Copyright 1999 The New York Times Company
The New
York Times
September 29, 1999, Wednesday, Late Edition -
Final
SECTION: Section A; Page 1; Column
5; Business/Financial Desk
LENGTH: 1358
words
HEADLINE: Long Distance By Bell Atlantic Expected
Soon
BYLINE: By SETH SCHIESEL
BODY:
Fifteen years after the court-supervised
breakup of AT&T, a part of the old Ma Bell stands a good chance of being
allowed to offer customers both long-distance and local service.
The
Bell Atlantic Corporation, the nation's biggest local telephone company, plans
to ask Federal regulators, perhaps as soon as today, for permission to sell
long-distance communications services in New York State. Approval would make it
the first Baby Bell to enter the $80 billion long-distance market. The Federal
Communications Commission has rejected five previous long-distance applications
from other Baby Bell companies, saying they had not yet opened their local
networks to competition, as required by the Telecommunications Act of
1996. But many communications executives, analysts and lawyers expect
Bell Atlantic's New York application to be approved.
For the 6.6 million
New York households served by Bell Atlantic, approval could mean one-stop
shopping for local and long-distance phone service for the first time since the
breakup of what was then known as the American Telephone and Telegraph Company
in 1984.
In addition to offering pricing plans competitive with those of
the established long-distance giants, Bell Atlantic could also offer special
deals like discounted pricing for local service to consumers who sign up for the
company's long-distance product. Bell Atlantic's entry into the long-distance
market could push long-distance rates, which have already dropped, even lower.
The F.C.C. declined to comment. But John T. Nakahata, who was chief of
staff for the commission's chairman, William E. Kennard, until last winter,
said, "I think that there's a sense at the commission that it's getting close to
being time to let a Bell into long distance."
Mr. Nakahata added,
"Assuming they have the support of New York regulators, I think they'll get it."
Even as they say that Bell Atlantic does not deserve to win
long-distance entry, some of Bell Atlantic's potential long-distance
competitors, including AT&T, also say the petition will probably pass
muster.
"I'd put the chances above 50-50," said Michael J. Morrissey,
vice president for government affairs at AT&T, which stands to lose billions
in revenue if the Bells broadly enter the long-distance market. "The other
applications had no real chance."
Bell Atlantic's application would
apply only to New York State, with a $7 billion long-distance market that is
among the most attractive for communications companies. But if the petition is
approved, New York will probably set a regulatory tone for much of the rest of
the nation, with other Bells in other states looking to Bell Atlantic's New York
experience for guidance on gaining access to the long-distance market.
"We're on track for a filing this week," said James G. Cullen, president
and chief operating officer of Bell Atlantic.
If Bell Atlantic wins
long-distance approval, it would open a huge new front in the brutal wars of
marketing and technology that have roiled the communications business since
passage of the Telecommunications Act, a law that was intended to eliminate many
barriers among various communications sectors.
The act set off a frantic
dash among the nation's communications giants to assemble comprehensive baskets
of local, long-distance, wireless and Internet services to be offered to
consumers as one-stop communications solutions, making it less likely that
consumers would divide service among several companies.
In that vein,
AT&T, the No. 1 long-distance carrier, has committed more than $90 billion
to enter local communications markets by acquiring two big cable companies,
Tele-Communications Inc. and Mediaone Group Inc., and retooling its network to
piggyback local phone service and Internet access on TV cables.
Bell
Atlantic, based in Philadelphia, acquired the Nynex Corporation in 1997 and has
since agreed to merge with the GTE Corporation. This month it struck a deal with
Vodafone Airtouch, Britain's largest wireless concern, to combine their United
States wireless operations and create the nation's largest coast-to-coast
network.
So far, none of the local Bells have won entry to the
long-distance market. Before that can happen, Baby Bells must have F.C.C.
certification that they meet a highly technical checklist included in the 1996
act to insure they have opened their local networks to competitors. Between the
breakup of Ma Bell in 1984 and the passage of the act, the Bells were completely
barred from long distance.
In the eyes of many communications experts,
Bell Atlantic's strategy for winning long-distance approval has been more
patient -- and potentially more effective -- than those of the other Bells.
Bell Atlantic, which provides local phone services throughout the
Northeast and Middle Atlantic regions, has spent more than a year slogging
through a tough review by the New York Public Service Commission and the Justice
Department. In April 1998, it made a deal under which the Public Service
Commission and the Justice Department would support Bell Atlantic's
long-distance aspirations in New York after the company had completed a set of
tests of whether its network could easily link with its competitors' systems.
But those tests took longer and uncovered more problems than perhaps any
of the parties had expected. At the time of the deal, Bell Atlantic said it
hoped to be in the long-distance market in New York by the beginning of this
year.
"No other applicant to date has gone through the type of testing
that Bell Atlantic has done," said Mr. Nakahata, the former F.C.C. chief of
staff who is now a partner at the Washington law firm of Harris, Wiltshire &
Grannis. "The fight will be over whether the performance is good enough."
It remains unclear, whether the New York regulators are satisfied. If
they were to oppose the application, it would stand almost no chance with the
F.C.C. But after spending a year longer than expected meeting the demands of New
York regulators, it would be a surprise if Bell Atlantic had not received at
least a tacit nod from New York.
Since the telecommunications law was
passed, New York has seemed like a natural candidate to be the first state to
allow a Baby Bell to offer long-distance service because so many competitive
local exchange, or phone, companies, (known as CLEC's and pronounced SEE-leks)
have made the state a target. Among others, even MCI Worldcom Inc. and AT&T
have joined the push to provide local service. MCI Worldcom has signed up about
160,000 residential customers in New York, while AT&T has about 5,000.
"What Bell Atlantic decided to do is strike deals -- deals with the
F.C.C., with the New York commission, with the CLEC's," said Reed E. Hundt, a
former chairman of the F.C.C. who is now a consultant for McKinsey &
Company. "And this diplomatic strategy is going to get them into long distance
in a hurry."
The New York commission declined to comment. The F.C.C.
also declined to comment, but people close to the commission acknowledged that
it would be under strong pressure to approve the application to show that the
telecommunications law is producing competition almost four years after its
passage. Some members of Congress have criticized the commission for not moving
more quickly to approve long-distance applications.
SBC Communications
Inc. is within weeks or months of applying for long distance in Texas, and
people close to the commission added that the F.C.C. might prefer to give its
first approval to Bell Atlantic because the New York regulators have set a
higher bar for opening the incumbent's network than have the Texas regulators.
After the application is filed, the commission will have 90 days to
review it. During that time, the lobbying battle will be intense, with the
long-distance giants doing their best to have the petition denied.
"As a
practical matter, Bell Atlantic isn't ready in New York," said Jonathan Sallet,
MCI Worldcom's chief policy counsel, referring to the test of Bell Atlantic's
network. "At the current time, the facts show that the systems that have to work
don't yet work."
http://www.nytimes.com
LOAD-DATE: September 29,
1999 
