March 4, 2004 – The already complex situation regarding the possibility of local telephone competition in the Virgin Islands was rendered still more complicated on this week by a federal court in Washington, D.C.
No V.I. entities were involved directly in the case, but the U.S. Circuit Court of Appeals for the District of Columbia ruled 3-0 that a Federal Communications Commission administrative decision that was widely regarded as being in favor of local phone competition was invalid.
The judges ruled on Tuesday in favor of four existing local phone service providers (comparable in that respect to Innovative Telephone in the territory). The four companies had argued that they should not have to lease their telephone lines to their competitors at wholesale rates. That is also the view held by Innovative with regard to Choice Communications, which is seeking to offer competitive local phone service.
According to Wednesday's Washington Post: the judges "wrote that the FCC lacks the authority to delegate responsibility for setting those rates to the states. The court also ruled the FCC had failed to prove that competitors in the local phone markets were 'impaired' without government-regulated access to [the wholesale rates]."
The New York Times wrote that the FCC's reaction to the ruling "suggested that the agency was in a kind of civil war over the regulations."
A majority — three of the five FCC members — voted to direct the agency's general counsel to appeal the ruling. But FCC chair Michael Powell, who had voted against the original FCC regulation in the first place, said he had instructed FCC staff to start writing new regulations to comply with the court's ruling. The majority group consists of the two Democratic members of the commission and a maverick Republican.
The court decision itself is potentially subject to three different kinds of review: a rehearing before the same panel of three, a rehearing en banc before all the judges of the Circuit Court, or an appeal to the U.S. Supreme Court. National news reports indicated that an appeal appeared likely, but it was not clear which of the avenues would be pursued.
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