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AT&T; to Bill Some Local Phone Company Customers Directly for Long-Distance Calls : Telecom: GTE patrons in California will be affected. Industry experts see the change as a strategic move.

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From Reuters

AT&T; Corp. is quietly moving to bypass local phone companies and bill consumers directly for long-distance services in anticipation of the day it will go toe-to-toe with the Baby Bells.

In January, AT&T; will start billing customers for long-distance services in GTE Corp. local service areas in California, Florida and Texas. It made the change known Dec. 5, issuing statements in the areas affected.

“The main reason is to have a direct link to our customers,” AT&T; spokeswoman Nancy Smith said. “It improves our time to market with new features and services.”

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But industry experts said the move has a broader significance.

If implemented nationwide, direct billing could mean significant savings for AT&T;, which pays hundreds of millions of dollars to the Baby Bells and other local phone companies such as GTE to include long-distance charges on their customers’ bills.

More important, experts said, the move deprives regional phone companies of a vital source of information on calling patterns, which would make it harder for the regional companies to select AT&T; customers to recruit for any Baby Bell long-distance service.

“It really is a very major step,” said Daniel Briere of consulting firm TeleChoice. “This will take AT&T;’s bill out of the hands of the regional Bells.”

The Bells are expected to be given full rights to enter the long-distance market in exchange for an end to their local-calling monopolies under legislation being debated in Congress.

And AT&T;, with 60% of the $80-billion long-distance market, is certain to be the Bells’ prime target.

For now, AT&T; is being modest about its aims and will not say if or when it will bill directly on a national basis. But industry analysts have no doubt about its ultimate aim.

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They say AT&T; can eventually use its billing as a way to offer integrated local phone, wireless and other services and to compete with local phone carriers.

Basking Ridge, N.J.-based AT&T; said recently that it would offer local phone service across the country as local regulations allow.

It is well-known within the industry that consumers prefer to write just one check for telephone services, so AT&T; is hoping it will be able to offer a better bundle of services than that of any rival by the time it starts billing directly nationwide.

AT&T; says billing directly will cut the time needed to introduce marketing features in the hard-fought war for long-distance market share.

Consultants estimate that long-distance rival MCI Communications Corp. bills about 20% of its customers directly, Sprint Corp. between 40% and 50%.

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