rivals.

Still, with any formal action still weeks away, there's little sense that the debate has immediate implications on this hard-hit sector.

Tatters

With the backdrop of a tattered telecom industry and a roster of global issues bearing down on our nation's economy, Rep. Billy Tauzin (R., La.), chairman of the House committee, laid into maverick Republican FCC commissioner Kevin Martin for siding with the agency's Democrats in a 3-2 vote that failed to relieve the Bells of mandatory pricing arrangements that they contend are money losers.

While the FCC order gave the Bells a victory on broadband rules and business services competition, it left in place residential pricing guidelines that force the local phone giants to rent their networks to rivals at steep discounts.

Tauzin sided with FCC Chairman Michael Powell, who says the committee's so-called indecision hindered the "recovery of the telecommunications economy and our nation's economy."

Powell has pressed for an immediate end to the pricing rules that allow long-distance phone companies such as

AT&T

(T) - Get AT&T Inc. Report

and

WorldCom

to resell the local phone service of the Bells,

Verizon

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,

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SBC

(SBC)

,

BellSouth

(BLS)

and

Qwest

(Q)

. The stakes could hardly be higher, he added in written testimony.

"Clearly, the telecommunications industry, which accounts for anywhere from 14%-16% of our nation's GDP, is suffering," the chairman said. "By now we are all too familiar with the fact that by some estimates some 500,000 jobs have been lost and approximately $2 trillion of market value has vanished."

Seven-Run Homer?

That said, opponents of the Powell doctrine in telecom prefer a more gradualist approach. Rather than an immediate removal of the pricing mandates, as Powell wanted, Martin's plan calls for a more moderate state-by-state phase-out of the price discounts over three years.

In his prepared statements and in his testimony before the committee, Martin defended the agency's vote and the mix of industry incentives and consumer protections it was intended to foster.

"We needed to craft a balanced package of regulations that would help revitalize the industry by spurring new investment in next-generation broadband infrastructure while also maintaining access to the network elements necessary for new entrants to provide competitive service," wrote Martin in his statement.

The Bells have threatened to cut their equipment spending and network investments if they don't get relief from the current pricing scheme. That would penalize their equipment suppliers, among others, a group that has already been hard hit by the sector's deep recession.

But some observers note that the FCC decision has been six years in the making and remains far from implementation. As such, this latest standoff may merely mark another opportunity for the industry to find villians to blame for a painful three-year decline.