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AT&T Retreats From Tradition
AT&T had taken advantage of the rules to offer a bundle of local and long-distance calling for one flat rate, allowing it to compete with similar offerings from regional giants such as Verizon, SBC Communications Inc. and BellSouth.
Packages of local and long-distance service have proved to be enormously popular with consumers: About 40 percent of all households subscribe to some form of bundled service, according to Dorman. But he said AT&T can no longer market such bundles competitively without the regulated access to local networks.
FCC officials declined to comment on Dorman's statements, but FCC Chairman Michael K. Powell has said that he thinks consumers are better served by competitors that own local networks rather than companies that lease facilities, as AT&T does.
Like Dorman, Kimmelman of Consumers Union blamed the federal regulatory policy for AT&T's decision to all but walk away from the consumer market.
Drake Johnstone, a telecommunications analyst with Davenport & Co., said AT&T is trying to cut its losses in the face of the inevitable loss of its consumer base to rivals. "AT&T has come to realize that the consumer franchise is indefensible and, over time, it will disappear," Johnstone said. Also, the move will allow AT&T to focus on its business customer base, analysts said, possibly preparing the company for a future sale.
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