Better Phone Competition
Long-distance phone companies will be paying less for using the lines of the regional Baby Bells, and, if they pass the savings to their customers, millions will see their long-distance bills reduced. That is the result that the Federal Communications Commission expects from a complex deal it has cut with most of the leading telephone companies. However, the savings might not be significant and in much of Southern California would be reduced anyway by Pacific Bell’s whopping increases in fees for phone directory services. Still, it diminishes the government’s role in pricing phone services, unravels an outdated regulatory scheme and bolsters marketplace competition. Consumers, especially those who make little or no use of long-distance services, might be the winners.
In another bit of good news for California consumers, state regulators are putting into effect pricing rules that are expected to make high-speed Internet services over telephone lines--the so-called digital subscriber lines--cheaper. Under those rules, Pacific Bell and GTE cannot require independent providers of DSL services to purchase a separate line to a subscriber’s home. Rather, the phone company must let the DSL service ride piggyback on existing phone lines, saving consumers the price of a separate line.
The FCC deal with the phone companies, by eliminating the monthly minimum-usage fees of AT&T; and Sprint, offers the greatest savings to the 41% of U.S. phone customers who make no or few long-distance calls. The accord will also save long-distance carriers $3.2 billion a year in charges that they now pay the Baby Bells for use of their wiring for long-distance calls. If those savings are passed on to the customers, rates would drop for everybody. Consumers and industry analysts are justifiably skeptical because of the phone companies’ poor record of passing on savings from lower access charges to customers. The FCC says the long-distance carrier promised to lower prices, but there is little the agency can do to measure and enforce the promise.
The savings question aside, even the skeptics agree that the FCC accord represents a big step toward dismantling the arcane regulatory system by which local phone services in rural America are being subsidized. It removes the vestiges of monopoly phone service dating back to the Ma Bell days of the early 1980s and, by bringing prices in line with costs, allows competition to take hold. That is the agreement’s greatest promise.
