Bell Atlantic gets competitor for business service

April 27, 1994|By Michael Dresser | Michael Dresser,Sun Staff Writer

An article yesterday about the state Public Service Commission approving the entry of a new local telephone service to Maryland incorrectly spelled the name of MFS Intelenet Inc.

The Sun regrets the error.

The Monopoly game is over in Maryland's local phone business.

In a ruling that makes Maryland one of the most competitive local telephone markets in the United States, the state Public Service Commission has given the green light for MFS Intellinet of Maryland to go head-to-head with Bell Atlantic-Maryland in the battle for business customers.

The unanimous ruling, issued by the PSC late Monday, doesn't directly affect local residential services. The effect, however, is to put out a welcome sign for any carrier that wants to apply to compete with Bell Atlantic for that business.


"We are entering an era in which the notion of pure monopoly is in retreat," said PSC Chairman Frank O. Heintz.

On the most critical issue before the commission, the ruling appeared to be a victory for MFS Intellinet (MFS-I), a subsidiary of MFS Communications Co. of Oakbrook Terrace, Ill. Over Bell Atlantic's objections, the PSC granted MFS the status of "co-carrier" rather than limiting it to the role of reseller of Bell Atlantic's services. Bell Atlantic had sought to delay that designation until other issues were resolved.

The distinction is important because it essentially makes MFS the legal peer of Bell Atlantic, entitled to negotiate a split of the cost of calls that terminate on Bell Atlantic lines rather than just paying tolls to use Bell Atlantic's network. As a co-carrier, MFS must be given nondiscriminatory access to Bell Atlantic's local network and will be permitted to complete calls between its own customers using its own switching system rather than Bell Atlantic's.

"We concluded the co-carrier status should be given quickly so that competition can be robust more quickly," Mr. Heintz said.

Royce Holland, president of MFS Communications, hailed the PSC's action as "truly a landmark ruling for the state of Maryland."

Because of the decision, MFS will be able to offer service to even the smallest businesses, Mr. Holland said. He said the carrier expects to begin offering local service in the third quarter of this year, backed by an aggressive marketing push.

The company's existing network, which it now uses to provide low-cost connections to long-distance carriers for large businesses, takes in parts of downtown Baltimore and Hunt Valley, Fort Meade and some Washington suburbs. As a result of the decision, the company says it will accelerate its program of laying fiber-optic cable to areas of the state it does not already reach.

The decision brought praise from other potential competitors to Bell Atlantic. They said the PSC's action would increase their interest in the Maryland market.

"We're delighted. Certainly we would consider Maryland as a condition for our services," said Roger Cawley, spokesman for ,, Teleport Communications Group in Staten Island, N.Y. Mr. Cawley said that to his knowledge Maryland was only the third state, after New York and Washington, to approve co-carrier status for a new entrant in the local phone business.

At MCI Communications Inc., the long-distance giant that has proclaimed its desire to compete with the Bell companies in both the business and residential arenas, regulatory affairs director Donna Sorgi said the PSC's decision would be seen as a sign that Maryland is "friendly to competition."

Meanwhile, Bell Atlantic sought to accentuate the positive. Frederick D. D'Alessio, president of Bell Atlantic-Maryland, said in a statement that his company has not been opposed to competition and was not surprised at the PSC's action.

"We're pleased that the commission has rejected MFS-I's plea to use our network for free. We're equally pleased that they will be required to support the joint and common costs associated with providing service to rural and residential customers," Mr. D'Alessio said.

Still, Bell Atlantic was rebuffed by the PSC on several other key issues. The commission rejected Bell Atlantic's request to impose on MFS a "competitive contribution charge" of $14.47 a month per line.

The commission did approve a 6.1-cents-a-call rate that MFS would have to pay for calls that terminate on Bell Atlantic lines. William Sarver, general counsel for Bell Atlantic-Maryland, said Bell Atlantic was "not displeased at all" by that decision, saying the rate amounts to 60 percent of what Bell Atlantic proposed.

Mr. Sarver also noted that his company will get a second chance to persuade the PSC to approve a higher rate during the second phase of the approval process, to begin late next month.

PSC Chairman Heintz didn't hold out much hope of substantial changes, pointing out that the burden of proof will be on Bell Atlantic. "We have confidence in our decision today, but we're willing to look at any new evidence or do some fine-tuning," he said.

Mr. Sarver also took comfort in the PSC's broad acceptance of the phone company's position that all players in the state's local phone market must bear a share of the cost of providing "universal service" -- a burden now largely borne by Bell Atlantic's business ratepayers.

MFS Communications, better known locally by its former name of Metropolitan Fiber Services, has been active in Maryland since the mid-1980s as a "competitive access provider," offering large businesses cut-rate fiber-optic connections to long-distance carriers.

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