Bell Atlantic allowed to offer long distance

Broadcasters blast low-power FM radio proposal

By Rod Perlmutter, News Editor, MediaCentral

KANSAS CITY, Mo., Dec. 22, 1999 (MediaCentral) – For the first time since the 1984 break-up of AT&T, the Federal Communications Commission allowed a “Baby Bell” company to provide long distance telephone company in its own region, wire services reported today.

The FCC announced today it was approving Bell Atlantic Corp.’s bid to offer long distance service in New York. The vote of the five-member commission was unanimous.

Both the chairman of the FCC, William Kennard, and a consumer interest group said the ruling was a historic day signifying greater competition and choice for consumers. But AT&T, a major competitor, was not happy, and even some FCC members said they approved the decision with caution, worried that Bell Atlantic comply with the spirit of the law that encouraged this type of competition, the 1996 Telecommunications Act.

FCC: Bell Atlantic took the required baby steps

The FCC said that, in the 1996 act, Congress envisioned fundamental pro-competitive changes in the telecommunications environment by making the entry of a Bell operating company, or “Baby Bell,” into long distance contingent on the company first opening its local service monopoly to competition. A Bell operating company (BOC) would satisfy this contingency by demonstrating compliance with the act’s section 271.

In granting Bell Atlantic’s application to enter the long distance market in New York, the FCC found that Bell Atlantic has taken the statutorily required steps to open its local telecommunications markets to competition, including compliance with the 14-point checklist. Congress specified that unless the FCC finds the checklist has been satisfied by the BOC that the Commission “shall not approve” the requested authorization.

The checklist states that the BOC must allow competitors to have “non-discriminatory access” to the following products or services:

  • Interconnection, physicals link from competitor’s networks to the BOC’s, to permit the mutual exchange of traffic.
  •  Network elements, such as loops, switches and other equipment.
  •  Poles, ducts, conduits, and rights-of-way.
  •  Local loops, which are the wires and transmission links that connect the telephone company end office to the customer’s home or business.
  •  Local transport, the trunks that connect different switches.
  •  Switches, which connects loops to other loops, and connects loops to trunks for transporting a call to another central office or to a long-distance carrier.
  •  911 and E911, Directory Assistance, and Operator Services.
  •  White pages directory listings.
  •  Assignment of telephone numbers.
  •  Databases and associated signaling, which are call-related systems that are used for billing and collection, or the transmission, routing or other provision of a telecommunications service.
  •  Number portability, which is the ability of consumers to take their phone number with them when they change local telephone companies.
  •  Local Dialing parity, which means customers of another carrier are able to dial the same number of digits to make a local telephone call.
  •  Reciprocal compensation, which means the BOC must compensate other local carriers for the cost of transporting and terminating a local call from the BOC.
  •  Resale, which requires the BOC to offer other carriers all of its retail services at wholesale rates without discriminatory conditions so that other carriers may resell those services to an end user.

Since the passage of the 1996 Act, the FCC has denied five section 271 applications: an earlier one from Bell Atlantic, two from BellSouth, and one each from SBC and Ameritech.

Bell Atlantic then revised its application. The FCC reviewed a wide variety of factors and determined that, for each checklist item, the totality of the circumstances indicates that Bell Atlantic is providing the item in “substantially the same time and manner” or is giving competing carriers a “meaningful opportunity to compete.”

Kennard: FCC demolishes the ‘Berlin Wall’

FCC Chairman William Kennard said the ruling was a historic step for telecommunications reform, and it showed the promise of the 1996 telecommunications act.

“The competitive future in local phone service is now on the doorstep of every citizen in the State of New York,” Kennard said. ” Today we are able to finally declare that the Berlin Wall of local phone monopoly in New York has been demolished and hauled away. Consumers in New York are now free to pass into an exciting new world of competition and choice in telephone service.”

