FCC Decisions Challenge Local Competitors´ Business Plans

More than five years after enactment of the Telecommunications Act of 1996, the FCC has dramatically changed carrier-to-carrier payment mechanisms that had spurred Competitive Local Exchange Carriers (CLECS) to enter local telephone markets previously served almost exclusively by Incumbent Local Exchange Carriers (ILECs). ILECs and long-distance carriers hail the FCC's decisions as removing distortions in the competitive marketplace that unfairly favored the new competitors, while CLECs see the changes as betrayals of the FCC's commitment to foster competition that eliminate the underpinnings for crucial business decisions and investments by competitors. In contentious proceedings, the FCC (1) preempted state decisions that CLECs receive reciprocal compensation for terminating calls to information service providers (ISPs) and (2) established benchmarks for reasonable tariffed CLEC access charges for local handling of interstate long-distance calls from interexchange