| BUSINESSWEEK ONLINE : SEPTEMBER 13, 1999 ISSUE | ||||||||
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| NEWS: ANALYSIS & COMMENTARY
Commentary: Let the Baby Bells Reach into Long Distance With phone rates tumbling, you would hardly think the Baby Bells would be chomping at the bit to get into long distance. But three--Bell Atlantic, SBC Communications, and BellSouth--are lobbying state regulators in New York, Texas, and Georgia, respectively, to let them get into the act. More than three years after the 1996 Telecommunications Act passed, no Baby Bell has won regulatory approval to sell long-distance service within its region. The law requires the Bells to open up their local-calling markets to competition before being able to get into this new business. None has passed muster so far. But the old test doesn't measure competition as well as it did: Wireless systems, Internet calling, and phone service over cable--and the ingenuity of countless entrepreneurs--have made the arbitrary distinction between long distance and local look like a throwback to Ma Bell days. ''STRONGER STICK.'' So it's time to start letting the Baby Bells into long distance. The likely first entrant is Bell Atlantic, which has been working closely with New York regulators to prove itself worthy. In particular, state officials want local-phone customers to be able to switch to a new local-service provider as easily as long-distance customers can today, and Bell Atlantic has been developing a system with this capability. No doubt, a Bell Atlantic entry will spur the other Bells to become equally cooperative, if only to get the stock market boost that their long-distance entry is expected to produce. Says Robert C. Taylor, president of Focal Communications, a Chicago local phone company that competes with Ameritech Corp.: ''Wall Street has a stronger stick than the regulators.'' There is also some need to level the playing field when AT&T enters the local market, which it plans to do through the cable systems it has been snapping up. The Federal Communications Commission has already sided with AT&T on one key issue, supporting the giant's stand against ''open access'' for data services over cable. Internet service providers want to force AT&T to carry all data services on an equal basis, rather than giving favorable terms to Excite @home, in which it is a major investor. Meanwhile, the regulators warn that even with the looming entry of AT&T, Bells still have to comply with the law. ''The Bells will get long-distance relief when they satisfy the competitive checklist,'' says Larry Strickling, chief of the Common Carrier Bureau at the FCC. ''What other competitors do in the marketplace doesn't make much difference.'' But he does concede that ''these companies are doing a lot more than they were two years ago.'' Many expect state regulators to grant approval to the first Bell sometime this fall and the FCC to move early next year. ''Bell entry into New York will be the single most important telecom event of the year,'' says Scott C. Cleland, an analyst at Legg Mason's Precursor Group. Ultimately, this is all a prelude to consumers buying telecom bundles from a new generation of megatelecoms. ''In the long term, there will be a handful of large companies offering Internet, long-distance, local, and wireless services,'' says Larry Darby of Darby & Associates, a Washington telecom consultant. A primary goal of the Telecom Act was erasing arbitrary distinctions between service markets. Now that the virtuous cycle of competition between the two sectors is starting, let the games begin. By Catherine Yang _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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