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Justices' ruling might accelerate competition in local phone markets; Customers could be victors with FCC setting rules


LAST WEEK, the Supreme Court handed the Federal Communications Commission a big victory by ruling that the Telecommunications Act of 1996 gives it -- not the states -- general authority to set rules meant to open the $100 billion local telephone business to competition. In its ruling, which overturned a 1997 appeals court decision, the justices said the FCC has authority to determine guidelines for how much local companies can charge their new competitors for tapping into their networks. The court also approved FCC rules that outline how competitors can go about breaking into the local markets by, among other things, leasing elements of existing networks.

Is the court decision a victory for long-distance companies like AT&T; Corp. and MCI WorldCom? Will it increase competition in the local phone market? Are prices likely to fall? What about the impact on the regional Bell telephone companies?

Sherry Bellamy

President and chief executive officer, Bell Atlantic, Maryland

The ruling cuts both ways. The Supreme Court said the FCC and not the states can set the ground rules and framework for pricing. It also said -- and this is what is most important to us -- companies cannot give us a wish list.

Our competitors have to meet a standard that says their ability to compete will be impaired if they cannot use our networks. We know there are many parts they can easily supply for themselves, such as switching, operator services and directory assistance. Our competitors can use any part of our network at a reasonable price, and I mean that sincerely. Bell Atlantic is willing to negotiate. That means they have to negotiate, and not demand.

Companies that have already invested in their own facilities have a great head start over companies that have sat on the sidelines and refused to invest, and instead said they want to use Bell Atlantic's facilities.

What we want to see happen is for consumers and the economy to benefit from our competitors investing in their own networks.

Jonathan B. Sallet

Chief policy counsel, MCI WorldCom, Washington

I have seen comments from the Bell companies that the Supreme Court was a big victory for them. The people who told them that must be the same people who told Napoleon he had a good day at Waterloo.

What the Supreme Court said is the FCC had to do a better job in explaining how competitors would get access to the Bells' network and why we need access. The Supreme Court was very careful not to imply that competitors do not need access.

The $100 billion local telephone market has been closed off to competition, and now the Supreme Court decision will speed up MCI WorldCom's entry into the market.

What we have always seen is when markets open, prices come down. The long-distance market opened in 1984 and prices are now down 70 percent and competition is flourishing for the benefit of consumers.

This Supreme Court basically put the foot on the accelerator. We won't get to the destination immediately, but we'll get there a lot faster.

Theresa Czarski

Assistant people's counsel, Maryland Office of the People's Counsel

If I had to choose between the two camps, certainly the Supreme Court decision goes on the scoreboard for the potential competitors of the Bell companies. The ruling should speed up the introduction of competition in the local market, barring any other major actions. But of course, analysts years ago said we would have full competition by now and that hasn't happened.

But Maryland is already experiencing some level of local competition, mainly for very large to moderately sized business, but not for residential customers.

Now that the FCC has pricing authority, that may translate into lower costs for the companies to get access to the market. If all goes according to plan, lower costs to them may translate into lower costs for customers. In a perfect world that would happen.

Glenn F. Ivey

Chairman, Maryland's Public Service Commission

It's hard to categorize the Supreme Court ruling as a win or a loss. It depends whether it serves as a catalyst for the companies to open the markets, and if that's the case, the victory is the customers'.

Prices aren't expected to fall immediately. There are a lot of logistics still to be worked out. I'm sure other disputes will surface as this ruling is analyzed and detailed. There's still more groundwork that needs to be done. This is a very important ruling, but it's one of many steps in the process. It's not a panacea.

Pub Date: 1/31/99

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