Court Backs FCC on DSL Resale to ISPs

Washington— Incumbent telephone carriers are not required to provide wholesale discounts on the digital subscriber line services they sell to Internet-service providers, a federal court here ruled last Tuesday.

The U.S. Court of Appeals for the District Columbia Circuit affirmed a 1999 Federal Communications Commission finding that the resale requirement applies to DSL services sold to residential and business end users, but not to DSL services sold to ISPs such as America Online.

The court backed the FCC's interpretation that the wholesale discount requirement in the Telecommunications Act of 1996 is applicable when incumbent phone carriers provide advanced services "at retail." Agreeing with the FCC, the court said the ILEC-to-ISP relationship was not an "at retail" event because the "ISP packages and ultimately resells the service to end-users."

Although the 1996 law failed to define "at retail," the court said standing doctrine required the court to defer to the FCC in filling in gaps in the law, provided the agency acts in a reasonable manner.

"We find the [FCC's] order in all respects reasonable," the court said in rejecting an appeal by the Association of Communications Enterprises (ASCENT).

The unanimous decision was handed down by U.S. Judges Stephen F. Williams, Douglas H. Ginsburg and Judith W. Rogers, in an opinion written by Ginsburg.