Appeal cost set to use local phone equipment Bell Atlantic disagrees $14.50 a loop is too high


August 01, 1998|By Kristine Henry | Kristine Henry,SUN STAFF

The battle over the price for competition in Maryland's local phone service market continued yesterday when two would-be providers formally asked the state's Public Service Commission to reconsider a key decision.

MCI Communications Corp. and AT&T Corp. filed motions seeking review of the PSC ruling that set the wholesale prices competitors must pay Bell Atlantic Corp. to use its equipment to offer local phone service. The two companies say Bell Atlantic RTC incorrectly reported some of its costs so the commission, which relied on Bell Atlantic's numbers, set a price too high for accessing equipment.

Bell Atlantic said it will file its appeal Monday, saying the commission's prices were too low.

The main contention is over the price of access to so-called local loops -- the lines running from a home or business to a Bell Atlantic phone switch. The commission ruled last month that the competitors should pay Bell Atlantic $14.50 per loop per month. Bell Atlantic had asked for a price of $16.59 and MCI and AT&T had proposed $11.37.

MCI and AT&T said yesterday that after further review, they think the price should be lower -- $11.32 -- and that Bell Atlantic was figuring one-time charges as recurring costs.

"What Bell Atlantic did in its model was apply variable costs to things like digging a ditch, which made its costs higher," said AT&T spokeswoman Candace Humphrey. "You only have to dig a trench once; it doesn't matter how much cable you put in."

Humphrey said she hopes the commission will agree with AT&T after the numbers are reviewed, but added that a court case will likely be pursued if the price is not changed.

Les Kumagai, an MCI spokesman, said he doesn't agree with Bell Atlantic's past analogy that the PSC's price decision is similar to telling McDonald's it has to let Hardee's use its stoves for free.

"Customers paid the cost to install the lines many times over, why shouldn't they be able to exercise their right to connect to any carrier they want?" he said. "The loop is the only way to reach customers right now. They [Bell Atlantic] control it and they want to continue to control it so no other competitors can reach customers."

But Bell Atlantic spokeswoman Sandra Arnette said maintaining those networks and providing customers with reliable service is expensive.

"We don't believe giving away our network will spark fair competition in the marketplace, and that's pretty much what AT&T and the others want," she said. "If we were giving it away free, they'd probably still come back and want more."

Arnette said set rates in several states are in line with Bell Atlantic's request. Monthly loop rates in New Jersey, where the lines are shorter and less costly, are $16.21, she said.

She said she did not have enough information to discuss one-time vs. variable costs.

PSC Chairman Glenn F. Ivey said he had not seen yesterday's appeal and didn't know how long it would take to resolve.

"Our bottom line is that the two parties gave us proposed rates that were significantly different and they were not able to reach an agreement, so we tried to find common ground in the middle based on the evidence we had and what we thought was reasonable to both sides," Ivey said.

"We'll keep moving forward and try to create an atmosphere for fair competition," he said.

Pub Date: 8/01/98

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