ON THE LAST DAY OF 1997, A U.S. DISTRICT COURT IN Texas struck down sections of the Telecommunications Act of 1996 that prevent former Bell System operating companies (BOCs) from entering certain lines of business, including interstate (and interLATA) long-distance. Some see the case as a clear victory for the BOCs. Others say it disrupts the delicate compromise forged by Congress among many diverse interests. In truth, the court's decision prompts a single question: Can Congress single out the BOCs for special treatment?
In particular, the recent ruling tackles section 271 of the Act, the section that requires Baby Bells to prove that local telephone service is sufficiently competitive to justify allowing their entry into long-distance. Judge Joe Kendall characterized section 271 as a "bill of attainder," a legislative act made unconstitutional because it inflicts punishment on an identified individual or group without the benefit of a trial. According to the judge, the "competitive checklist" contained in the law to qualify BOCs for the long-distance business was "tainted with indefiniteness and replete with arbitrary standards." Kendall found that the Act inflicted serious financial punishment on BOCs by restricting their ability to engage in a lawful business. He added that the punishment was levied for what the "court can only conclude were the sins of AT&T." (See, SBC Communications, Inc. v. FCC, No. CIV.A. 7:97-cv-163-x, 1997 wl 800662, Dec. 31, 1997, N.D.Tex.).
Even before the ruling came down, state public utility commissions had begun to tackle section 271, but not without difficulty. The PUC cases decided so far show a fair degree of controversy and diversity among state regulators.