ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, October 17, 1996 TAG: 9610170035
SECTION: BUSINESS PAGE: C-8 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
Despite a court-ordered delay in federal rules to open up local phone markets to new competition, long-distance companies already have moved in that direction - betting billions of dollars on the assumption that change was just around the corner.
In anticipation of the lowered barriers, AT&T, MCI, Sprint and other long-distance companies have struck deals or wired their own networks in recent years to provide limited access to local phone customers, particularly businesses.
At worst, Tuesday's action by a U.S. appeals panel is expected to postpone, rather than fatally undermine, the drive toward full-blown competition in the nation's telecommunications business, industry observers said Wednesday.
The 8th U.S. Circuit Court of Appeals put on hold until a January hearing regulations that would set prices and other terms for how regional phone companies would give outside companies access to their local lines.
Supporters had hailed the rules as a potential boon to consumers and companies, who presumably would see prices for local service fall as rivals competed for their business.
``On one level, the momentum behind local competition will pretty much continue. The disappointing thing is it won't be accelerated,'' said Bryan Van Dussen, director of telecommunications research at Yankee Group, a Boston-based consulting and market research firm.
The Federal Communications Commission plans to take its challenge of the appeal panel's stay all the way to the Supreme Court.
MCI, AT&T and Sprint all are supporting that challenge. Behind their stance is the fear they will remain hobbled in local markets until they are allowed access to the Baby Bells' extensive phone networks, by leasing local lines and then reselling the service to consumers.
The long-distance companies already have gotten involved as much as they can.
MCI Communications Corp., the nation's second-largest long-distance company, says it will have spent about $1 billion by the end of this year to build local networks of fiber-optic cable that handle business calls in 25 cities.
``We are going to continue to develop facilities based on our plans,'' said MCI spokesman Robert Stewart. ``But we can't do anything on other fronts. And that disturbs us.''
AT&T Corp. offers local phone service to businesses in 70 cities, through deals with ``alternative access'' companies that provide access to local telephone customers.
No. 3 Sprint Corp. already owns several phone companies that provide local service in 19 states, but it was planning to spend billions of dollars over a period of years in further investments in local phone service.
``Before we spent the first dollar on assets, we want to make sure we have a binding agreement,'' said John Hoffman, senior vice president of external affairs for the Kansas City, Mo.-based Sprint.
In their appeal, Baby Bell companies argued that the FCC rules take too much power from the states over setting local prices. They said states should set their own rates because national standards do not take into consideration differences in geography, population and the complexity of each phone company's networks, among other things.
But the long-distance companies said that, if the stay is not lifted, they will be forced into the cumbersome process of approaching officials from each state to try to negotiate pricing plans that will allow them to make money and are also acceptable to the Baby Bells.
However, the court's pricing decision does not affect other rules governing how long-distance carriers and cable television companies can connect their networks to the networks of local carriers. The mere anticipation of the rules has had large companies scrambling to get involved in as many areas as they can.
LENGTH: Medium: 75 linesby CNB