Copyright 1999 The Baltimore Sun Company
THE
BALTIMORE SUN
December 23, 1999, Thursday ,FINAL
SECTION: BUSINESS ,1D
LENGTH: 1014 words
HEADLINE:
Bell Atlantic long-distance expected here; FCC allows firm to offer service in
New York state; A first for a regional Bell; Head of Md. subsidiary anticipates
getting same right in 2000; Telecommunications
BYLINE:
Mark Ribbing
SOURCE: SUN STAFF
BODY:
For the first time since the 1984 breakup of
AT&T, one of the regional Bell telephone companies has won permission to
offer long-distance service in its territory, a long-anticipated development
that could be repeated in Maryland next year.
The Federal Communications
Commission said yesterday that its five commissioners had voted unanimously to
allow Bell Atlantic Corp. to sell long-distance service in New York state.
Bell Atlantic's New York application is seen as a bellwether for the
company's entry into the long- distance markets of the other 12 states it
serves, including Maryland.
" Today is truly a historic moment for
American consumers," said FCC Chairman William E. Kennard. Ivan G. Seidenberg,
Bell Atlantic's chairman and chief executive officer, said, "We're gratified by
the FCC's action today. We're ready to go and we can't wait to roll out Bell
Atlantic long distance not only in New York but throughout the Bell Atlantic
region."
Seidenberg said his company would next seek permission to offer
long-distance service in Massachusetts, Pennsylvania and New Jersey, with
filings in those states expected early in the second half of next year.
Maryland is not as far along in the process. But Sherry F. Bellamy, the
president and chief executive officer of Bell Atlantic-Maryland Inc.,
anticipated getting FCC approval "sometime in the year 2000."
Maryland
Public Service Commission Chairman Glenn F. Ivey, whose agency will play a
crucial role in determining whether and when Bell Atlantic will be eligible to
offer long-distance service here, called the FCC's New York decision "useful" as
a road map for other states.
AT&T, which could lose millions of
customers to Bell Atlantic in New York alone, objected fiercely to the FCC's
action and said it plans to launch a legal challenge to the decision.
James Cicconi, AT&T's general counsel, said in a statement, "Today's
decision shortchanges the people of New York because it does not ensure that
Bell Atlantic's local phone markets are truly open to competition."
When
Bell Atlantic begins selling long- distance connections in New York, it will
mark a return of sorts to an older way of selling phone service.
Until
the 1984 consent decree breaking up AT&T, Americans made all calls -- both
local and long-distance -- through Ma Bell. After the decree broke up the
company, AT&T was left with long-distance service, leaving local calls
mainly in the hands of seven regional Bell companies.
The Bell companies
were barred from offering long-distance in their service areas. The watershed
Telecommunications Act of 1996 sought to change this.
The act was intended to free up competition throughout the
communications industry, and it offered the Bell companies a way to become full
players in the $80 billion long-distance market.
Local
competition
But to sell long-distance in any of the states in its
region, a Bell company would have to file an application with the FCC showing
that the state's local-service market was sufficiently open to competition.
Before approving Bell Atlantic's New York application, the FCC had
rejected five such bids in other states.
But New York was a unique case:
The state had attracted numerous local competitors hoping to challenge Bell
Atlantic, especially in the lucrative New York City market.
In addition,
New York state regulators put Bell Atlantic's application through a battery of
tests, including a spate of third-party evaluations by the accounting firm KPMG
Peat Marwick LLP.
Many experts believed the FCC had to grant
long-distance permission somewhere to quell objections that it was foiling the
purposes of the Telecommunications Act.
"The FCC has been under enormous
pressure to show it can approve an application," said Jack Nadler, a
telecommunications and technology lawyer at Squire, Sanders & Dempsey LLP in
Washington.
Equal access
Kennard, the FCC chairman, indicated
that a major factor in the panel's approval of Bell Atlantic's bid was an
agreement by the phone company to take steps to ensure that Internet providers
are granted equal access to its networks.
Analysts said yesterday's
decision was important not only for its impact on the telephone industry, but
for its implications in the Internet realm.
The former restrictions on
Bell Atlantic's activities in long-distance phone communications also
constituted a formidable legal barrier to the company's entry into the
increasingly important Internet access market.
Consumer groups generally
approved of the FCC's move.
Mark Cooper of Silver Spring, the research
director for the Consumer Federation of America, said:
"The New York
commission did a lot of hard work. They listened to AT&T whine and Bell
Atlantic drag its feet for two years, but we got there. The Maryland PSC and
Bell Atlantic have to explain why they haven't offered all of that here."
Bell Atlantic will be eligible to sell long-distance in New York on Jan.
3, and will launch the service two days later.
The company said it plans
to offer single-rate pricing plans that have no monthly charge, and to focus
initially on the residential market, coming out with plans for business
customers 30 to 45 days after its initial New York rollout.
Seidenberg
said he expected Bell Atlantic to have 1 million long-distance customers in New
York by the end of next year, and as much as 30 percent of the state's
long-distance market within five years.
3 years to be profitable
Bell Atlantic President and Chief Operating Officer James G. Cullen said
it will take two or three years before its New York long- distance operations
become profitable.
Bell Atlantic estimates that long distance in its
13-state region is worth $20 billion. New York, easily the
largest state in its region and a major point of departure and entry for
international calls, would account for about a third of that.
Shares in
Bell Atlantic fell $1.0625 yesterday on the New York Stock
Exchange to close at $64.50. AT&T shares slipped
$1.25 to $52.9375.
GRAPHIC: PHOTO(S) New long line: FCC Chairman
William E. Kennard announces the decision granting Bell Atlantic the right to
offer long-distance service in New York state.
LOAD-DATE: March 29, 2000 
