Originally created 01/08/98

Third Bell joins suit

WASHINGTON -- A federal judge brought a third regional Bell company Wednesday under his ruling that allowed two others to offer long-distance telephone service. At the same time, the government joined AT&T, MCI and Sprint in requesting a delay in implementing the order.

To avoid "considerable disruption" to the telecommunications market and to preserve the status quo, the Justice Department asked U.S. District Judge Joe Kendall of Wichita Falls, Texas, to stay his Dec. 31 decision until an appeal is heard.

On the same day, Kendall granted a request by Bell Atlantic, the largest regional Bell company, which provides local phone service from Maine to Virginia, to join the case, Bell Atlantic spokeswoman Susan Kraus said. It originally was brought by the regional Bells SBC Communications and US West.

The development means that if the ruling takes effect, Bell Atlantic as well as the first two would be able to use it. Bell Atlantic would offer long-distance service to local phone customers along the East Coast, Kraus said.

Also Wednesday, SBC Communications moved ahead with plans to offer long-distance service to local customers in Oklahoma. The company filed long-distance tariff schedules with the Oklahoma Corporation Commission for both residential and business customers.

SBC spokesman Selim Bingol said the company asked the commission to act within 20 days. Before SBC can provide service, the Federal Communications Commission also must approve the tariffs, which it normally does.

Kendall ruled that a key portion of a 1996 telecommunications law discriminates against at least two Bells -- SBC Communications and US West -- because it does not apply to GTE Corp., Southern New England Telephone Co., Frontier Corp. and other local phone companies.

The overturned provisions required all five Bells to open their local phone markets to competitors as a condition of winning federal approval to provide long-distance service to local customers.

Specifically, Kendall ruled that the provisions constitute a "bill of attainder" -- punishing the Bells for the past anticompetitive sins of their one-time parent, AT&T, and for any offenses that they may commit in the future. The Constitution bars Congress from passing any "bill of attainder" that inflicts punishment without a court trial.

Courts have rarely held a law to be unconstitutional on these grounds. In its motion to Kendall, the government said the Supreme Court has done so only twice in this century. Both times the law at issue was enacted in response to the perceived threat of the Communist Party, the government said.

"Unlike restrictions barring individuals from certain professions because of their beliefs, economic regulation that restricts the business activities of corporations (such as the overturned provisions) is routine and has not been traditionally reviewed as punitive," the government brief said.

Under the provisions now overturned, the Bells enjoyed unprecedented access to the long-distance market because they superseded a 1982 consent decree that barred them from the business. That decree broke up the Bell System into a long-distance company, AT&T, and seven regional Bell companies to provide local phone service. After mergers, five regional Bells now exist.

On Friday, AT&T, MCI and Sprint asked the judge to suspend his decision.

Kendall's decision initially paved the way for SBC Communications and US West to offer long-distance service to their local customers. The companies say they intend to offer service but are not doing so yet. Now Bell Atlantic would be able to do the same.

The Justice Department, with support from the Federal Communications Commission, said, "The court's decision threatens to derail a major enactment of Congress that was formulated after years of hearings and debate." All the Bells supported the 1996 law.

If Kendall denies the stay, long-distance companies say they'll ask the 5th U.S. Circuit Court of Appeals in New Orleans for a stay. That court handles appeals for Texas, Louisiana and Mississippi.

If the appeals court doesn't grant one, MCI said it would then ask Supreme Court Justice Antonin Scalia to intervene. Scalia has jurisdiction over such matters in the 5th circuit.

In the meantime, long-distance companies are preparing to appeal to the 5th circuit Kendall's Dec. 31 decision. If the decision is upheld, long-distance companies intend go to the Supreme Court to get it reversed.


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