State OKs GTE’s Entry Into Long-Distance

Ushering in a new era in which many consumers will, for the first time in more than a decade, be able to buy local and long-distance telephone service from the same company, the California Public Utilities Commission on Wednesday granted GTE Corp. permission to immediately begin offering long-distance service.

The decision enables GTE to join AT & T, MCI and Sprint as a major long-distance player in the state, and on Wednesday GTE was already touting volume-discount calling plans similar to those offered by AT & T and MCI. GTE already offers local phone service to 4 million California customers and is a force in cellular communications.

“We promised we would be quick to market once the telecommunications bill became law,” said Barbara Bellinghausen, director of GTE Long Distance Launch in Thousand Oaks, referring to the recent federal legislation that allows local and long-distance phone companies and cable companies to compete in one another’s markets. “Today we’re making good on that promise.”

GTE, the nation’s largest local phone provider, now offers long-distance service in 17 of the 28 states in which it operates and expects to be in every state by year-end. Because it is not a Bell operating company, it is free of many of the restrictions that have slowed the entry of Pacific Bell and other Baby Bells into the long-distance fray.

Pacific Bell, which has about 15.8 million local customers in California, hopes to gain state and federal approval to begin offering long-distance service next spring.

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GTE’s PUC victory drew a predictably harsh reaction from its chief competitor, AT & T, with whom it has traded legal briefs in recent weeks over encroachments onto each other’s turf.

“As the only company able to provide local and long-distance service, GTE could use its monopoly hold on local-service customers to thwart competition in the long-distance market,” Randy Deutsch, AT & T’s vice president for law and government affairs in San Francisco, said in a statement.

But the reaction was mixed from one consumer advocate. “It’s wonderful to see a new entrant into the long-distance market,” said Michael Shames with the Utility Consumers Action Network in San Diego.

“On the other hand, it’s probably premature for the local-service providers such as GTE, or for that matter Pacific Bell, to enter that market because of the concerns for cross-subsidies,” i.e., using local proceeds to finance long distance and undercut smaller competitors, he said.

Douglas A. Christopher, an analyst with Crowell, Weedon & Co. in Los Angeles, said GTE brings a well-known brand name to the fray. “They do have an advantage in that way.”

Nationally, GTE Long Distance President Rob McCoy said that more than 250,000 customers have signed up for its long-distance service so far, and another 6,000 new customers are being brought on each day.