Dialing the PUC: Stay Alert
Three years after the passage of the landmark Telecommunications Act, a local telephone company, Bell Atlantic, was authorized last week to provide long-distance phone service in New York. SBC Communications, the regional company that owns Pacific Bell, is expected to ask for a similar license in California, perhaps as early as April.
To qualify, however, SBC, like Bell Atlantic in New York, would first have to allow competition into its local market on reasonable terms. Federal and state regulators must make sure that consumers end up with the best possible deal.
The New York agreement provides a good model for California and other states. That state’s Public Service Commission imposed a strict pricing regime under which Bell Atlantic will lease its lines to competitors for local phone service. The phone company also accepted close supervision by the Federal Communications Commission to provide timely and adequate service to new subscribers.
The deal is not perfect. In fact, the Justice Department had recommended waiting until Bell Atlantic improved its handling of orders from competitors seeking access to its network. The FCC went ahead anyway, ordering Bell Atlantic to improve the service and threatening to impose a fine if it didn’t.
The payoff to customers of a Baby Bell entering the long-distance fray could be significant. Bell Atlantic--to AT&T;’s chagrin--has already said it will offer New Yorkers long-distance phone service without minimum monthly charges. That’s a boon to the nearly one-half of phone customers who make fewer than 30 minutes of long-distance calls a month. Despite the per-minute charges that AT&T; and MCI are heavily advertising, when the minimum fees are added, small-time users are paying much more today than they were three years ago.
The wholesale pricing of access to Pac Bell lines in California will determine whether competitors for local service find it worth their while to enter the market, but the quality of the service will also be an important competition issue. The California Public Utilities Commission has been among the toughest price regulators in the country, and that has kept local charges low. Competition will most likely hinge on the quality of service the newcomers offer, from how long it takes to make the initial connection to the speed of repair and other service calls.
The PUC should watch closely how well Bell Atlantic complies with the FCC’s conditions. When the time comes and Pac Bell asks for a long-distance license in California, the PUC should require that all conditions on access for local-service competitors, including pricing and quality of service, are met first. This would speed up service for consumers and avoid protracted legal wrangling later.
