Bell Atlantic to let rival use phone network Metropolitan Fiber gains wider market

August 13, 1992|By Leslie Cauley | Leslie Cauley,Staff Writer

Bell Atlantic Corp. has agreed to let Metropolitan Fiber Systems Inc., a prime competitor for business customers, expand its reach by using Bell Atlantic's network, a move destined to further loosen Bell Atlantic's grip on the local phone market.

Under terms of the agreement, announced yesterday, Bell Atlantic will let Metropolitan Fiber place its equipment at a number of Bell Atlantic's telephone switching sites. Metropolitan Fiber will pay an undisclosed amount for that access.

That means Metropolitan Fiber will be able to expand its jTC network, which generally had been limited to urban areas, and to reach virtually any business customer.

"Clearly, this is the sign of the future -- that the bottleneck the local phone company has is about to be opened up to competition," said Mike Balhoff, a telecommunications analyst with Legg, Mason, Wood, Walker Inc. in Baltimore.

Bell Atlantic's agreement to allow its switching sites to be used by Metropolitan Fiber Systems came on the heels of a complaint filed by Metropolitan Fiber with the state utility commission in Pennsylvania. A similar complaint, demanding access, is pending in Maryland.

Metropolitan Fiber Systems, based in Oakbrook, Ill., operates systems in Baltimore, Washington, New York, Boston, Philadelphia, Pittsburgh, Dallas, Houston, Minneapolis, Chicago, San Francisco and Los Angeles. The company is finishing construction of networks in Atlanta and northern New Jersey.

Known as a "bypass" company, Metropolitan Fiber specializes in providing business customers with telephone service that circumvents the local phone network.

That is a big worry for companies such as Bell Atlantic. Businesses account for about 10 percent of Bell Atlantic's customers but generate about 90 percent of the company's revenues.

Although the regional Bell companies continue to dominate local phone markets, studies have shown that business customers are eager to switch when offered a choice.

A 1991 study by Andersen Consulting, a division of the accountants Arthur Andersen & Co., found that 45 percent of medium-sized businesses would switch carriers if service were available.

"This means that if competitive alternatives were available, many [regional Bells] would be at risk of losing a significant portion of their franchise," the study said.

Furthermore, the study said, 60 percent of those who would switch would do so even if the new carrier didn't provide better prices or service.

"That means there are many disgruntled customers out there who would switch just for the sake of switching," the study said.

Companies nationwide might get that choice sooner rather than later.

The Federal Communications Commission is expected to require all seven regional Bell companies to open their networks for arrangements similar to the one between Bell Atlantic and Metropolitan Fiber. In anticipation of that ruling, several Bells have made such arrangements. Mr. Balhoff said he believed Bell Atlantic was agreeing to the deal because of the expected ruling.

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