At issue this time are local toll calls--calls made between cities such as Oakland and San Francisco, which aren't far enough to be true long distance, but which are still billed at a higher rate than calls made within the same city.
In California, these calls are usually handled by the dominant local telephone company, Pacific Bell. Callers may use one of the long distance carriers by dialing a seven-digit access code for a local call--but most simply dial 1 plus the area code for such calls.
The long distance companies say they want equal footing with the local companies--without the need for callers to dial special access codes to use their services. Regulators have already given them this power in 21 states, prompting a drop in the prices of local toll calls there, as companies compete for business.
The issue stems from a provision in the 1996 Telecommunications Act, which says states can break up the baby Bells' default access to these local toll calls as soon as the Bells have won access to the long distance markets, or three years after the passage of the Act, whichever comes first.
No baby Bell has yet won approval to enter the long distance market in its home territory. The three-year anniversary of the Telecommunications Act is February 8, and the long distance companies say it's time for state regulators to act.
"We didn't want to wait until February to say flip the switch, turn this on, knowing that this would be a long process," said James Peterson, a spokesman for AT&T. "Our goal is to raise the level of awareness and attention and let everyone know we're serious."
For their part, Pacific Bell executives say the long distance companies shouldn't be given the local edge until Bell companies are allowed to offer long distance service in their own home markets. "Our position is that this is supposed to happen when we're allowed into long distance," said Mike Moffett, a spokesman for SBC Communications , Pacific Bell's parent company.
Potential rivals say, however, that the Bells are the cause of their own slow entry into long distance. "They already have the power to get into interstate markets," said MCI WorldCom spokeswoman Barbara Gibson. "All they have to do is open up their local markets to competition. But they haven't done that yet."
Pacific Bell asked California state regulators earlier in the year for approval to enter the long distance markets. Utility commissioners said the baby Bell had yet to complete enough of the items on a federal 14-point checklist measuring how far it has opened its local markets to rivals.
In California, the long distance companies' request is supported by the state's Office of the Ratepayer Advocate, a consumer protection body affiliated with the Public Utility Commission. The office has sent a letter to the commission supporting the AT&T/MCI bid.
"We are clearly, affirmatively supporting the filing," said Michael McNamara, senior manager at the Office of the Ratepayer Advocate. "This would remove a substantial impediment to competition for local phone service."
The issue is also percolating through regulatory bodies in other states. Peterson said AT&T would bring the issue to the fore in any state where regulators haven't already.
"As a national company, it's in our best interest to have the same set of services available wherever possible," Peterson said.
Monday's hearing in California was the first face-to-face meeting between commissioners and the long distance companies on the issue. A decision could be issued within the next several weeks.