FCC Moves to Increase Competition Among Local Phone Service Providers

The Federal Communications Commission took sweeping steps on Thursday to throw open local phone service to increased competition, a move that should lead to lower telephone charges initially for businesses and possibly later for consumers.

The commission, as expected, also approved new regulations for the telemarketing industry that are far looser than consumer interests and some members of Congress wanted.

In the landmark ruling on local phone competition, the commission voted to allow companies operating specialized fiber-optic telephone networks to tie in directly with the giant central distribution centers of local phone companies, including GTE, Pacific Bell and other regional Baby Bell firms.

That would allow firms operating those networks to compete against the local phone firms in providing long-distance connection services to businesses with their own phone systems.

Big business, such as Atlantic Richfield Co. in downtown Los Angeles, are increasingly turning to the fiber network operators as an alternative or secondary source of connections with their chosen long-distance provider.

In another ruling, the commission proposed allowing companies operating these networks to provide long-distance connection services to smaller businesses and residences sometime in the future.

The downtown sections of more than two dozen major U.S. cities, including Los Angeles, San Diego and San Francisco, are now wired with fiber-optic networks to provide these services. However, until Thursday’s vote, operators of these networks were not permitted to connect directly with a local phone company’s system, a barrier that the fiber carriers considered unfair to their businesses. Those local phone systems provide ready access to virtually all businesses and homes.

The rulings, which FCC Chairman Alfred Sikes called historic for opening up “one of the last monopoly reserves” of the Baby Bells and other local phone firms to competition, are expected to force local phone companies to lower prices and improve service to compete with fiber network operators.

Companies expected to benefit from the rulings include Teleport Communications Group, Metropolitan Fiber Systems Inc. and Intermedia Communications.

In another matter, the commission voted to reset the prices that local phone companies are allowed to charge to complete long-distance calls within their service territories. However, the new pricing schedule, which favors large-volume carriers such as American Telephone & Telegraph, MCI and Sprint, will not go into effect for at least a year.

Ultimately, analysts said, the new prices could result in lower long-distance rates from the largest carriers.

Under the FCC’s new telemarketing rules, telephone solicitations will be limited to between 8 a.m. and 9 p.m., and the use of computer-driven phone dialing will be restricted. But Rep. Edward Markey (D-Mass.), whose bill last year called for the new regulations, likened the FCC rules to putting the fox in charge of the chicken coop.

Markey was especially critical of the FCC’s refusal to provide any way for consumers to learn that they have the right to order a telemarketing company to put their number on a telemarketer’s “do not call” list. Failure to honor such requests could lead to civil prosecution in state courts and a fine of up to $500.

Markey had initially hoped that the FCC would create a national registry of consumers who do not wish to receive any telemarketing calls at all.

However, the commission was persuaded by the $60-billion-a-year telemarketing industry that such a list would be expensive and cumbersome to maintain. Consumers are instead allowed to make their preferences known on a company-by-company basis.

Congressional aides said Markey and other representatives are considering whether to push for additional legislation that would force the FCC to adopt stricter telemarketing regulations. However, the chances of such legislation appear slim this year because Congress is scheduled to adjourn within several weeks.