Local phone service ruling criticized PSC sets rates for other firms' access to Bell Atlantic network

Competition is goal

Local Bell says prices are too low

AT&T, MCI say too high

Regulation

July 03, 1998|By William Patalon III | William Patalon III,SUN STAFF

The Maryland Public Service Commission took the middle ground yesterday when it issued a key decision in its push to open local telephone service to competition.

But the ruling, which set the wholesale prices rivals will pay Bell Atlantic Corp. to lease important pieces of its Maryland network, left both the local Bell and challengers like AT&T Corp. feeling they got the bad end of the deal.

The prices the PSC established for such things as access to telephone switches and the "loops" that connect Bell Atlantic to its customers were lower than Bell wanted but higher than AT&T and MCI Communications Corp. had sought.

Bell Atlantic-Maryland President and Chief Executive Officer Sherry F. Bellamy said the decision lets rivals use the network Bell Atlantic spent billions to build for less than it costs to use it.

"This is like telling McDonald's that they have to let Hardee's use their stoves, but that they don't have to pay," said Bellamy, who was openly agitated by the decision.

Bellamy said the decision will give unfairly competitors the ability to undercut Bell Atlantic and skim off high-profit business customers. That could force residential customers to shoulder more of the costs of updating and improving the phone network here in Maryland, Bellamy said, assuming Bell Atlantic decides to make those investments at all.

The other side wasn't any happier.

AT&T Public Relations Director Candace Humphrey said the prices set by the PSC "are considerably higher than the FCC recommended [when it deregulated telecommunications in 1996]. That means telephone consumers in Maryland aren't going to have a choice for phone service anytime soon."

Humphrey's message: AT&T may not enter the market at all.

MCI, a long-distance carrier that also wants to sell local phone service in Maryland, adopted a more moderate stance, though that company, too, made it clear it was not pleased with the decision.

In a statement, Jay Young, MCI's regional director for public policy, said the company "still is reviewing the complex cost order and it appears to balance the interests of the incumbent monopoly and new entrants to the market. Based on an initial review, however, it appears the PSC, which traditionally has acted to aggressively open the local market, has backtracked on providing a strong economic incentive to encourage new competitors to enter the local market in Maryland."

Any of the companies could appeal the decision to the PSC. If not satisfied there, they could take the case to court, Bell Atlantic's Bellamy said.

None of the companies yesterday were ready to say what they planned to do, stating that they were still reviewing the lengthy decision.

Glenn F. Ivey, chairman of the state PSC, said the commission believes the costs set for new entrants were priced competitively. Other rulings must follow before competitive local phone service becomes a reality.

Those rulings should come in the next several months, Ivey said.

"My view is that this is a step along the way," he said. "But the companies fought hard on it. They fight hard on every step."

Pub Date: 7/03/98

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