State panel forces Bell to wait Public Service Commission delays setting charge to local service providers

September 12, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

The state Public Service Commission yesterday delayed final action on setting the interim wholesale price Bell Atlantic Corp. may charge other phone companies for local telephone service that new firms plan to resell.

While a commission spokeswoman said a decision could come as soon as next week, any action will be short-lived.

The commission has until November to settle arbitration cases between Bell Atlantic and other carriers over permanent wholesale prices that the panel will set. The prices will be in accord with federal regulations that will be published next month.

The resale strategy is part of plans by long-distance carriers such as AT&T Corp. and MCI Communications Corp. to enter the local phone service industry that Congress deregulated earlier this year, and from which AT&T had been barred since it split up in 1984.

The new rules allow competitors to get a foothold in the market by reselling service generated by traditional phone monopolies, competing with their rivals only in selected areas like marketing and billing, on the assumption that partial competition is one way for new players to generate the cash to build competing phone networks.

Other new competitors such as MFS Communications Co. have skipped the reselling strategy in favor of building networks immediately. But MFS serves only major business and government clients, skipping the consumer market.

The long-distance companies and Bell Atlantic have had bitter debates over how much the wholesale price should be below Bell Atlantic's retail rates. In June, the PSC ordered an interim wholesale price 10 percent below Bell Atlantic's retail rates, and Bell Atlantic's specific price plan implementing that order was up for approval yesterday.

The June order disappointed both Bell Atlantic, which wanted smaller discounts, and long-distance carriers, who said discounts of 40 percent or more were required by this year's telecommunications reform law. The law requires the wholesale rate to be discounted for any costs -- such as marketing and billing expenses -- the incumbent local phone company will avoid by not serving the new competitors' customers itself.

However, the Federal Communications Commission issued regulations last month that indicated the discount would be between 17 percent and 23 percent, depending on local conditions.

That order has moved Bell Atlantic and the long-distance carriers closer together in negotiations, but has not eliminated the gap.

Executives of the companies said Bell Atlantic is now seeking Maryland wholesale rates 12.1 percent to 14.3 percent below retail. AT&T has come down to a 26.9 percent wholesale discount, and MCI is seeking prices 22.6 percent below retail.

Pub Date: 9/12/96

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