Md. Seeking Local Phone Company

State Contract Has Been Handled By Bell Atlantic In Past

Milestone In Deregulation

Deal Could Be Worth `Millions And Millions' To Pact Recipient

April 22, 1997|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Marking a milestone in the deregulation of the telephone industry, the state of Maryland today will ask for proposals from bidders seeking to take the state's own local telephone service business away from traditional monopoly carrier Bell Atlantic Corp.

"This is historic," said Bell Atlantic-Maryland President Sherry F. Bellamy. "To my knowledge, there has not been a comparable scenario anywhere in the Bell Atlantic region. I don't know if there has been a comparable experience anywhere in the nation."

The state, as well as Congress and federal regulators, have been pushing for telephone deregulation for the last several years. But this is different, since the state is a huge phone customer as well as a regulator, and carriers are hotly anticipating the chance to bid on business that has been all but exclusively controlled by Bell Atlantic.

"I'm not sure even how to put a number on it, but it's millions and millions and millions of dollars," said Joe Haynes, Washington-Baltimore regional vice president for Teleport Communications Group, one of a bevy of local phone companies spawned by deregulation.

One of the reasons for the uncertainty is that the state has not told the carriers exactly what services it will put out for bid, executives at several phone companies said. In a business that has an exploding number of services, including basic local voice, data, specialized voice services and ferrying long-distance calls between callers' offices and long-distance calling networks that lack the street-by-street coverage of local systems, no one knows how big the contract can be until they know exactly what it includes.

Preston Dillard, the state's director of telecommunications, declined to say exactly what pieces of the state's business will be put out for bid, though he confirmed the request will be released today. He said the state hopes to award contracts by July, though he said losing bidders may appeal the award and delay signing of the contracts.

Dillard declined even to say how much the state has paid Bell Atlantic in the past, because he said the disclosure could invite misleading comparisons between the services the state has bought before and what it plans to put out for bid today. He said Bell Atlantic has had nearly all of the business in the past.

But there is little doubt the contract will be enormous. Since Maryland regulators in 1995 approved terms to let WorldCom Inc. enter the local phone business in the state, WorldCom, TCG and MCI, among others, have begun to build local networks and long-distance access facilities. But the biggest customers to switch part or all of their business to newcomers have been companies such as Legg Mason Inc., which went with MCI, and individual federal agencies such as the Social Security Administration, a WorldCom client.

By comparison, the state will have a $15.4 billion budget in fiscal 1998 and has almost 70,000 employees.

MCI, AT&T, TCG and Bell Atlantic said they intend to bid on the contract. But in an attempt to make it easier for the new competitors to vie for the deal, the state plans to divide the deal into separate packages serving Maryland's four major calling zones, which roughly correspond to the boundaries of metropolitan Baltimore, metropolitan Washington, the Eastern Shore and Western Maryland.

That helps the newcomers because virtually none of them plans to build a call-handling network serving rural areas anytime soon. Instead, they are concentrating their facilities in the Baltimore-Washington corridor, where dense populations and lots of major government and business clients mean they can reach most of the market at comparatively low cost.

For the state contract, that means the rural areas are likely to be conceded to Bell Atlantic while the real fight rages over serving the central part of the state.

"They don't want to serve Western Maryland," Bell Atlantic spokeswoman Shannon Fioravanti said. "They don't want to serve Southern Maryland, they don't want to serve the Eastern Shore. They want to serve the Washington-Baltimore metro. And that's all."

Pub Date: 4/22/97

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