Baby Bells can expand cell service

April 29, 1995|By New York Times News Service

In a big victory for local telephone businesses, a federal judge ruled yesterday that the seven regional Bell companies could offer long-distance cellular and other wireless service.

Declaring that "effective, large-scale competition" would lead to

rapid progress in wireless communications, Judge Harold H. Greene opened the long-distance market to local companies -- on the condition that they can demonstrate measurable competition in their own markets.

As the overseer of the 1984 antitrust decree that broke up the Bell System, Judge Greene rules on the Bell companies' efforts to expand beyond their core markets. While Judge Greene has allowed the Bell companies into long-distance service to transmit video programming, yesterday's ruling was the clearest signal yet that he might have overcome a reluctance to allow them into the long-distance voice business on a large scale.

"This is significant because it puts us into direct competition with AT&T and McCaw Cellular," said John Thorne, the associate general counsel of Bell Atlantic Corp.

Long-distance telephone calls account for less than 10 percent of the $20 billion cellular market, but Mr. Thorne pointed out that cellular was growing at a torrid pace -- more than 45 percent a year.

Moreover, Bell Atlantic and the other Bell companies have made huge investments in a new form of wireless communications called personal communications services. The ability to offer a full complement of local and long-distance services will be critical to compete effectively against the two major players -- AT&T and an alliance of Sprint Corp. and three cable television operators.

All seven Bell companies were parties in the case; they were supported by the Justice Department.

But the Bell companies did not agree to drop a request for larger local calling areas for cellular services. GTE Corp. and other cellular companies not governed by the antitrust consent decree have had an advantage over the Bells because they have been able to offer a broader area of cellular coverage. Judge Green did not accept the Bell companies' argument for expanded calling areas. But by opening the long-distance market, yesterday's ruling partly compensates the Bells for that disadvantage.

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