In a move that could lead to major changes in the telephone industry nationwide, Bell Atlantic Corp. filed yesterday for permission to sell long-distance telephone service in New York state.
If the Federal Communications Commission grants the company's request, the stage would be set for Bell Atlantic and the other regional local-service phone companies to become major players in the $80 billion national long-distance market.
This would cause a furious new round of competition in the industry and put new pressure on current long-distance kings such as AT&T; Corp. and MCI WorldCom Inc.
While the FCC has rejected five such applications by other phone companies, Bell Atlantic's New York bid is widely seen as having a good shot at success.
"This is the first Bell application that looks like it's going to be approved," said Scott C. Cleland, a telecommunications analyst with Legg Mason Precursor Group in Washington.
Bell Atlantic's top officers proclaimed their confidence yesterday at a news conference in Washington. "It is time for New York, without question the most competitive communications market in the world, to be first in opening up the long-distance market," said company President and Chief Operating Officer James G. Cullen.
The New York application marks Bell Atlantic's first attempt to win permission to sell long-distance in its service territory, which stretches from Maine to Virginia and includes Maryland.
Bell Atlantic expects to file in three other states in its territory -- Massachusetts, New Jersey and Pennsylvania -- by the middle of next year. The company said it hopes to begin selling long-distance service in Maryland and the rest of its realm by the end of next year.
Bell Atlantic and the other regional carriers were split off from the old AT&T; Corp. in 1984, and were barred from selling long-distance service. The 1996 Telecommunications Act lowered this bar, stipulating that a Bell company could sell long-distance service outside its territory.
To offer long-distance in a state within its territory, a Bell company must prove that its local market in that state is sufficiently open to competition.
To make this showing in New York, Bell Atlantic has undergone a rigorous testing and evaluation program that has lasted more than two years. Experts said this process, along with New York's identity as a relatively competitive communications market, make it likely that Bell Atlantic's filing will succeed.
FCC Chairman William E. Kennard issued a noncommittal statement that said in part, "I look forward to the day when a Bell company is able to demonstrate that it has met the test of opening up its local market as a condition to being able to offer long-distance service in its market."
The FCC has 90 days to rule on the petition. New York regulators will issue their report on Bell Atlantic's application within 20 days, and the Justice Department will consult with the FCC on the matter within 35 days.
AT&T;, which is trying to enter local markets dominated by the regional Bell companies, called on the FCC to reject Bell Atlantic's New York petition. The long-distance giant said Bell Atlantic had not shown that it could handle the technological challenges of opening New York's local market.
Bell Atlantic's Cullen responded to these charges by calling AT&T; "world-class serial whiners."
It is not yet clear how Bell Atlantic's New York application will influence its effort to enter the Maryland long-distance market.
"We'll follow the New York process closely, and I think, frankly, that everyone around the country will be watching to see how all this plays out," said Glenn F. Ivey, chairman of Maryland's Public Service Commission.
However, some in the state said Bell Atlantic could have a harder time getting permission to sell long-distance in Maryland, since the local market here is less competitive than New York's.
Maryland People's Counsel Michael J. Travieso said that aside from some local-telephone ventures on the Eastern Shore and in suburban Washington, Bell Atlantic has a virtual stranglehold on the market. "We think the situation here is much worse than in New York as far as local competition is concerned," Travieso said.
John W. Dillon, a spokesman for Bell Atlantic, said testing has not begun in Maryland, in part because the money and resources the company allocated for tests are being used in other states. He said Bell Atlantic did not know when testing in Maryland will start.
Dillon said the company will give notice to the Maryland Public Service Commission 60 days before filing with the FCC, so the commission will be prepared to file its report 20 days after Bell Atlantic's FCC filing in Maryland.
Pub Date: 9/30/99