PUC Transfers Call on Open Phone Market : Telecom: Agency tells cable, phone firms to sort out dereg- ulation on their own. Critics decry move; PUC calls it empowerment.

In an action that critics decried as an abdication of responsibility, the California Public Utilities Commission urged telephone and cable companies Wednesday to sit down and negotiate among themselves how they want to open local phone markets to competition by 1997.

Beginning Jan. 1, the PUC said, interested parties will have 90 days to work out a settlement on how to implement a free market for local phone services in California. If they fail to reach agreement by March 31, the commission will intervene.

“They’re saying to the companies, ‘Go out and figure out how to regulate yourselves; we don’t want to be bothered,’ ” said Audrie Krause, executive director of Toward Utility Rate Normalization, a consumer group in San Francisco.

Commissioner Jessie J. Knight Jr., however, said the agency is seeking not to delegate its authority but to “empower the participants.”

By encouraging interested parties to develop their own compromise, the PUC is straying from its traditional method of deciding issues after long periods of hearings and comments. But the agency has said it must reinvent itself in light of the revolutionary changes under way in the markets it regulates, notably electricity and telephones.

A similar approach worked well to speed the process of introducing competition in Rochester, N.Y., where Rochester Telephone, an independent company, took the initiative in working out a settlement. Competition is set to begin there Jan. 1.

But the cable and long-distance companies, along with major telephone customers, expressed concern that unless a regulator oversees the negotiating process, Pacific Bell will attempt to stymie the process, because competition will mean the loss of revenue and market share for it.

“We urged (the PUC) to be involved,” said Joseph S. Faber, a San Francisco attorney who represents Los Angeles County in telecommunications negotiations with Pacific Bell. “I don’t think (Pacific Bell) is going to move unless someone makes them move.”

However, John A. Gueldner, Pacific Bell’s vice president for regulatory, disagreed, saying the company is as eager as anyone to have an open market. Although local phone utilities undoubtedly will lose some local customers, he noted, they will gain the right to enter the lucrative long-distance business and other markets from which they have been barred.

Wednesday’s ruling was the first on the matter since last December, when the PUC declared its intention to allow full competition in the state’s telephone markets by Jan. 1, 1997, and to streamline the regulatory process.

At that time, many companies and utility experts said the five-member PUC would have to use a firm hand to keep participants in line and make sure consumers did not suffer.

Representatives of cable operators and long-distance companies such as MCI and Sprint vowed Wednesday to immediately begin drafting rules that would represent a consensus.

Jack Leutza, manager of the PUC’s telecommunications branch, said the agency had no plans to have a commissioner sit in on settlement meetings but that it would not be opposed to having an administrative law judge facilitate a settlement.

The PUC has come under fire for dawdling on telephone reform in California. Cable companies note that regional Bell operating companies such as Pacific Bell have made headway in winning federal approval to offer such services as video over phone lines, but cable operators and long-distance providers have yet to secure privileges to offer certain phone services in California.

California was almost dead last among the states to approve competition in so-called local long-distance calls. That market is set to open Jan. 1.

Regardless of the outcome of negotiations, the PUC said it plans early next year to issue rules about the way calls are transmitted and how such call routing should be priced. By May, it also intends to develop interim regulations determining, among other things, what happens to customers’ current phone numbers and telephone-book listings should they decide to switch to a carrier other than Pacific Bell or GTE.