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Monday, August 9, 2004

Banking on Lawful Expectations
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Kohlberg, Kravis Roberts & Co. and other investment banking and venture capital firms are imploring [read: lobbying hard] the FCC not to really reduce the scope of the FCC's unbundling rules. They are understandably concerned about the investments they made in certain CLECs based on expectations (and hopes) that the uneconomic UNE regime would remain in place indefinitely.

According to a TR Daily story [subscription required], the investment firms have told Chairman Powell: "We committed this capital to, and have continued to invest in, competitive wireline telecommunications infrastructure in reliance on the FCC's steady and consistent interpretation of the telecom act over the past eight years, which you also have articulated." Problem is, the FCC's steady and consistent interpretation of the Telecom Act's unbundling regime for the past eight years was unlawful.

The DC Circuit put it very succinctly at the very end of its USTA II decision vacating the FCC's unbundling rules that the investment bankers now implore the Commission largely to keep in place. In imposing a very short dealine before its mandate would be effective, the court emphasized: "This deadline is appropriate in light of the Commission's failure, after eight years, to develop lawful unbundling rules, and its apparent unwillingness to adhere to prior judicial rulings."

I assume the bankers have heard the expression "Eight is enough!" And they should understand that it is now time for the FCC to get on the right side of the law, regardless of whatever legal or political advice they early on may have received concerning how different people may have thought the Telecom Act ought to be interpreted.

posted by Randolph May @ 12:50 PM | General

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