PUC Tentatively OKs Opening of Toll-Call Market : Utilities: Commission’s ruling to let local firms enter long-distance market would also raise monthly basic service charges.

The state Public Utilities Commission on Wednesday issued a tentative ruling that would permit Californians to place so-called local long-distance calls through the phone company of their choice beginning Jan. 1.

As part of the policy change, the commission also proposed increases in basic monthly telephone service charges. The rate hikes are designed to offset the revenue local telephone companies will lose when they are forced to cede their monopoly on the $3-billion local long-distance market.

AT&T;, MCI, Sprint and other companies are expected to mount a fierce battle for a piece of the local long-distance--or toll call--business, offering rates far below those now charged by Pacific Bell and GTE. Local long-distance is defined as calls between points that are more than 12 miles apart but still within a local service region, such as calls between Los Angeles and Anaheim, or between Santa Monica and San Bernardino.

The proposal comes 10 months after the PUC issued a similar order opening local long-distance to competition. But that order was rescinded a month later when it was learned that a Pacific Bell employee helped draft portions of it, in violation of commission procedures. A final ruling is now expected September 1.

The proposed order issued Wednesday gives Pacific Bell and GTE smaller basic monthly rate increases than they had wanted, and Pacific Bell said it hopes to cut toll call rates more than the proposal allows. Still, some consumer advocates denounced the local rate hikes as harmful to the poor and elderly. Long-distance companies, meanwhile, applauded the ruling.

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Businesses, which make most of the local long-distance calls, could come out ahead under the proposed decision. The PUC said it plans to approve cuts of up to 40% in what Pacific Bell and GTE charge for toll calls. For example, the charge for a three-minute call between Los Angeles and Anaheim would drop to 45 cents from 75 cents.

The commission said residential customers, especially those who do not make many toll calls, would end up paying more. The flat rate for Pacific Bell residential customers would increase 35% to $11.25 a month from $8.25 a month. The flat rate for GTE residential customers would mushroom nearly 80% to $17.49 from $9.75 under the proposal.

Business customers would also pay more for basic service. The measured rate for Pacific Bell business customers would increase 17% to $9.77 from $8.35. The flat rate for GTE business customers would balloon 86% to $16.99 from $9.10. But businesses are expected to benefit overall because they will save on local long-distance calls.

Thomas Long, an attorney with Toward Utility Rate Normalization, an advocacy group in San Francisco, asserted that 70% of Californians will pay more for phone service if the proposal is adopted.

“It is a blow to Californians,” Long said. “It is really bad news for people trying to economize on the phone bills.”

The PUC said the monthly phone bill for the median Pacific Bell residential customer would increase 3.6% to $23.55 from $22.31. The monthly phone bill for the median GTE residential customer would jump 14.8% to $24.86 from $21.66.

The order that was rescinded last fall called for larger increases in basic rates while permitting deeper cuts--up to 60%--in local long-distance charges.

Pacific Bell said that it plans to ask the commission for deeper toll cuts so it can be more competitive with rates charged by long-distance carriers. Indeed, shortly after the proposal was issued, MCI said it plans to underprice Pacific Bell by at least one-third.

“We had proposed a 50% decrease as a starting point, with further discounts for people who use more of our services more often. We think there could be bigger discounts,” said Pacific Bell vice president Mike Miller.

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Miller said he will ask the commission to offset larger toll rate cuts with increases in other charges, including the possibility of further increases in basic rates.

Long-distance carriers were generally pleased with the proposal, which MCI said made it “an important day for California.” But the long-distance carriers said they plan to seek “open access” to make it easier for Californians to use their services for toll calls. Under the proposal, consumers must first dial a five-digit access code to use any carrier other than Pacific Bell or GTE for toll calls.

The Coming Competition

The issue: The Public Utilities Commission has proposed rules that would allow competition in the local long-distance market. These changes require a new rate structure for Pacific Bell and GTE so they can compete with long-distance carriers.

Background: When the old AT&T; was broken up in 1984, the seven regional Bell operating companies were created to provide local telephone service. The remnants of AT&T; and competitors such as MCI and Sprint were authorized to provide long-distance service.

Types of calls: Bell companies are prohibited from carrying calls between LATAs. These calls are the province of highly competitive long-distance companies, though new federal legislation may soon allow local phone companies into the market. Within LATAs, calls between points more than 12 miles apart are toll calls, or “local long distance”. In California, the local phone company has a monopoly on such calls.

Proposed changes’ effects on consumers: Rates for toll calls would drop. In its Public Utilities Commission proposal, Pacific Bell says the rate for a 5 minute call between Los Angeles and Anaheim would drop to 45 cents from 75 cents. Residential flat rate service would increase, however. For Pacific Bell customers, the fee would rise to $11.25 from $8.35; for GTE customers, it would increase to $17.49 from $9.75.

LATAs: To define what would be a local call and what would be a long distance call at the time of the AT&T; breakup, the nation was divided into Local Access and Transport Areas (LATAs), based on Census Bureau’s Standard Metropolitan Statistical Areas. The map at left shows how California is divided.

Source: MCI; Los Angeles Times