Phone firms girding for more competition New PSC regulations will pave the way for local battles

Bell exploring merger

Race to provide high-speed data to homes imminent

January 01, 1996|By Michael Dresser | Michael Dresser,SUN STAFF

The three biggest news stories in Maryland telecommunications in 1996 will be competition, competition and competition.

The state Public Service Commission will be rewriting the rules governing telephone service to pave the way for competition in the local exchange.

Cable television and telephone companies will be competing to be the first to offer high-speed data communications to the home as the Internet's growth continues unabated. The smarter cable companies also will move aggressively to upgrade their service and their image to ward off competition from direct broadcast satellite and telephone companies.

And should Congress pass a bill overhauling the nation's communications, Bell Atlantic Corp. will likely strike a merger deal to position itself for its looming competition with AT&T Corp.

From local phone and cable monopolies to cellular carriers to Internet service providers, just about every player in the Maryland telecommunications market will come under more pressure from rivals in 1996.

The Maryland PSC has stated its commitment to the goal of a competitive local telephone market, but the real test will be seen in the results of the second phase of MFS Communications Co.'s application to compete in the local exchange. The first phase decided in principle that rivals could compete with Bell Atlantic as equals; the second will set the rules and rates that will determine whether competition is practical.

A decision is expected early this year. If Bell Atlantic's rivals are smiling when it's announced, Maryland consumers can expect a donnybrook.

MFS-2 is just the first of a series of complicated issues facing the PSC. Over the course of the year, it will likely consider how to regulate telephone companies in a competitive market, how to ensure affordable service to everyone and what the true costs of providing local service are.

H. Russell Frisby, chairman of the PSC, said he expects the commission to tackle the full range of telecommunications issues during the first half of 1996 -- a feat that would be the regulatory equivalent of the four-minute mile.

"I'm from the school of thought where you move thoroughly but expeditiously," Mr. Frisby said. Still, it would be little surprise if full-blown competition doesn't get off the ground until 1997.

When true competition does ar-rive, it is unlikely that one of the players will be Bell Atlantic as we know it today. Like most of the regional Bells, the company is looking for potential merger partners who could help it muscle its way into the long-distance business. So far, Nynex Corp. is rated as the most likely candidate.

The cable TV industry will spend much of 1996 waging a battle to win back the hearts and minds of its customers.

Comcast Corp., which serves three Baltimore-area counties and continues to lust after TCI's Baltimore City system, took a big step toward placating viewers recently when it announced that it would include Home Team Sports in its most popular package.

Comcast customers can expect more goodies as the company continues its $100 million-plus upgrade of its Baltimore, Harford and Howard county systems.

Comcast wants to build up its reservoir of good will before it begins offering customers telephone service and high-speed Internet access.

Those offers could start coming late this year if the cable TV industry develops the modems and switching systems necessary to offer those services. More likely, it will take longer.

The big question hanging over the local cable TV industry is what Tele-Communications Inc. will decide to do with its Baltimore system. To remain competitive, it probably will have to invest millions in an upgrade. If it doesn't, it could swap it to Comcast for a cable system in a market where it can gain dominance.

For Bell Atlantic, 1996 will be a year of decision on how to reach its goal of providing interactive video service over its phone lines. That issue is particularly pressing in the Baltimore area because of the Comcast upgrade.

Publicly, Bell Atlantic is adhering to an optimistic timetable to deploy a sophisticated digital system that brings fiber-optic cable almost to the home. But industry analysts say the costs and technological difficulties of building such a system have forced it to consider other options.

For now, the chances of it deploying a video system in Baltimore in 1996 appear slim.

Other telecommunications arenas are likely to be no less competitive in 1996.

In the wireless phone industry, Baltimore-Washington is the first market where traditional cellular phone service is competing with the new, all-digital "personal communications services" industry.

The industry will be watching closely to see whether American Personal Communications' Sprint Spectrum service can make inroads against Bell Atlantic, Nynex and Cellular One.

"The wireless prices are going to start collapsing," said Clyde Heintzelman, chief operating officer of Digital Express Group in Rockville.

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