Verizon starts long-distance in Md. today

Service also begins in District of Columbia

Lower prices expected

Regional Bell can now offer bundled rates

April 15, 2003|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Verizon Communications Inc., the nation's largest local phone company, will launch long-distance service today in Maryland and Washington, in what some believe will spur competition by giving consumers more choices - as well as a slew of advertisements.

It is the final piece of the puzzle that Verizon needed to bundle its services, said Maura Breen, a senior vice president and chief marketing officer for Verizon.

"It's something that we've waited for and worked very hard for," she said.

The Telecommunications Act of 1996 forbade Verizon and other regional Bell phone companies from offering long-distance service in some states until the utilities proved they allowed competitors into their local markets.

Competitors, including the No. 1 long-distance carrier, AT&T Corp., criticized Verizon's application for long distance service at a hearing of the Maryland Public Service Commission hearing in October, claiming the regional giant made it difficult for them to enter the local phone market.

But the commission approved Verizon's application in December, demanding that the company meet 10 conditions that the PSC is monitoring. And last month, the Federal Communications Commission gave Maryland, West Virginia and the District of Columbia permission to offer long distance service.

Verizon, the nation's third-largest long-distance company, had 10.4 million long-distance customers at the end of the fourth quarter.

Starting today, Verizon will sell long-distance services in 48 states and the nation's capital. It plans to begin long-distance service in West Virginia next month. Verizon does not offer the service in Alaska.

Verizon's entry into the Maryland market means consumers will have one more option for long-distance services.

Customers also will be offered deals on bundling local and long-distance services, said H. Russell Frisby Jr., former chairman of the Maryland Public Service Commission and current president of the Competitive Telecommunications Association in Washington, a trade group that represents local and long-distance phone companies.

"Competition always means lower prices for consumers, so consumers will benefit," Frisby said.

Regional Bells typically grab 20 percent to 25 percent of the market share within the first year of entering a long-distance market, said Patrick Brogan, an analyst who covers telecommunications for the Precursor Group, a Washington research firm. That figure does not include business customers.

So the blitz of Verizon advertisements that lies ahead is no surprise to industry experts. One commercial, to begin airing today in the region, features actor James Earl Jones break dancing in dark clothes and slick sunglasses.

"I'm sure you're going to see James Earl Jones all over the place," Frisby said. "You've seen the Verizon ads, you've seen the Cavalier ads, you've seen ads from IDT and a number of other companies. It is fairly common to see an increase in ads. "

One package that the company plans to give the hard sell is Verizon Freedom, which offers residents unlimited local, toll and long-distance calls, along with voice mail and other services, for $49.95 a month.

To competitor AT&T, Verizon's entry into the market today simply means one more long-distance company for consumers to choose from, said Jeff Roberts, an AT&T spokesman.

"The problem in Maryland is that there's no choice for local phone service," he said.

Verizon charges competitors, such as AT&T, wholesale rates to lease the regional phone company's network, allowing them to sell local phone service. Competitors have said those wholesale rates are too high. They pay more to lease Verizon switches to complete a local call in Maryland than in all but a few other states.

If the Maryland Public Service Commission lowered those wholesale rates, it would lead to more robust competition, said AT&T's Roberts.

The rates have been lowered in nine other states, including Michigan, where prices have dropped more than 30 percent because of the number of companies selling local and long-distance services, said Frisby of the Competitive Telecommunications Association.

"The important key in Michigan as well as in Maryland is, it's going to be important that we have both local and long-distance competition because the real savings come to consumers when they have both local and long-distance competition," Frisby said.

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