THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, August 2, 1996 TAG: 9608020433
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: STAFF AND WIRE REPORT
DATELINE: WASHINGTON LENGTH: 89 lines
Marking another major step in the telecommunications revolution, federal regulators Thursday completed an overhaul of the local telephone business intended to give Americans more choices and lower prices.
The Federal Communications Commission voted, 4-0, to approve rules opening the $100 billion local phone marketplace to long-distance and cable-TV companies and other potential competitors.
Customers in Virginia could begin to see multiple choices for residential local phone service sometime next year, state regulators and telephone companies say.
Virginia is one of about a dozen states that have been aggressively moving toward opening up the local-exchange phone business. AT&T Corp., MCI Communications Corp. and Cox Communications Inc. are among a half-dozen companies that have already won go-aheads from state regulators to compete in local services. Mainly, they'll be challenging Bell Atlantic Corp. and GTE Corp., the state's largest and second-largest local service providers.
But Virginia and other states have still needed broad guidelines from the FCC to fully implement a bill signed into law last February by President Clinton that undid 62 years worth of anti-competitive telecommunications statutes. That law also will help usher in wide-ranging competition in cable-TV, long-distance and wireless phone services.
The FCC rules approved Thursday are one key element of carrying out that broad plan. They set the framework to guide states into the new era of competition in the biggest sector of telecommunications: local phone services. But they also will provide state regulators with leeway to make decisions that would best serve local customers.
FCC Commissioner Susan Ness said, ``the ultimate winners will be the American consumers.'' But, she added, ``competition will take time to emerge. It won't come easy.''
Bell Atlantic Vice President Edward D. Young III said the FCC had succeeded in ``crafting an order that appears to establish a reasonable mechanism to introduce local competition.''
Consumer advocates were also generally pleased with the FCC'sactions. ``The FCC seems to be headed in the right pro-competitive direction,'' said Bradley Stillman, the Consumer Federation of America's telecommunications policy director.
The regulations are designed to give potential competitors to local phone companies a number of ways to break into the local phone business.
One of the law's ultimate goals is to encourage companies to build their own local networks to compete with existing local phone companies. Cox is one of the most ambitious of these would-be ``facilities-based'' providers. It plans to use its cable-TV network in Hampton Roads to offer a range of phone services.
In the meantime, however, the rules will allow rivals to plug into the current phone systems, for a fee, to ``resell'' local phone service. AT&T and MCI are among companies that plan to resell Bell Atlantic's and GTE's networks in Virginia to offer their versions of local-exchange service.
The FCC rules also lay out guidelines for ``interconnection,'' the process by which customers of different local companies can call each other. If Bell companies don't abide by the rules, they won't be allowed to offer lucrative long-distance services to their current local customers. They will be allowed to offer long-distance services outside their local service areas, however. Bell Atlantic has begun courting long-distance customers in North Carolina, Michigan and Texas, for instance.
Perhaps the hardest guideline for the Baby Bells to stomach out of Thursday's FCC decision deals with terms by which companies like AT&T will lease pieces of existing local phone networks to provide their own local services.
The FCC decided that the lease price these companies pay to companies like Bell Atlantic will be 17 percent to 25 percent less than the basic rates the local phone companies now charge their customers. State regulators will have the final say on the exact discount within that range.
The discount is about twice what the regional Bells have said is fair. It's also somewhat lower than the would-be ``resellers'' had hoped for. AT&T, for instance, has asked Bell Atlantic to grant it a 33 percent discount in Virginia. Still, AT&T Chairman Robert E. Allen called the FCC's guidelines on reselling ``reasonable.''
The biggest setback for aspiring competitors was the FCC's decision to allow local phone companies to continue charging long-distance providers $20 billion to $30 billion a year in so-called ``access charges'' for originating and terminating long-distance calls. However, analysts expect the FCC to re-address this issue within a year and cut the amount the Bells can charge.
Wireless phone companies did win their battle to slash by about 80 percent the fees they pay Bells to complete calls. Industry officials said that will help wireless companies compete for local phone business the same way their wired counterparts do. MEMO: Staff writer Dave Mayfield, The Associated Press and Bloomberg
Business News contributed to this report. by CNB