FCC Asked to Ease Grip on AT&T; Long-Distance Rates
American Telephone & Telegraph asked the Federal Communications Commission on Friday to loosen its regulatory hold on AT&T;’s long-distance telephone rates, but it didn’t go as far as rival MCI Communications, which has called for AT&T;’s immediate deregulation.
AT&T; Communications, which controls 80% of the market, is the only long-distance carrier whose rates are set by the FCC.
“We’re suggesting that regulators replace a blanket approach to regulating AT&T; with a more finely tuned, targeted approach,” company vice president Lawrence Garfinkel told reporters in Washington. “The regulatory framework in which AT&T; operates today is no different than it was in the days when the Bell System was a monopoly,” Garfinkel said. “Those days are long gone.”
In a filing with the commission, AT&T; proposed a continuing government watchdog role while leaving the company more latitude in setting rates, which have been cut due to FCC orders. MCI, which has about 10% of the long-distance market, and US Sprint, the No. 3 carrier with about 6%, have felt obliged to match those FCC-imposed reductions in order to compete with AT&T.; (More than 500 carriers divide the remaining 4% of the market.)
MCI, in a similar filing with the FCC on Thursday, contended that the long-distance market is now sufficiently competitive to prevent AT&T--despite; its dominant market share--from exercising monopoly power and engaging in predatory pricing. MCI already is pressing California regulators to deregulate AT&T; operations within the state, the largest intrastate telecommunications market in America.
Garfinkel of AT&T; said 10 states have already ended traditional regulation of the company while 14 others have allowed it greater price-setting flexibility.
MCI, in presenting its deregulation proposal, maintained that if AT&T; were free to set its own rates it might not cut them as sharply as regulators have required. This would relieve the FCC-imposed pressure on MCI and other competitors to cut their own prices more than they might otherwise to maintain a competitive advantage.
Both MCI and US Sprint, a partnership formed last July in a merger of the competing long-distance services of GTE Corp. and US Telecom, reported huge losses last year. Both attributed some of the red ink to the price cuts forced on AT&T; that they felt forced to match.
Although AT&T;’s filing stopped short of the deregulation called for by MCI, an AT&T; spokesman called its rival’s proposal “on target.”
Under the AT&T; proposal, the company would continue to provide basic long-distance service to all customers and maintain uniform prices nationwide, unless granted FCC approval to do otherwise. It also proposed that:
- AT&T; be allowed to change interstate rates within 14 days of filing the new tariffs with the commission and submit far less documentation each time it introduces or changes services.
- The FCC require all carriers to submit periodic reports to help it monitor the development of competition, and retain authority to intervene in the marketplace as necessary.
The filings by AT&T; and MCI responded to an FCC request for comment on its proposal to streamline regulation of AT&T; on a service-by-service bases.
