Federal regulators here are caught in a battle of words over the entrance of local-phone companies into the long-distance market at a time when the major long-distance providers are restructuring to protect themselves from ever-decreasing revenues. The association for the Baby Bells last week called AT&T "heavy-handed and anti-consumer," and that company responded Tuesday that the Bells were offering "self-serving falsehoods."
Despite the clear desire on the part of AT&T, WorldCom and Sprint to shift their focus to other industries, long-distance remains a strong source of revenue for them. It is also an enticing source of new revenue for the Baby Bells, which must prove to the Federal Communications Commission that they have opened their networks to local-phone competitors before receiving permission in a state to offer long-distance service.
The battle goes back years and in fact was the genesis for the most significant overhaul of communications law since 1934, the Telecommunications Act of 1996. However, the rush of restructuring plans announced by the Big Three long-distance providers has again moved this debate to the forefront at the FCC.
"As the major long-distance providers signal their retreat from the consumer long-distance market and intensify their efforts to become more business-focused," wrote U.S. Telecom Association (USTA) president Gary Lytle Oct. 30 to the FCC on behalf of the Baby Bells, incumbent Bell companies "should be free to meet the long-distance needs of consumers."
AT&T general counsel Jim Cicconi responded in a letter Tuesday: "There is no place for the cynical innuendo and self-serving falsehoods that appear in USTA's October 30, 2000, letter to you." Citing the fact that long-distance service will remain in AT&T's parent company after the restructuring and its new tracking stock will make it more market-sensitive, he said the company "will continue to provide residential customers the same high-quality services that we provide today."
Suggesting Bell company monopoly practices were keeping those companies from winning long-distance approval, Cicconi wrote, "USTA's letter calls to mind the apocryphal story of the parricide defendant who seeks mercy as an orphan. Shifting the blame to AT&T and the scores of other excluded competitors for their failure to enter markets the ILECs (incumbent local exchange carriers) continue to monopolize is no less brazen or disingenuous."
USTA charged that AT&T had some bullying tactics of its own, however, namely its refusal to carry long-distance calls from competitive local-phone providers with access charges AT&T views as too high. These actions "are arbitrary, heavy-handed and anti-consumer," Lytle said.
Lytle said a case could be made for federal regulators to investigate AT&T's restructuring, if only to ensure laws and commitments aren't being broken. He also noted that "AT&T is not alone" in restructuring, citing WorldCom. Sprint announced its restructuring after Lytle sent his letter to the FCC, but unlike its two main rivals, Sprint did not go so far as to apply a tracking stock to consumer long-distance.