Baby Bell Gets OK to Enter Long-Distance : Telecom: Milestone plan with the Justice Department could serve as a blueprint for an overhaul of communications laws.

Showing that compromise is possible on one of the most bitterly contested regulatory issues in all of American industry, a regional Bell telephone company Monday won Justice Department backing to begin offering long-distance telephone service.

Atty. Gen. Janet Reno and antitrust chief Anne K. Bingaman endorsed a plan that would allow Chicago-based Ameritech Corp. to offer long-distance service on a trial basis in Chicago and Grand Rapids, Mich., but only after the Justice Department certifies that competition exists in local telephone service in those markets.

The proposal, which still requires the approval of U.S. District Judge Harold Greene, would be the most significant modification to date of the landmark 1982 decree that broke up the nation’s telephone monopoly. It could serve as a blueprint for congressional legislation aimed at overhauling the nation’s communications laws--legislation that has foundered for several years on the issue of regional Bell company entry into long-distance.

“This is a milestone moment in moving forward from the court decree 13 years ago that brought us to a whole new world of phone competition in the long-distance business but left local service non-competitive,” Reno said at a news conference. “If it works . . . it could be the model for the next revolution in the telecommunications service.”

“This trial represents good public policy . . . and a high-value proposition for the American consumer,” AT&T; Chairman Robert E. Allen said in a prepared statement. Long-distance companies such as AT&T; have furiously fought all regional Bell company efforts to get into the $65-billion-a-year long-distance industry.

The proposal is thought to have a good chance of winning the blessing of Greene, who oversees the consent decree that established a competitive long-distance market and led to the creation of Ameritech and six other regional Bell companies--but barred them from offering long-distance service. The Federal Communications Commission must also review Ameritech’s proposed long-distance rates.

Pacific Bell and Nynex are also seeking Justice Department approval to offer long-distance service. But Bingaman said the discussions over those proposals are still “very preliminary.”

Ameritech’s breakthrough came after the company, which holds a near-monopoly on local phone service in five Midwestern states, broke ranks with the other Baby Bells and submitted a revised plan 11 days ago in which it promised to meet a long list of Justice Department preconditions for loosening its monopoly grip over local phone service.

“What we’ve done here is very much in the interests of consumers,” Ameritech Chairman Richard C. Notebaert said. “We are untying the Gordian knot. . . . Competition will cause (the phone market) to explode more than it already has.”

Local phone companies, which already face limited local competition from so-called alternative access providers, are eager to get into long-distance, cable television and other services. But rivals say the Baby Bells still have enough control of the “local loop” to gain an unfair advantage in long-distance.

Although the public comment period on Ameritech’s revised proposal wasn’t set to expire for several more days, the Justice Department’s sudden announcement of support for Ameritech’s proposal appeared timed to influence the telecommunications legislation now pending on Capitol Hill.

A Senate bill that would allow the regional Bells into the long-distance business once they met a list of 12 preconditions appeared to be heading for a quick vote last week. But Capitol Hill sources say the measure may be put off to give Senate Majority Leader Bob Dole (R-Kan.) more time to mend simmering party differences over various telecom issues.

* OPENING THE MARKET

A Pacific Bell plan to freeze the price of basic service drew fire. D2