THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, January 24, 1995 TAG: 9501240270
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: BY DAVID MAYFIELD, STAFF WRITER
DATELINE: RICHMOND LENGTH: Long : 103 lines
A coalition of businesses and consumer groups told a General Assembly subcommittee Monday that Virginia will lose billions of dollars of investment in new telecommunications networks over the next several years if the legislature doesn't make way for competition in local phone services.
In what largely amounted to a piling-on session - with Bell Atlantic Corp. and other local phone companies on the bottom - an alliance of cable operators, long-distance phone companies and groups like the American Association of Retired Persons said that Virginia is falling way behind other states in opening its communications industry to competition.
But Bell Atlantic, GTE Corp. and their brethren asked lawmakers not to just throw open the gates to new players in their monopoly businesses. The local phone companies suggested that the General Assembly attach restrictions that they say would keep upstarts from taking unfair advantage of new competitive freedoms.
The two sides hashed things out in a hearing before a specially appointed House Corporations, Insurance and Banking subcommittee. The panel was given the job of trying to resolve differences between two bills introduced last week by Norfolk Del. George H. Heilig Jr., the committee's chairman. One is favored by Tele-Future Virginia, the name given to the cable/long-distance/consumer alliance. The other is championed by Bell Atlantic and most of the state's other local phone companies.
Subcommittee Chairman Clifton A. Woodrum of Roanoke joked at the start of the hearing that Heilig had appointed his ``least favorite people''to the panel. Such is the acrimony between the two sides, the intensity of their arguments and the stakes involved.
The state's cable operators, facing federally authorized video-on-demand competition from Bell Atlantic, feel particularly vulnerable if the state's status quo remains. They want to expand into local phone services and started the ball that led to the Tele-Future coalition's formation.
Virginia's local-exchange carriers have mostly held together in response. However, two of the state's largest - Centel and United - broke ranks and endorsed the Tele-Future bill at Monday's hearing.
Bell Atlantic executives quickly pointed out that those carriers are owned by Sprint Corp, better known for its long-distance phone operation and a partner with several large cable companies in developing a nationwide wireless communications network.
If the outcome of the legislative battle is determined by punch count alone, the Tele-Future group appears out in front.
The group's Richmond attorney, James Roberts, paraded five witnesses before the subcommittee on Monday: from Cox Cable Hampton Roads Inc., AARP, Virginia Citizens Consumer Council, AT&T Corp. and MCI Communications Corp.
The two executives of Bell Atlantic and GTE who spoke spent much of their time trying to rebut the Tele-Future group's arguments.
The main difference between the two bills is this: Tele-Future's would lift a state law barring local phone competition and give the State Corporation Commission absolute freedom to decide when and how to let cable operators and long-distance companies into the ``local loop.'' The Bell Atlantic-led group's measure would give the commission specific guidance on how and what to do.
The commission itself hasn't endorsed either bill, said Ken Schrad, a commission spokesman. But after Monday's hearing, he confirmed as ``accurate'' the Tele-Future group's claim that the agency prefers its measure over the Bell Atlantic-led group's.
Robert Woltz, a Bell Atlantic-Virginia vice president, said the company and its partners are ``pro-competition'' but want to ensure they're accorded ``equitable'' treatment when competition arrives.
The restrictions his group wants written into a reform bill would mainly do two things:
Keep new competitors from getting into local phone services when the local phone companies' hands are tied from getting into those competitors' business lines. This, for instance, would keep long-distance companies from offering local services until local exchange carriers can freely offer long-distance services.
Require new competitors to be subjected to the same level of state regulation as incumbent carriers.
Rob Lopardo, an MCI attorney, said no other state legislature has adopted the ``quid pro quo'' approach advocated by Bell Atlantic and that most states, to the contrary, are breaking down monopolies enjoyed by local-exchange phone companies. He noted that MCI was recently authorized in Maryland, for instance, to offer local services.
Roberts, the Tele-Future attorney, said the corporation commission needs the flexibility to regulate companies differently in order to stimulate competition. Barring such flexibility will help ensure that would-be competitors won't invest the billions of dollars necessary to challenge established carriers, he said.
The Tele-Future representatives said telecommunications issues are so multifaceted that the commission would have to hold extensive hearings before having all evidence needed to make decisions. They suggested that Bell Atlantic and its partners want to short-cut that process and win in the legislature restrictions that they might not achieve at the commission level.
With Virginia trailing other neighboring states in fostering communications competition, its ability to attract and retain communications-businesses is being impaired, Roberts said.
The message that passing the Bell Atlantic-led group's bill would send is, ``it's better in Maryland, it's better in Pennsylvania,'' he warned.
Woodrum, the subcommittee chairman, asked the panel's staff to report back on the regulatory climate in other mid-Atlantic states by Friday, the subcommittee's next meeting dae. by CNB