Samuel A. Simon, chairman, the Telecommunications Research and Action Center, a non-profit group based in Washington whose primary goal is to “promote the interest of residential telecommunications customers,” praised the ruling.

“The formula for consumers to win is simple: More choices for more services at lower prices and higher quality — local, long distance and data,” Simon said. “Consumers must be the winners as we move to the new competitive marketplace in telephone and telecommunications.”

Bell Atlantic CEO Ivan Seidenberg said during a press conference after the decision, said the ruling will mean better opportunities for the company and its customers.

“The benefits will be immediate,” Seidenberg said. “We have a host of innovations in the pipeline, so you can expect a constant stream of announcements as we roll out the long-distance business.”

Some analysts said the approval could bolster Bell Atlantic’s proposed $52 billion acquisition of GTE Corp., a more diversified carrier that already offers long distance.

AT&T general counsel Jim Cicconi said he didn’t share the FCC’s assessment of Bell Atlantic. He said Bell Atlantic really didn’t prove that the local phone market is open to competitors.

“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,” Cicconi said in a statement. He added that AT&T expects to seek “prompt review” of the FCC’s action through an appeals court.

However, Kennard said the New York local market was competitive, and it was due to the New York State Public Service Commission.

“Competitive local carriers already serve over 1.3 million business and residential telephone lines, and over 55% of those lines are delivered over the competitors’ own facilities,” Kennard said. “The states are becoming the laboratories for innovation in local competition, and we look forward to many paths toward this end.”

Other commissioners support ruling, but urge caution

Even some FCC members said that they were cautious in their approval.

Commissioner Harold Furchtgott-Roth said he approved the decision, but was reluctant because he felt the FCC used the wrong approach to achieve the means of more competition.

“I would have preferred that the Commission place a greater reliance on the negotiation, arbitration and enforcement of contracts between competing telecommunications companies, as provided under the Telecommunications Act of 1996, than does this order,” he wrote in an opinion posted on the FCC website and sent to reporters. “Consumers are better served by competition among companies who are more, rather than less, free to pursue innovative technologies and services by way of contract, as opposed to being subject to centralized federal regulation.”

Commissioner Susan Ness said she strongly supported the ruling, stating that it “should lead to more consumer choice, improved services, lower prices, and greater innovation.” But she warned Bell Atlantic that she was reluctant to approve because in some categories, the company just barely met the technological requirements of the 1996 act.

“A few of the checklist items barely received passing grades,” Ness wrote. “We expect to see continued improvement in, for example, access to its operational support systems and loop provisioning, especially DSL loops. If there is evidence of backsliding, the commission is fully prepared to use any and all of the tools at its disposal to ensure that new barriers to competition do not arise. We will closely monitor progress in New York.”

She wrote that she was also concerned about Bell Atlantic’s limited record in broadband services.

“Because the consumer market for broadband services has only recently begun to develop, neither the FCC’s collaborative discussions nor our earlier decisions adequately addressed the ordering of xDSL-capable loops,” she wrote. “Thus, it would be unfair to penalize Bell Atlantic for its record on DSL loop performance at this time. However, our evaluation of future applications — and our monitoring of the New York marketplace for continued compliance — will indeed focus on this issue.”

Kennard said he agreed that the commission will closely monitor Bell Atlantic’s developments. But, he wrote, he looked forward to other competitors jumping into the ring.

“Shifting a $100 billion market even a few degrees is difficult,” Kennard wrote. “Opening markets is hard work, and establishing competition is not easy, simple or quick. The local market today is where the long distance market was twenty years ago, but we don’t have twenty years to make the local markets competitive. We need to do it now.

“The Telecommunications Act is elegant in its simplicity,” Kennard continued. “It says treat your competitors as you would have your competitors treat you. It’s a kind of competitive Golden Rule. I commend Bell Atlantic for being the first to demonstrate that when this rule is followed, everyone benefits – – consumers, competitors and incumbents.

And, Kennard added, “I urge all of the Bell Companies to do the same.”

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