MCI seeks Md. OK to challenge Bell

October 04, 1994|By Michael Dresser | Michael Dresser,Sun Staff Writer

MCI Communications, the nation's second-largest long-distance company, launched a direct attack on Bell Atlantic Corp.'s primacy in Maryland yesterday as it asked the Public Service Commission for permission to compete in the local telephone business.

For now, MCI's petition to the Maryland Public Service Commission deals only with service to businesses. But Nate Davis, chief operating officer of the MCI Metro subsidiary, said the company will seek permission to enter the residential market for local telephone service within the next few years.

The Maryland filing was part of a broader MCI challenge to the regional Bell operating companies, which enjoy near-monopolies on local telephone service over most of the United States. MCI entered similar petitions yesterday in Illinois, Michigan, Pennsylvania, and Washington -- all states where regulators have signaled a desire to drive down customers' phone bills by fostering competition.

As in Maryland, a green light from Pennsylvania regulators would bring MCI into head-to-head competition with Bell Atlantic. Ameritech is its target in Illinois and Michigan, while U S West would be its Washington rival.

MCI is not the first company to seek or win permission to compete with the Bells, but it is by far the most potent threat to their lucrative business. A well-known brand with $11.9 billion a year in sales, MCI has an established reputation as an aggressive monopoly-buster.

The Washington-based telecommunications giant is openly spoiling for a fight with the Bell companies, which it blames for last month's derailing of a telecommunications reform bill that would have opened up the long-distance and local phone industries to competition from the other.

"State regulators can expect the local telephone monopolies to employ these same aggressive lobbying tactics to resist pro-competitive policies on a state level, just as they did in Congress," said Gary M. Parsons, chief executive officer of MCI Metro.

Frederick D'Alessio, president of Bell Atlantic, indicated that MCI won't get into Maryland without a fight. While he said Bell Atlantic's position was not yet certain, he denounced the idea of letting a long-distance carrier compete in the local exchange before Bell Atlantic can offer long-distance service.

"We're not opposed to local competition in our market, but that competition absolutely has to be fair," Mr. D'Alessio said.

But Michael Balhoff, a telecommunications analyst with Legg Mason in Baltimore, predicted the regulators would welcome the competi- tion. Based on their earlier actions, "I would expect them to be receptive," he said.

The PSC kicked the door to the Maryland market open in April when it granted "co-carrier" status to MFS Communications Co. Inc., an Omaha, Neb., company that plans to offer local telephone connections to business customers.

Co-carrier status essentially made MFS the legal equal of Bell Atlantic, rather than just a renter of the larger carrier's lines. The next month, Southwestern Bell Corp. became the first regional Bell to challenge another's local monopoly, asking the PSC for permission to use its cable television system in Montgomery County to compete with Bell Atlantic for residential telephone customers there. Its petition is due to come up for a hearing in December.

MCI is seeking the same things MFS and Southwestern want, but its ambitions are statewide and not limited to business customers.

Besides seeking co-carrier status, MCI is asking the commission to order Bell Atlantic to interconnect its network with MCI's and to ensure that customers who defect from Bell can keep their old phone numbers.

Frank Fulton, a spokesman for the state PSC, said the MCI petition could come up for a preliminary hearing as soon as next month and be decided in seven or eight months.

If the PSC acts quickly, MCI could be offering local service to businesses by the end of 1995, said Mr. Davis of MCI Metro. He added that if the PSC acts to require Bell Atlantic to share its network connections into the home, MCI will file another petition to bring competition to the residential market.

Under such a system, MCI would pay a regulated rate to Bell Atlantic for use of its wires but would then route the calls through its own switching system, Mr. Davis said. If the petition is approved, MCI will spend millions of dollars to build a local network, he said.

Mr. Balhoff said MCI is determined to drive down the "access charges" that local phone companies collect on both ends of the long-distance calls it carries.

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