On Thursday, the Supreme Court ruled that AT&T and other incumbent telephone companies must provide their competitors, including petitioner Talk America, with facilities needed to connect to the incumbents' network at regulated rates. The FCC urged the court to side with Talk America. Writing for a unanimous court, Justice Thomas held that the court owed deference to the FCC's interpretation of its own regulations unless that interpretation was inconsistent with federal law.
The 1996 Telecommunications Act imposed two distinct obligations on a Baby Bell such as AT&T. First, AT&T is required to allow interconnection with a competitor's network at regulated rates. Second, AT&T's facilities are subject to "unbundling"—a competitor is entitled to use certain parts of the incumbent's network, such as the 'local loop' that connects a customer premise with the Baby Bell's network, to provide its own services. Unbundling rates are also regulated by the FCC.
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