PacBell Files With State Regulators to Provide Long-Distance Service

Taking a landmark step in its campaign to expand beyond its core local phone business, Pacific Bell brushed aside critics and on Tuesday presented state regulators with a more-than-6,000-page application seeking permission to offer long-distance in California.

Consumer groups as well as AT&T; Corp., MCI Communications Corp. and other rival companies immediately assailed the filing as premature and potentially harmful to residential consumers, who have yet to see lower prices or increased competition in the local phone market.

“There is no reason on Earth that Pacific Bell should get into long-distance,” said Regina Costa, telecommunications research director at the Utilities Reform Network, a San Francisco consumer group. “PacBell controls 99% of the local phone lines in the communities it serves in California, and that is a monopoly.”

PacBell, the state’s largest phone company, doesn’t dispute the lack of choice for residential phone users. But it argues that it has sufficiently opened the market to rivals and is not to blame if they can’t make a profit and decide to pursue business customers instead.

In its filing with the California Public Utilities Commission, PacBell also argued that allowing it into the long-distance market will benefit consumers by spurring lower prices.

“California deserves full, genuine competition,” said Bill Blase, PacBell’s vice president for regulatory affairs. “Allowing PacBell to compete like every other telecommunications company will benefit everyone--consumers, the industry and the state as a whole.”

Under the Telecommunications Act of 1996, local phone companies must prove they have opened their market to competition before they can begin selling long-distance service in their region.

SBC Communications, PacBell’s parent company, has repeatedly challenged the law and has already struck out once trying to get its Southwestern Bell subsidiary into long-distance. Three other Baby Bell companies have also failed to win regulatory approval to sell long-distance in their regions.

PacBell’s filing is a critical matter for California, the nation’s most populous state and a region long coveted because of its huge and lucrative phone market.

Local phone service alone is an $11.2-billion-a-year business, while Californians spend about $9 billion on long-distance services.

The new application sets in motion a complex review process that works hand-in-hand with the 1996 Telecommunications Act, the sweeping legislation that laid the groundwork for allowing long-distance and local phone companies into each other’s businesses.

Under the act, the Federal Communications Commission will make the final decision on PacBell’s application. But the FCC will require input from state regulators as part of the review.

To give them enough time to study the documents, California regulators required PacBell to submit its long-distance application to them 90 days before the company files it with the FCC.

PacBell plans to file its FCC application at the end of June or in early July, and has said it hopes the PUC will issue an advisory ruling before then.

The PUC, however, has not agreed to issue any decision before July 20, when its advisory opinion would be due to the FCC. The FCC has three months to approve or reject PacBell’s application.

PacBell’s application comes amid heavy lobbying by the company and after years of jockeying from all sides in the phone industry.

“California’s the largest market in the country, so that alone makes it the most important filing that comes down the pike,” said Jim Lewis, MCI’s senior vice president for public policy. “All eyes will be on this application.”

For the PUC, the key issues will involve a complex 14-point deregulation checklist, which outlines the steps PacBell must take to give rivals smooth ordering procedures, equal access to the local phone market and the ability to buy access to PacBell’s network at wholesale prices.