FCC gives competitors entry to phone networks Upstarts get access to local exchanges

August 04, 1993|By New York Times News Service

WASHINGTON -- The Federal Communications Commission voted unanimously yesterday to extend competition in local telephone service by allowing upstart companies to use more of the vast networks operated by the regional Bell companies and other large local carriers.

The FCC decided in September to encourage competition in local markets, paving the way for small companies like MFS Communications Co. Inc. in Oakbrook Terrace, Ill., to compete with companies like Bell Atlantic, and yesterday's 3-0 vote builds on that decision.

The FCC decision last fall was the first step toward the day when businesses and consumers can choose a local carrier. Just as they now might choose MCI, Sprint or another long-distance company over AT&T, eventually consumers and businesses might choose a competitor over Bell South, for example.

Like last year's decision, yesterday's ruling allows competitors to link to established companies' local networks. These upstarts, which serve mainly large corporations, could compete with companies like Bell Atlantic and Bell South for some of the billions of dollars that long-distance carriers like Sprint and MCI typically pay the big local companies for use of their lines. Residential customers are largely unaffected by yesterday's decision but could be involved someday.

FCC Commissioner Andrew C. Barrett called yesterday's action on local competition "a measured and balanced step." But the smaller companies contended that it did not go far enough, while the established phone companies said it went too far.

Christopher Collins, a spokesman for the U.S. Telephone Association, which represents 1,100 local carriers, including the regional Bells and GTE Corp., called the decision "very, very irresponsible." Many millions of dollars must flow to competitors before established companies could get out of "a regulatory straitjacket," he said.

The FCC decision, the telephone association argued, could ultimately lead to higher bills and reduced service, especially for millions of rural customers whose bills are often subsidized by urban customers whom phone carriers can serve more efficiently. The group said the FCC action could undermine as much as $20 billion in such subsidies.

By contrast, upstart companies maintain that the FCC action does not go far enough. They say that for every $1 of new revenue they would receive under the ruling, they must give back 80 cents, for what is known as a residual interconnection charge, to established phone companies as part of a regulatory transition period.

The rebate outrages MFS Communications. "It's like charging airline customers of the Delta Shuttle to pay the railroads for lost market share," said Andrew D. Lipman, MFS senior vice president.

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