Teleport Communications Group, an upstart telephone company owned by some of the largest players in the cable television industry, is seriously considering an application to provide residential phone service in Maryland in competition with Bell Atlantic Corp., a senior TCG executive has confirmed.
Robert Atkinson, TCG's senior vice president for regulatory affairs, confirmed last week that the New York-based company had recently written a letter asking the Maryland Public Service Commission whether a recent decision allowing competition in the local market for business phone services also applied to homes.
The PSC said no, but Mr. Atkinson said TCG has not lost interest. He said TCG would likely ask for permission to provide residential service if the PSC sets rules and rates for interconnection with the Bell Atlantic network that would make competition economically feasible.
The PSC will write interconnection rules this summer in a case involving MFS Communications Co., another potential Bell Atlantic competitor.
While Teleport itself is not well known, its challenge to Bell Atlantic could be formidable. If it does move into the Maryland residential market, TCG will likely do so as part of a powerful alliance of cable companies and Sprint Corp., the nation's No. 3 long-distance company, Mr. Atkinson said.
Instead of attempting to resell the use of Bell Atlantic's phone lines, TCG is interested in using cable connections to provide phone service, Mr. Atkinson said. He said the company is currently conducting tests of the technical feasibility of providing phone service over coaxial cable in Arlington Heights, Ill.
TCG is owned by four large cable TV companies -- Comcast Corp., Tele-Communications Inc., Cox Cable Communications and Continental Cablevision.
All except Continental are partners with Sprint in the venture Wall Street has dubbed the "Triple Play," which intends to offer consumers a package of wireless, long-distance, cable and local telephone services under a single brand name.
Such a move would bring TCG a long way from its roots as a "competitive access provider" (CAP), a company that provides businesses with low-cost connections to long distance networks, bypassing the comparatively expensive access charges levied by local phone companies.
As several states, led by Maryland, New York and Illinois, have begun breaking down the legal barriers to local telephone competition, Teleport has moved to compete with the local exchange carriers in the business arena. It received approval to enter the Maryland market in December, though many issues remain to be resolved before service can begin.
Teleport's interest in extending phone service competition to the residential market comes at a time when several important players are considering a challenge to Bell Atlantic's primacy in Maryland homes.
MCI Metro, the long distance company subsidiary that recently announced that Baltimore would be the first city where it will offer local phone services for businesses, has said it plans to eventually move into the residential market.
And MFS, which now has approval to offer business services, said last week that it would like to offer residential connections as a wholesaler to other carriers.
Last year, Southwestern Bell Corp. (now SBC Communications) became the first company to file with the PSC to provide local residential telephone service in Maryland.
The company, which had proposed to serve Montgomery County through the cable network it owns there, later asked the PSC to put its application on the back burner amid industry reports that it has decided to sell its cable properties.
Mr. Atkinson said that TCG is confident that there is money to be made in residential service if reasonable interconnection rates are set.
"The telephone companies have been going around for years bemoaning the fact that they have to provide residential telephone service," Mr. Atkinson said. "We or an affiliate could offer a residential telephone service at a very competitive price."
Dave Pacholczyk, a spokesman for Bell Atlantic, said his company's reaction was: "Welcome to the marketplace."
Asked whether a company could make a profit in the residential zTC market, he said, "Let them deploy the network and provide services and we'll see how much they make."
TCG is moving aggressively to extend that network throughout the state.
It recently won approval from the Board of Public Works to run its own fiber-optic cable along some interstate highways in the state in exchange for a package of goods and services valued at $21 million.