The closed-door discussions were intended to set rules for competition in the state's local telephone and high-speed Internet markets, setting the stage for Bell Atlantic's move into long distance.
But the final expiration date on the talks passed last night without an agreement between the parties, throwing the issues back into the hands of regulators and judges. The failed talks will likely slow the pace of competition in the state's local phone market, and possibly delay Bell Atlantic's bid to offer long distance service.
The renewed uncertainty could also threaten state approval of the merger between Bell Atlantic and GTE, since several prominent state politicians have tied their support of the deal to concessions by the Bell company.
The negotiations started last October, when the state Public Utilities Commission agreed to combine a long list of outstanding issues into a single set of talks, dubbed the Global Settlement process.
Included in the discussions were Bell Atlantic's requests for long distance approval, a long list of controversial connection agreements between it and competitors, and rules governing the company's control of network elements such as high-speed digital subscriber line (DSL) Internet service.
The parties to the talks, which included Bell Atlantic, competing local and long distance phone companies, consumer groups, legislators, and regulators, agreed not to discuss the talks until they had concluded.
But signs that the talks were foundering were present at least since January, when several prominent state senators withdrew from the negotiations, citing Bell Atlantic's intractability.
"This was an attempt at a negotiated settlement," said Christopher Craig, counsel to state Senator Vincent Fumo. "Not much was given up or compromised on the part of Bell Atlantic."
Too little, too late?
Yesterday, the commission released a final set of compromise proposals to the parties involved in the talks.
But at midnight, the talks officially closed, with the commission's last attempt at compromise appears left with little hope of adoption.
Regulators are now no longer allowed to participate in the discussions, and MCI WorldCom said today they would not independently pursue compromise with the local phone company.
"We tried for four months, we tried with the commissioners mediating," said Elena French, an MCI WorldCom spokeswoman. "We don't think it will be fruitful to continue without the commissioners there."
For its part, Bell Atlantic says the talks were helpful, and it will continue trying to negotiate with competitors.
"We believe that significant progress was made," the company said in a statement today. "Bell Atlantic continues to work with the parties and expects to reach agreement with many of them on the critical issues as quickly as possible."