Family friction afflicts phone giants

July 08, 1995|By Michael Dresser | Michael Dresser,Sun Staff Writer

Bell Atlantic spokesman Eric Rabe minces no words when asked to describe relations between his employer and the company that gave it birth.

"They've gone from Ma Bell to Mommie Dearest," he said yesterday, shortly after his company lobbed one more verbal grenade in an escalating war of words and deeds between the regional Bell company and AT&T Corp.

Tensions between AT&T and the seven regional Bell companies are nothing new. And with landmark telecommunications legislation working its way through Congress, AT&T and the Bells have more reason to fight than ever before.

But over the last year, relations between AT&T and Bell Atlantic have become especially strained.

Gary Arlen, president of Arlen Communications, a telecommunications consultancy in Bethesda, said Bell Atlantic is widely viewed as the most aggressive of the Bells in encroaching upon AT&T's businesses. "Bell Atlantic has been the thorn in AT&T," he said.

The last few days were in many ways typical in the two companies' dysfunctional relationship.

Thursday, AT&T charged that Bell Atlantic was inflicting "vast overcharges" on residents of Pennsylvania for access to long-distance lines.

Yesterday, it was Bell Atlantic accusing AT&T of "playing a shell game" and "misleading customers" while pocketing $680 million in access-fee reductions ordered by the Federal Communications Commission.

It's difficult to pinpoint an exact incident that lifted the AT&T-Bell Atlantic exchanges beyond the normal sniping between long-distance companies and local phone companies, but relations have clearly tumbled since Bell Atlantic joined with Nynex Corp. in August to challenge AT&T's merger with McCaw Cellular as an antitrust violation. The suit was settled in November.

In February, Bell Atlantic was back in court on its own, suing AT&T in New Jersey over what it called "false and misleading ads" for its short-haul long-distance plans, which compete with Bell Atlantic's toll-call service.

"They've pulled the wool over our customers' eyes one time too many. AT&T should start using itstrue voice in its advertising," said James Young, Bell Atlantic's general counsel, mocking AT&T's True Voice long-distance calling plan.

A federal judge dismissed that suit in May, but not before AT&T filed a countersuit accusing Bell Atlantic of violating antitrust laws by attempting to squelch competition.

Perhaps the most devastating blow to the relationship came in February, when Bell Atlantic in effect fired AT&T as the systems integrator for a planned "full service network," saying eight months of contract negotiations had failed to produce an agreement. Both sides put as good a face on the breakup as possible, and AT&T does remain a vendor for the project, but the decision was a clear signal that Bell Atlantic didn't want to entrust critical proprietary information to AT&T.

Behind the loathing is a healthy dose of old-fashioned fear, especially on Bell Atlantic's part. The regional Bells and the long-distance companies are on a collision course as they move toward competing in each other's industries. Bell Atlantic executives say they respect all their potential competitors, but that AT&T -- with its golden brand name and exceptionally deep pockets -- is the one that causes them to lose sleep at night.

"There's no doubt that AT&T is going to absolutely be the company for us to worry most about," said Mr. Rabe.

AT&T officials are reluctant to characterize the company's relations with Bell Atlantic as being any different from those with any other regional Bell company. Mark Rosenblum, the company's vice president for law and public policy, said several of the other Bell companies have been just as aggressive in battling AT&T before regulatory agencies and the courts.

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