Recent decision good news for PAETEC

AT&T and other larger communications companies will have to share their lines with their smaller competitors.

The U.S. Supreme Court unanimously ruled last week that AT&T Michigan, as an incumbent local exchange carrier, must lease its existing “entrance facilities” to Talk America and other competitors to interconnect at cost-based rates under the Telecom Act of 1996 and subsequent Federal Communication Commission rules.

PAETEC Holding Corp. of Perinton recently acquired Talk America.

“The Supreme Court decision is a significant victory for PAETEC and the competitive telecom industry, upholding the opportunity to offer consumers a truly competitive choice,” Arunas Chesonis, PAETEC CEO and chairman, said in a statement Tuesday.

“The ultimate beneficiaries of the court’s decision are the millions of businesses who have and will continue to receive unmatched service and innovated, cost-effective solutions in a competitive telecom environment. That added efficiency is vital to the creation of new jobs and driving overall economic growth.”

The high court rejected AT&T’s argument that the interconnection and unbundling obligations were synonymous under the Telecom Act, holding instead that interconnection is an independent obligation and must be available to competitive providers at cost-based rates when technically feasible.

The ruling endorses PAETEC’s belief that the Telecom Act of 1996 was enacted to promote fair competition between providers in the interests of America’s businesses and consumers, according to a PAETEC release.

The U.S. Court of Appeals for the Sixth Circuit had ruled in AT&T’s favor, prompting Talk America and the Michigan Public Service Commission to seek leave to appeal. The FCC rule had eliminated the carriers’ obligation to provide similar facilities when they are used by competitors for a different statutory purpose.

The high court deferred to the FCC’s interpretation of its own rule, saying competitors must make the entrance facilities — allowing the competitor’s physical network to connect to AT&T — available when they are used for interconnection purposes.

Justice Clarence Thomas wrote the majority opinion, joined by Justice Antonin Scalia in a concurring opinion. Justice Elena Kagan was recused.

The case is Talk America Inc. v. Michigan Bell Telephone Co., doing business as AT&T, no. 10-313