FCC is asked to open local phone networks

March 08, 1995|By Michael Dresser | Michael Dresser,Sun Staff Correspondent

WASHINGTON -- In an action with potentially important implications for competition in local telephone service, MFS Communications Co. asked the Federal Communications Commission yesterday to require many phone monopolies to make the final leg of their connection to homes and businesses available to competitors.

MFS, an aggressive Omaha, Neb.-based telephone company that is seeking to compete with Bell Atlantic and other local exchange carriers around the country, also urged the FCC to set guidelines for state regulators to follow in setting rates for such services.

In telephone industry jargon, MFS is asking the FCC to require the regional Bell companies and other local carriers to "unbundle" the "local loop," the part of the phone network that connects the customer to the central office. Any unbundling would break down the component steps of making a phone call into pieces that can be bought separately by competitors.

Such an action is widely viewed as a necessary for the introduction of robust competition into the local exchange market, where regional Bell monopolies seem to be on their last legs as an increasing number of states take steps to open their doors to challengers.

Last year Maryland became one of the first states to open the market to competition in local business phone service when it granted MFS "co-carrier" status. That gave MFS the legal right to compete with Bell Atlantic as an equal, but the details of interconnecting the two systems were left for a series of PSC hearings that began last week.

Since last year, several other states have adopted laws eliminating their statutory monopolies in local telephone services, including Virginia just last week. More are expected to join in the trend before the end of the year.

Royce Holland, MFS' president, said an FCC mandate to unbundle is the "next logical step" toward local competition.

"This will have a big impact on consumers and small businesses and medium-sized businesses," said Mr. Holland.

The MFS petition is less an attempt to reverse policy than an effort to speed current pro-competitive trends at the FCC, in Congress and at the state level.

"It would probably send a clear signal in terms of an overall framework of local regulation," said Tom Brennan, senior consultant with TeleChoice, a Verona, N.J., research company.

The MFS executive said his company wants to install its own switching system and run its own fiber-optic connections to the incumbent telephone companies' central offices, but generally does not want to duplicate connections between the telephone company offices and customers.

"We would have to physically dig up your yard or your parking lot to provide that service," said Mr. Holland, arguing that the "local loop" is a "bottleneck" monopoly that government regulators can force a utility to share.

Michel Daley, a spokesman for Bell Atlantic in Washington, said his company has not yet taken a formal position on MFS' filing, but he suggested that state public utility commissions might object to FCC guidelines on setting rates.

He said Bell Atlantic does not object to the principle of unbundling of the local loop but believes it should take place in conjunction with a move to open up the long-distance phone market to the regional Bell companies.

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