Telco Pricing Tussle Heads Back to Washington

Hopes that the companies could work out deals among themselves prove far-fetched.
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The phone-service pricing debate is headed back to Washington after a federal appeals court sided with the Bells Friday.

The ongoing battle over whether the nation's big regional phone companies should have to rent network access to rivals at discount rates is now in the hands of the Bush administration. The solicitor general will then decide if the case should move to the U.S. Supreme Court.

In March, the D.C. Circuit for the U.S. Court of Appeals threw out controversial pricing rules handed down by the Federal Communications Commission. The FCC then petitioned to have the ruling blocked, and that effort was denied Friday by the appeals court.

Regulators had hoped the debate would be resolved once phone companies like

Verizon

(VZ) - Get Report

,

SBC

(SBC)

and

BellSouth

(BLS)

struck pricing agreements with competitors like

AT&T

(T) - Get Report

,

MCI

and

Sprint

. But after an intensive negotiation process the past two weeks, only MCI and

Qwest

(Q)

said they arrived at a pricing agreement. Other telcos, including AT&T, called the effort a failure.

The rules were suspended until June 15 so the various phone companies could work out their differences. Now that nearly all have reached an impasse, analysts say the pricing-rules case will likely move on to the Supreme Court.