SBC’s Long-Distance Bid Gets Federal OK
Federal regulators gave SBC Communications Inc. the green light Thursday to start offering long-distance service to California customers.
Pending an expected approval from state regulators, the company is ready to launch an advertising blitz at the end of the month.
The Federal Communications Commission, in a 3-1 vote with one abstention, found that SBC meets the legal criteria to enter the long-distance market, “making increased competition in all markets for telecommunications services possible.” Until recently, SBC operated in California under the Pacific Bell name.
The order, which takes effect Dec. 30, relies in part on the continued monitoring and enforcement by the FCC and the California Public Utilities Commission to ensure that SBC doesn’t use its massive local-service market share to hammer long-distance or other competitors.
The commission vote on SBC, which had been anticipated, brought relief to executives who had fought doggedly to win approval in the face of charges that giving it access to the nation’s most lucrative long-distance market would stifle competition, not promote it.
“We’re really excited about this,” said Lora Watts, president of SBC’s Pacific region covering California and Nevada. “Our marketing team is trained, our systems are ready. Everything is set to go on the effective date.”
The California PUC is expected to rule next week on a decision from one of its administrative law judges giving SBC the go-ahead to provide long-distance service within the state. Until then, SBC can’t discuss rates or product packages.
“All we can do is promise we’ll offer some exciting packages, combining local, long-distance, wireless, data and give some discounts for bundling them all in one bill,” Watts said.
Industry analysts also welcomed the FCC approval, giving the company high marks for managing an operation that encompasses 13 states and controls a third of the nation’s residential access lines.
“Now that approval is in hand, California can expect to see the same benefits of competition that other states are experiencing,” said independent analyst Jeff Kagan in Atlanta. “This allows SBC to offer a bundle of services, and it’s all about the bundle in the new telecom marketplace.”
But competitors such as AT&T; Corp. complained that SBC will now use its muscle to push competitors out of the state.
The FCC acted on the “perceived” ability of competitors to enter local markets by leasing access lines from the Baby Bells, said AT&T; spokeswoman Claudia Jones. But the regional Bell companies are trying to push up the prices for leasing the lines, she maintained.
“The Bells are in the final stretch of gaining access to the country’s long-distance market, while at the same time continuing their domination of the local telephone marketplace,” Jones said.
Watts noted that although SBC covers 78% of the state and controls 90% of the residential access lines and 80% of the business lines, it expects to lose some of its share of the local-service market as it gains long-distance customers.
Dissenting Commissioner Kevin J. Martin said that approving SBC’s application is “premature,” though he commended the company for working to open its market to rivals.
