updated 6/14/2004 3:27:00 PM ET 2004-06-14T19:27:00

The Supreme Court refused Monday to intervene and temporarily save phone competition regulations that force regional carriers to share their networks with competitors at deep discounts.

Chief Justice William H. Rehnquist declined to grant a stay sought by AT&T Corp., MCI Inc. and state utility regulators.

The decision means that government rules intended to make local phone service more competitive will expire on Tuesday. The rules had been thrown out by an appeals court, and the Bush administration decided not to ask the Supreme Court to review that decision.

The head of the Federal Communications Commission said last week that work was beginning on new rules. Supreme Court justices

The FCC rules allowed states to require that the regional carriers — Verizon, BellSouth, Qwest and SBC — lease parts of their networks at low prices to long-distance companies in an effort to boost competition. In March, the U.S. Court of Appeals for the District of Columbia said the government didn't justify a need for the rules.

Despite the administration's decision to drop the case, others unsatisfied with the ruling decided to go to the Supreme Court.

The attorney for the state of California, Michigan utility regulators and a national association of regulators told Rehnquist in an emergency appeal filed last Thursday that the ruling prevents states from helping bring competition to local telephone service. The decision "jeopardizes the local telecommunications competition that has developed over the last decade," Washington lawyer James Bradford Ramsay wrote.

The Supreme Court will announce later this year whether it will hear the broader appeal. The government's decision not to request the action makes high court review less likely.

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