Bell Atlantic today will become the first of the regional Bell companies allowed into the $80 billion long-distance market, signaling an era of competition in the communications industry, people close to the decision said yesterday.
The announcement, expected from the Federal Communications Commission, would allow Bell Atlantic to sell long-distance services to 6.6 million households it serves in New York state.
Approval would mark the first time since the breakup of AT&T Corp.'s Bell System 15 years ago that millions of consumers would be able to get both local and long-distance phone services from an offspring of Ma Bell.
Executives close to Bell Atlantic said the company planned to mount a marketing drive in January to promote the service. The company reportedly intends to offer low per-minute rates but without monthly fees.
Even as the communications business surges amid a flurry of mergers, the explosive growth of the Internet and the popularization of wireless phones, Bell Atlantic's long-distance victory in New York would mark the beginning of a profound reshaping of the industry's landscape.
Over the next few years, the FCC is expected to allow the regional Bell companies to enter the long-distance market in many states. That would give AT&T, as well as the other long-distance titans, MCI WorldCom Inc. and Sprint Corp., which have agreed to merge, powerful new competitors with tens of millions of customers.
SBC Communications Inc., the largest local phone company, which does business as Ameritech, Southwestern Bell and Pacific Bell, is expected to ask the FCC for approval to offer long-distance service in Texas.
For the Bell companies and for regulators, Bell Atlantic's long-distance approval in New York would mean the beginning of the end of a regulatory system that emerged as AT&T shed its local Bell companies under court supervision in 1984.
"The dropping of the barrier keeping the local telephone companies from the long-distance market is in fact the beginning of the end of regulation," said Reed Hundt, who resigned as chairman of the FCC in 1997. "It's important, the way that crossing the highest peak in any mountain range is important. You're going down now, but you still have a long way to go."
When the old AT&T agreed to divest its local phone operations in 1984, the seven spinoffs were prohibited from selling long-distance services, which could have enabled them to use their local monopolies to extend into a new market.
The Telecommunications Act, however, said the Bell companies would be allowed into the long-distance market on a state-by-state basis as they convinced the FCC that they had opened their local networks to competitors.
The Bell companies are required to sell access to parts of their networks, notably the copper lines that run into homes, because it would be difficult for a new local company to fully replicate the systems the Bell companies spent decades building.