Copyright 1999 St. Louis Post-Dispatch, Inc.
St.
Louis Post-Dispatch
February 7, 1999, Sunday, FIVE STAR LIFT
EDITION
SECTION: BUSINESS, Pg. E1
LENGTH: 1144 words
HEADLINE:
PHONE RIVALRY FAILS TO APPEAR;
TELECOM ACT HASN'T BROUGHT MANY CHALLENGERS
TO BELL
BYLINE: Jerri Stroud; Of the Post-Dispatch
BODY:
A Birch Telecom billboard on Highway
40 brags that all of its customers have fired Southwestern Bell.
Kansas
City-based Birch is among a handful of firms actively marketing alternatives to
Bell's local telephone service here.
But most of their customers are
businesses, and most St. Louisans see few signs of the brave new world of
competition that the Telecommunications Act of 1996 was
supposed to ignite.
Three years ago, analysts predicted that consumers
soon would spend their dinner hours fending off telemarketers offering package
deals on local and long-distance telephone service, cable television, Internet
access, wireless phones and pagers.
Most consumers are still
waiting for the phone to ring.
A few highly mobile consumers have hung
up on Ma Bell, choosing to take all their calls on a wireless phone.
Businesses have bypassed Bell's network by hooking up with companies
such as Birch or Broadspan Communications, another competitive local telephone
company here. AT&T and MCI WorldCom have bought up companies that built
fiber optic networks through high-density business areas like downtown, Clayton
and the Interstate 270 loop.
So far, competitors have taken a little
more than 50,000 lines from Southwestern Bell in Missouri -- less than 2 percent
of the 2.5 million lines Bell serves in the state. Nationwide, the percentage of
lines lost by former Bell companies is about 1 percent.
Bell says the
incipient competition shows that its network is open -- one requirement it must
meet before it is allowed to offer long-distance service to its local customers.
The company has asked the Missouri Public Service Commission for permission to
offer long-distance service, and hearings on the request will be held next
month.
Bell contends that it would cut long-distance rates by 25
percent. By getting into the long-distance market, Bell says it would spur
long-distance companies to start selling local service to residential customers.
Bell's parent, SBC Communications of San Antonio, says it will get into
local and long-distance service in up to 50 cities nationwide if it wins
permission to merge with Ameritech, the local service provider in Illinois and
six other states. SBC said it would start the service next year in Miami,
Seattle and Boston.
"It's difficult to know what else we could do" to
open the network to competitors, said Stephen Carter, SBC's president for
strategic markets. The company says that 17 companies in Missouri are providing
local service to former Bell customers. The company has agreements to connect
with nearly four dozen companies.
Competitors and regulators say most of
the customers Bell has lost still use lines leased from Bell. They say Bell has
failed to meet all the items on a 14-point checklist the telecom act requires
before Bell companies can offer long-distance in their home regions.
William Voight, an economist with the Missouri Public Service
Commission, has filed testimony indicating that Bell has met six of the 14
requirements. Missouri Public Counsel Martha S. Hogerty says the company has met
just three. "There is no question that we really have gotten nowhere near to a
market that's competitive," Hogertysaid.
David E. Scott, Birch Telecom's
president, said the company has had "just one problem after another in working
with Southwestern Bell on a daily basis." Frequent changes in procedures for
entering orders have kept Birch from providing service to customers in a timely
manner, for example.
Scott said Bell's procedures have improved
recently. "But it's still not at a level where the quality they provide us is at
the level (Bell) provides itself."
Fewer than one in four Americans are
getting either the choice of carriers or the lower prices that supporters of the
act predicted three years ago, the Consumer Federation of American and Consumers
Union said in a study last week. The groups contend that the nation is being
divided into telecommunications "haves" and "have-nots," with companies
targeting busnesses and high-income consumers to the exclusion of poor and
middle-income consumers.
"The act has been a dismal failure," said Fred
Voit, an analyst with The Yankee Group of Boston, a consulting firm that focuses
on telecomm unications. "Nobody wants to open up the market to anybody else."
But Voit believes competition is about to take hold. MCI WorldCom
announced plans last week to provide local service in New York, and AT&T
plans to test phone service over TCI's cable networks this spring in St. Louis
and several other cities.
Competition is "about to happen in a lot of
places, and it's about to happen in a hurry," said Joel Thierstein, a
telecommunications policy professor at Baylor University in Waco, Texas.
Competitors are beginning to offer alternatives to Southwestern Bell's phone
service in the Dallas suburbs, and even Waco has a second telephone company.
"Technology is up to speed enough so that if you can offer Internet,
cable and telephone service over your own pipe, it's cost-effective to string
your own pipe," Thierstein said. He predicts that consumers could be getting all
three services for about $ 20 a month in the near future, about a third of the
current cost.
Rachelle Chong, who served on the Federal Communications
Commission from 1994 to 1977, said the Bell companies delayed competition for
about two years by challenging crucial parts of the telecom act in court. The
Supreme Court last week threw out most of a suit filed two years ago by SBC and
GTE Corp. Chong and other observers say the ruling could put progress toward a
competitive market back on track.
Meanwhile, Chong is encouraged by a
raft of new technologies that could offer competition to the Bell companies
without using parts of their network. Among them: Fixed wireless service, which
provides phone service over the air to fixed points like business offices.
Winstar Communications of New York is selling the service in 27 markets and
plans to offer it here next year. * Wireless Internet companies, which provide
Internet access, e-mail and document transfer through the air. Examples include
MetroComm on the West Coast and WorkNet Communications in Clayton. *
Voice-over-Internet service, which transmits voice conversations over the
Internet, bypassing much of the local and long-distance networks. The technology
is clunky, but Chong says it's bound to get better. * Global satellite companies
that will provide wireless phone service and Internet access to remote areas.
"Because of the way technology is moving along, it's really impossible
to say" what choices the consumer and businesses will have in five years, said
Russell Frisby, president of the Competitive Telecommunications Association. "As
soon as you pick one technology, another technology comes along out of nowhere."
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