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Telcos spar over long distance competition

Fourteen states plan to open new parts of their long distance phone market to competition, and consumers are already in the middle of the bitter battle.

Fourteen states plan to open new parts of their long distance phone market to competition this month, but consumers are already in the middle of the bitter battle.

Competition for in-state business has led to legal disputes and bitter public relations wars between the dominant local phone companies and the long distance giants, who want a bigger piece of the $8 billion U.S. local toll call market.

Local toll, or one-plus local calls, are in-state calls that remain inside long distance boundaries called LATAs, but are too far outside an area to be considered local. All states have competition for calls that cross those long distance lines, but just 20 states have instituted competition for these local toll calls so far.

Under the terms of the 1996 Telecommunications Act, all states are supposed to open these calls to competition between companies this year.

The biggest fuss has been made in Colorado, where US West has accused AT&T and MCI WorldCom of "slamming" customers as a result of the new competition.

Slamming is the practice of switching a telephone subscriber's service without permission. The issue has drawn considerable attention in the last several years, with bills introduced in Congress and in many state legislatures to ban the practice.

Last week, US West filed a formal complaint with the Colorado Public Utilities Commission, charging that the two biggest long distance companies are not giving customers enough notice of their options before changing their local service. This amounts to slamming, the company said in its complaint.

Both long distance companies have engaged in extensive marketing campaigns, including telemarketing, in preparation for the change in policy. AT&T has offered customers a $100 check to change their long distance service, and MCI WorldCom has offered customers free frequent-flyer miles on Delta or United Airlines.

But US West says these marketing campaigns don't make it clear that the consumer can pick separate companies for traditional long distance, and for the newly competitive local toll calls. The Baby Bell wants state regulators to crack down and force competitors to make their ads more specific.

For their part, the long distance companies say their marketing campaigns comply with state and federal regulations, and say that US West is using scare tactics to keep people in the old monopoly fold.

"They're trying to scare customers into believing that competition is something negative," said Sarah Duisik, an AT&T spokeswoman for the region. "Now they've come out with the truly unfortunate accusation that AT&T is slamming customers."

The dispute is more than verbal. US West wants to halt customer orders it says are a result of the long distance companies' slamming tactics. AT&T and MCI WorldCom executives are furious over the request, and have said the companies have a zero-tolerance policy for slamming.

Court fights
The opening of markets in other states have seen fewer fireworks, but also promise stiff competition.

Even in states where competition has theoretically been going on for some time, the long distance companies and Baby Bells are wrangling in courts over consumers' in-state long distance business.

In Michigan, a court ruled last week that an Ameritech program targeted to stop slamming actually refused to accept orders from MCI WorldCom for service changes that had been verified by a third party. This violated state rules on the issue, the court said.

In the latest round of new competition, local phone companies in different states will give consumers a certain time period to switch their service without being charged, ranging from 90 days in Ohio to six months in Indiana.

During that period, consumers can expect to be saturated with offers for the new service. AT&T is offering ten cents per minute for local toll calls, while MCI WorldCom is offering a nine-cent per minute rate for evenings and weekends.

Consumers in Alabama, Colorado, Indiana, Iowa, Louisiana, Mississippi, Montana, Nebraska, North Carolina, Ohio, Oregon, South Carolina, Tennessee, and Washington all will be given a choice for their local toll calls by the end of February.