Competition calling: Anyone there? Local phone service open to all comers, but choices still few

Breaking up is hard to do

Stubborn technology, bickering over fees slow process

April 06, 1997|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Telecommunications reform is supposed to save Americans billions of dollars, but you can hardly tell that at First National Bank of Maryland, one of the first companies to switch its local phone service contract away from Bell Atlantic Corp.

"Maybe a year from now we'll have a view," bank spokeswoman Joan Gillespie said. "We haven't implemented it yet, so we're not in any position to [compare] service and cost."

More than a year after Congress paved the way for the nation's first large-scale competition on local phone service, stories like First Maryland's are a lot more common than people had expected. Competition is coming, but more slowly than many thought it would.

Baby Bell companies and the new players that want to enter the market blame each other, while consumer advocates worry that mergers like SBC Communications Inc.'s $16.5 billion takeover of Pacific Telesis Group Inc., completed last week, will create exactly the sort of monopoly last year's telecommunications reform law was supposed to break up.

Consumers are seeing some tangible benefits from deregulation. Maryland, rates for intrastate long-distance and local toll calls fell by up to 20 percent in January, after the state Public Service Commission forced Bell Atlantic Corp. to cut rates it charges the long-distance carriers to carry calls between a customer's phone and long-distance networks, which lack the home-by-home connections of local phone systems.

Obscure -- though no longer small -- carrier WorldCom Inc. has unveiled a home phone service package that undercuts a similar Bell Atlantic offering by about $3 a month, or 10 percent. Even Comcast Corp., the cable TV company, has asked for permission to enter the phone business in Maryland, and has unveiled its cable modem-based Internet service, which is far faster (as well as significantly more expensive) than traditional phone-based Internet offerings.

Nationally, there are scattered examples of competition, especially in Connecticut, where local carrier Southern New England Telephone has pushed into the long-distance business, and in major urban centers.

"You drive around San Francisco and you see billboards everywhere offering AT&T local residential telephone service," said James Gattuso, a Federal Communications Commission official during the Bush administration who is now at Citizens for a Sound Economy, a conservative foundation.

But not all customers benefit equally. Cable TV rates nationally rose about 8 percent last year, Kimmelman said, and many new players in the phone business are concentrating on business customers rather than consumers, leaving Mom and Pop without the choices many thought they would have by now.

"We don't play in residential," said Ron Vidal, WorldCom's vice president of new ventures.

No one's switched yet

"There are no residential customers in Maryland who have switched to another [local] provider," People's Counsel Michael J. Travieso said. "It does matter. The whole concept of reform was to give people choices."

The Big Three long-distance carriers, the only ones planning a major effort to move consumers away from Bell Atlantic, aren't likely to offer local phone service in Maryland before fall, if then. Their network-sharing deals with Bell Atlantic still haven't been worked out, despite state arbitration that ended six months ago.

The long-distance companies say Bell Atlantic and other Baby Bells are simply stalling. For example, AT&T contends that Pacific Telesis is claiming it has the administrative ability to process only about 400 daily requests to switch local phone service in a state with 20 million people -- and even then is trying to talk switchers out of it before they turn the customer over to AT&T.

"We've been finding all kinds of problems, from the inept to the intentional," said MCI chief policy counsel Jonathan B. Sallet.

Long-distance companies and consumer groups are also concerned about the mergers, especially the $23 billion merger proposed by Bell Atlantic, which covers the area from Virginia to New Jersey, and Nynex Corp. which serves New York and most of New England. Competitors say teaming up the most obvious potential competitors in local service makes no sense. The Justice Department is considering whether to let that deal go forward.

"The act reduced price and ownership limits on the theory that there would be rampant competition," said Gene Kimmelman, director of the Washington office of Consumers Union. "If mergers entrench monopolists, it defeats the purpose."

Bell Atlantic general counsel James R. Young argues that the mergers are less important than they look. He insists that Bell Atlantic would have been no more formidable a competitor in local service in Nynex's territory than AT&T or Sprint will be, because unlike them it has no customers in the states Nynex serves.

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