An aspiring rival to Bell Atlantic Corp. is contending that the Maryland Public Service Commission jumped the gun when it partially deregulated Bell Atlantic's pricing of services for large business customers.
Teleport Communications Group told the PSC in a filing Thursday that its March decision to let Bell Atlantic offer preferred rates to such customers could defeat the agency's stated goal of a robust, competitive market. The New York-based telephone company urged the commissioners to set aside the decision and hold full-scale evidentiary hearings on the issue.
The key question is when does a monopoly market actually become competitive. At stake is whether Bell Atlantic can lock in the most lucrative local exchange customers before potential rivals get up and running.
The issue was originally decided in an administrative hearing of the five-member board in March. The Bell Atlantic petition for rate flexibility was approved March 15 in a 3-2 decision, with PSC Chairman Frank O. Heintz and Commissioner Susanne Brogan in dissent.
Previously, Bell Atlantic was required to post a tariff and charge all members of the affected group equally.
Bell Atlantic contended, and the majority agreed, that the flexibility would let it cut rates to large business customers. TCG agreed, but countered that the effect of such discounts would be to stifle competition and, in the long run, keep prices high. At the time, TCG's position was supported by other potential Bell challengers, including MCI Telecommunications Corp. and MFS Communications Corp., which, like TCG, have been granted permission to compete in Maryland's local exchange market.
Bell Atlantic originally sought approval of a modified tariff in February. To gain PSC staff approval of the new tariff, it made concessions to allay concerns that it would prevent competition from getting off the ground by locking the most attractive customers into long-term contracts before competitors were fully business.
Bell Atlantic agreed to a "fresh look" provision under which customers who sign contracts for 60 months or more can cancel those agreements without penalty between Jan. 1, 1997, and April 1, 1997.
hTC In its appeal, TCG characterized Bell Atlantic's tariff filing as a "pre-emptive strike" against potential competitors. It criticized the PSC's acceptance of the "fresh look" provision as too weak, adding that Bell Atlantic could avoid it by offering 48-month or even 59-month contracts.
TCG contended that price flexibility for Bell Atlantic should be delayed until there is actual competition in the local exchange.
"They're still the only carrier in Maryland capable of offering these services, so the granting of this permission is erroneous and premature," Paul Kouroutas, TCG's director of regulatory affairs, said yesterday.
Larry Bugden, TCG's general manager, said that the company does not expect to be able to offer local service until July. Even then, many of the issues affecting its costs will not be resolved until the PSC writes the rules for interconnections between competing systems -- a process that could take until the end of the year, Mr. Kouroutas said. He said the commission should revoke its decision until those issues can be resolved.
But Michel Daley, a spokesman for Bell Atlantic, said the PSC commissioners acted because customers told them they didn't want to wait for Bell Atlantic to get pricing flexibility. He contended that competition was already a reality.
"The race has already begun, and I'm not so sure that if there are slower players in the race, the faster players should slow down to let the slower players catch up," he said.
The PSC's offices were closed yesterday, and no spokesman could be reached for a comment.