Copyright 2000 Gannett Company, Inc.
USA TODAY
December 18, 2000, Monday, FINAL EDITION
SECTION: MONEY; Pg. 13B
LENGTH: 538 words
HEADLINE:
Despite competition, regional Bells still rule local lines
BYLINE: Andrew Backover
BODY:
Nearly five years after Congress ordered local phone monopolies
to open
their markets to rivals, fewer than 7% of customers nationwide
buy dial
tones from the rivals.
That's up from about 1% shortly after the
Telecommunications Act
of 1996 was born.
Most
observers say consumers are still several years from the
act's promise of
lower prices and better service.
"Competition is taking longer than
expected, but it is moving
forward," says Ron Binz of the Competition Policy
Institute.
So far, only two states -- New York and Texas -- have met the
1996 law's standard for deeming that a market is open to competition.
The main hurdle to expanding consumer choice, long-distance phone
companies say, is that the regional Bell companies, which own
the lines
into people's homes, charge competitors too much for
access to those lines.
"If we don't get fair and reasonable pricing,
you're not going to see the
long-distance companies aggressively
enter the local market," says Wayne
Huyard, head of WorldCom's
long-distance division.
Verizon
Communications and SBC Communications, which operate in
New York and Texas,
respectively, say the rates meet federal standards
and were created with
input from rivals.
But in November, Sprint announced it was exiting
the local business
in New York, Texas, Georgia and California because the
business
wasn't profitable.
Likewise, AT&T is not making
money on the nearly 1 million
local residential customers it has in Texas
and New York, says
John Langhauser, the company's vice president of law. As
a result,
AT&T might back off plans to expand its local presence in
other states.
Local phone monopolies such as SBC and Verizon
have an incentive
to open their markets. If they do, the 1996 law says, they
can
sell long-distance. Almost a year ago, Verizon earned that privilege
in New York. SBC won similar approval in Texas over the summer.
But AT&T has asked the Federal Communications Commission to
reject Verizon's application to offer long-distance in Massachusetts.
AT&T argues that Verizon charges competitors too much for
access to
its local phone network. AT&T and WorldCom are waging
similar battles
against SBC in Oklahoma and Kansas.
Verizon and SBC contend that
their local markets are competitive.
Verizon says it has lost about 1
million local phone customers
in New York since January. Rivals in Texas
have gained more than
2 million lines since 1996, says Cliff Eason, head of
SBC's Southwestern
Bell unit. SBC still has 11 million lines.
Consumers have started to benefit, says Terry Hadley, spokesman
for the Public Utility Commission of Texas. WorldCom, for instance,
is
offering local service for $ 8.45 a month, slightly less than
Southwestern
Bell's rate for comparable service, he says.
Some say that true
competition won't come until competitors can
leapfrog local phone networks
with cable TV, satellite and wireless
connections. AT&T, for one, is
using upgraded cable networks
to sell phone service in major markets.
"In a few years, all the competitors will have access," analyst
Jeff Kagan says. "There are a lot of channels that are going
to be
opened up to the home."
LOAD-DATE: December 18,
2000 
