PUC Says PacBell Isn’t Ready for Long-Distance

Pacific Bell has repeatedly thwarted efforts to bring competition to the market for local phone service and therefore should not be allowed to sell long-distance in California, according to a report issued late Monday by the state Public Utilities Commission.

Pacific Bell is hoping to become the nation’s first Baby Bell local phone company to win permission to bundle long-distance calling with local service--something that has been prohibited since the 1984 breakup of AT&T; on antitrust grounds. That would allow PacBell to tap into some of the $9 billion that Californians spend annually on long-distance.

The Telecommunications Act of 1996 gave the Baby Bells permission to get back into the long-distance business, but only after they fulfilled 14 specific requirements designed to make the market for local phone service competitive as well.

Monday’s PUC report said Pacific Bell has met only four of those 14 conditions. But it did offer a road map to show PacBell, a subsidiary of San Antonio-based SBC Communications, what it should do to fulfill the remaining 10 requirements.

The report said Pacific Bell has not made it possible for would-be competitors to offer local phone service widely in residential areas. The report also said PacBell treats other companies seeking to provide local phone services “as though they were in litigation” instead of as routine business associates or as wholesale customers.

The report recommended that PacBell stop focusing on merely fulfilling the minimum legal obligations of the Telecommunications Act and instead try to follow the spirit of the law by acting to bring “meaningful competition” to California.

“It’s a scathing critique,” Charles Carbonne, a telephone analyst and consumer advocate with the Utility Consumer Action Network in San Diego. “It’s disturbing to say that it’s been more than two years after the passage of the Telecom Act and consumers are still waiting for competition. And according to this report, we’re going to have to wait a lot longer. It’s not coming in the next month or two.”

PacBell, which is the dominant carrier in about 75% of the state, disputed the report’s conclusions and insisted that it has fulfilled all 14 requirements needed to consider its market open to competition.

“We have opened our network to more than 150 competitors, and it is clear that those companies that want to compete are already in the marketplace providing local service,” said Bill Blase, PacBell’s vice president for regulatory affairs. “Over the coming weeks, we will document and prove to the commissioners that we have met the requirements [for entry into the long-distance market] and are ready to compete in both the local and long-distance markets, just as all our competitors can.”

The report, prepared by staff members of the PUC’s telecommunications division, is the result of intense meetings among Pacific Bell, its would-be competitors--including long-distance companies and competitive local exchange carriers--and consumer groups. After a public comment period, an administrative law judge at the PUC will make a recommendation to the five commissioners, who are planning to vote on the matter by year’s end. In the past, commissioners have not always voted according to the recommendations of their staff.

Even if Pacific Bell does follow the report’s suggestions and convinces state regulators that it has opened competition, the company would still face a formidable hurdle--the Federal Communications Commission.

The FCC has final say on whether a Baby Bell has done enough to make its home market competitive. So far, Ameritech, Bell South, and SBC-owned Southwestern Bell have all applied for permission to sell long-distance--in some cases with the backing of state regulators--but the FCC has denied all of their requests.

In response, SBC filed suit last year to have part of the Telecommunications Act struck down on the grounds that it is unconstitutional to prohibit only the Baby Bells from entering the long-distance market. A federal judge sided with SBC on New Year’s Eve, but an appeals court overturned that decision last month.

Consumer groups and adversaries of Pacific Bell praised the PUC report, saying it had affirmed their own experiences.

“The report clearly shows that in critical areas like ordering systems, interconnection and collocation, SBC/PacBell continues to fall woefully short of its obligations and to delay bringing the benefits of a competitive market to the state,” said David Condit, AT&T;’s vice president of law and government affairs.