The Numbers Game Is About to Change

In what promises to change how Americans get phone service, regulators are set to adopt historic rules to open the local phone monopoly to cable TV operators, long-distance providers, utilities and others.

The Federal Communications Commission’s rules, expected to be adopted today, offer state and federal regulators a road map for breaking open the $100-billion local market controlled by the seven Baby Bell regional phone companies.

The Bells will have to give up certain revenues, offer to lease parts or all of their phone networks to newcomers at comparatively low prices, and forgo some fees they charge cellular and other wireless companies to complete calls.

In return, the Bells will eventually get a crack at the $70-billion long-distance market controlled by AT&T; Corp., MCI Communications Corp. and Sprint Corp.

The FCC hopes the net result over time will be lower phone rates and new choices. For example, Nynex Corp. or AT&T; would be in a position to offer local and long-distance service, Internet access and other products in one package.

“All through 1997 and 1998, the American people are going to see continuous offerings of new products at very, very affordable prices,” FCC Chairman Reed Hundt said Wednesday.

However, some experts are already suggesting that the rules, which run about 600 pages and stem from the new telecommunications law, will favor long-distance and wireless phone companies over the Bells in the bitter fight to enter each other’s turf.

“We have sufficient cause to be fearful about the direction of this,” said Roy Neel, president of the United States Telephone Assn., the Bells’ lobbying group.

But Hundt warned against picking winners and losers. “People will say it, but there won’t be any basis for saying that,” he said.

Industry and FCC officials predict the rules will:

* Cut the roughly $20 billion in interstate access charges long-distance companies pay the Bells when hooking up to their local phone network to originate or complete calls. But a full-scale overhaul of the access charge system would occur later, probably next year.

The charges, at 3 cents to 4 cents a minute, would drop because new competitors could form their own local network by leasing part of the Bells’ network, without paying certain access charges.

The Bells want the FCC to refrain from such cuts until the issue is dealt with more comprehensively.

* Require the Bells to split their local phone networks into eight parts and allow new entrants to lease any or all of those pieces, such as switches or the local loop that runs from a Bell’s switching center to a consumer’s home.

That way competitors could create their own local phone network without building costly facilities.

The Bells want their networks to remain bundled in no more than three parts, so long-distance carriers and others would have to lease larger chunks.

* Require the Bells to lease space on their local lines at discounts of about 20% from the retail price. The long-distance carriers want even steeper discounts.

* Order the Bells to sharply cut the fees they charge wireless phone companies to terminate calls on their wired local networks. The fees would be cut to less than a penny a minute from the current level of about 3 cents.

Local phone companies are expected to have to pay wireless firms the same rate for completing calls on wireless networks.

The wireless industry estimates it could save at least $800 million a year.

“The charges have inhibited wireless companies from becoming a full competitor in the local telephone loop,” said Thomas Wheeler, president of the Cellular Telecommunications Industry Assn.

Industry officials said the rules are just a start to spawning full-fledged competition. But one thing is clear: “The whole way you market telephone service to customers is going to change,” said Nynex Vice President Don Evans.