At ComNet Show, Regional Bell Companies Spar With Long-Distance Carriers

September 7th, 2007

The debate between local and long distance phone companies is becoming uglier, while your phone bill isn’t getting any smaller. At the ComNet 97 trade show yesterday, representatives from the local Bell carriers and long-distance companies accused each other of stalling the implementation of the 1996 U.S. Telecommunications Act.

During a panel discussion, the Bell and long distance companies accused each other of running cartels, in which members agree to share their respective local and long-distance markets among themselves and fix prices.

We have three companies in long distance, and prices bear no resemblance to reality, said James Cullen, vice president of Bell Atlantic. We have a three-person, cozy long-distance oligopoly.

But the Bell companies themselves put up blocks to competition in their local markets while mutually deciding not to compete with one another, according to Michael Salsbury, executive vice president and general counsel for MCI Communications.

We haven’t seen a single RBOC go into another’s territory, Salsbury said at the ComNet panel discussion.

Conceding that the Bell companies will not likely compete in one another’s local territory, Bell Atlantic’s Cullen said the local players have their work cut out for them in their own markets, where they will try to offer their respective local customers long-distance services. We’re willing to invest in our territory to get businesses we’ve been locked out of, he said.

One main point of contention was how the states should set pricing of local loops for new
competitors. The U.S. Federal Communications Commission last August issued accounting guidelines, calling for rates to be set according to an accounting methodology, called Total Element Long Run Incremental Cost. The methodology examines costs for maintaining the modern infrastructure going forward.

Pointing out that local carriers asked for, and were granted, a temporary stay from FCC accounting guidelines by a St. Louis federal district court, FCC Commissioner Susan Ness said the stay slowed implementation of the Telecom Act.

The district court is reviewing the stay and is expected to issue another decision during the first quarter of this year.

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