BellSouth to buy long-distance time 3-year agreement reached with AT&T

June 20, 1996|By BLOOMBERG BUSINESS NEWS

ATLANTA -- BellSouth Corp., in a first for a Baby Bell, said yesterday that it agreed to buy time on AT&T Corp.'s long-distance network.

The three-year agreement, which brings BellSouth one step closer to providing long-distance phone services in its local phone markets, means that BellSouth won't team up with two other Baby Bells -- SBC Communications Inc. and Pacific Telesis Group -- to jointly buy long-distance time.

It also means that BellSouth will be competing against AT&T in the $70 billion-a-year U.S. long-distance market in its Southeast region at the same time it is an AT&T long-distance customer. AT&T is the nation's largest long-distance company.

Under the preliminary accord, BellSouth will buy time from AT&T "on the lower end of between 1 to 2 cents a minute," said Al Schweitzer, a BellSouth spokesman.

BellSouth said it expects to sign a definitive contract with AT&T this summer. The company isn't in talks with any other long-distance company, BellSouth said.

"Our goal has been to provide our customers with the highest-quality package of local and end-to-end long-distance services at the best price and performance levels, as quickly as possible," said William F. Reddersen, BellSouth group president of long distance and video.

"But in the final analysis, we selected the combination of price and performance that best meets our needs and, more importantly, those of our customers."

Under the initial agreement, BellSouth Long Distance Inc., a unit of BellSouth, will buy minutes from AT&T at wholesale prices and resell the time to its customers under the BellSouth brand name at retail prices.

Such "resale" agreements allow the regional phone companies a quick and inexpensive way to get into the long-distance market.

AT&T is talking with other Baby Bells and "anyone that would like to resell our services," an AT&T spokeswoman said.

BellSouth will primarily provide long-distance services in its markets over its fiber-optic network and digital switches.

BellSouth has said it doesn't plan to provide long-distance services outside of its local region.

BellSouth said it teamed up with AT&T after looking at proposals from a number of long-distance carriers.

Under the revamped telecommunications law approved by Congress in February, BellSouth and the other Baby Bells must pass a 14-point checklist that ensures there is competition in their local phone markets before they can offer long-distance services in the region.

Pub Date: 6/20/96

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