AT&T Corp. v. Iowa Utilities Board

Until the 1990s, natural monopolies controlled local phone services due to technological limitations. States typically granted an exclusive franchise in each local service area to a local exchange carrier (LEC). The Telecommunications Act of 1996 restructured local communications by providing that the LEC must share its network with competitors, including long-distance phone service providers. After the passage of the act, the Federal Communications Commission (FCC) implemented the local-competition provisions. Rule 319, the primary unbundling rule, set forth the minimum number of network elements that LECs must make available to requesting providers. A group of LECs and state commissions (plaintiffs) brought suit against AT&T, other long-distance phone service providers, and the FCC (defendants). The plaintiffs argued that Section 201(b) of the act, which allowed the FCC to prescribe rules and regulations that were necessary to carry out the provisions of the act, limited rulemaking authority to provisions dealing with purely interstate and foreign matters. The LECs and state commissions reasoned that the first sentence of Section 201(a) stated that it was common carriers' duty to provide communication services upon request. The United States Court of Appeals for the Eighth Circuit consolidated a number of similar challenges and ruled in favor of the plaintiffs. The United States Supreme Court granted certiorari.