Leasing Phone Lines a Boon for Baby Bells

SBC says it’s forced to lease lines to competitors at below cost, which is like McDonald’s subsidizing Burger King (“Phone Rivalry as Simple as McDonald’s vs. Burger King, SBC Head Says,” May 26). That’s baloney, not hamburger.

Unlike businesses that compete in an open marketplace, the Bell phone companies once were legal monopolies. The law prohibited competition and guaranteed them a profit at ratepayer expense. Under this regime, the phone system was built as a public asset.

Now that competitors can lease phone lines, the Bells complain because they want to continue as monopolies and reap all the profit from the public investment in the phone system.

The argument that lease rates are below cost is pure fiction. Federal law expressly allows the Bells a reasonable profit on leased lines. In upholding this law, the U.S. Supreme Court rejected the Bells’ claims as patently false.

If lease rates were really below cost, the Bells would compete with each other because it’s profitable. Instead, they carve up the country into separate fiefdoms and refuse to compete. How fast would antitrust suits fly if McDonald’s and Burger King did this?

SBC wants to nearly double lease rates to drive competitors out of business. That would be bad for consumers and the economy because it would make SBC an unregulated monopoly whose slogan is “Have it our way.”

William Schuck

Columbus, Ohio

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It boils down to the fact that all of the rivals for local phone service are desperately trying to avoid the wasteful duplication of equipment and plant facilities. This, of course, is the historical reason phone companies are termed a “natural” monopoly with public regulation of investments, expenses, revenues and rates.

If the disparate ones succeed and are allowed to gobble up idle circuits, the economical provision of plants set aside for future use will be thrown out of balance. Where do you suppose the wasteful effect of those capers will be reflected in their cost studies?

If, by some miracle, the disparate ones actually do install their own equipment, will they duplicate land and buildings for housing same? Or will they lease space in phone company buildings at bargain rates? Either way, it would be a waste of resources, and those costs doubtless would be ignored.

Lloyd G. Martinsen

Canyon Lake