Almost two years after the breakup of the American Telephone & Telegraph Co., the company's long-distance competitors told a Senate committee yesterday that AT&T still enjoys an overwhelming advantage.
Therefore, the long-distance telephone companies asked the Senate Commerce, science and transportation communications subcommittee to pressure the Federal Communications Commission to implement stricter regulation of AT&T.
"The Bell operating companies, which have the power to make the transition to a fully competitive long-distance market as painless as possible for our mutual customers, have been more interested in finding investment opportunities for their new found wealth than in properly managing the transition to equal access," said William G. McGowan, chairman of MCI Communications Corp.
The "equal access" process involves local phone companies installing equipment that will allow customers to use a phone company other than AT&T without dialing a long access code.
AT&T Chairman Charles L. Brown argued that his company enjoyed no special advantages and called for further deregulation of the industry as the way to promote competition.
"The plain fact is that AT&T's competitors do not want AT&T freely to compete with them," said Brown. "Rather, they want handicaps put on AT&T and more subsidies for themselves. In short, they want protection from competition.
"If the subsidies, discounts and unnecessary handicaps are continued, there is little hope AT&T can offset the burden of low-volume users and provide low-cost long-distance service to everyone who wants it," said Brown, who called for an end to government-ordered discounts for his competitors.
Until "equal access" is installed, AT&T's competitors pay 55 percent less to hook up their long-distance lines to the local telephone companies, while AT&T pays the full price.
The discounts were designed to reflect the inferior quality of connections, which requires dialing extra digits to gain access to the AT&T's competitors.
FCC Chairman Mark S. Fowler said that it is too soon to deregulate AT&T long-distance rates, but he also rejected pressures from AT&T's competitors to offer them marketplace protection.
"We cannot guarantee the future of every competitive entrant," Fowler said. "While the FCC is committed to lowering barriers to entry, so that efficient competitors will have opportunities to compete and increase their share of the long distance market, we can not guarantee market share."
GTE Sprint Chairman Theodore F. Brophy said his company was not asking for protection, but simply wanted a fair and competitive process. Brophy urged the committee to use its oversight powers to require that the FCC develop an effective transition plan.
Although none of the witnesses recommended legislation and the senators present seemed confused about what action to take, there was a clear sense of urgency expressed by AT&T's competitors that the transition to a competitive long-distance telephone system is not working.
"I have reluctantly reached the conclusion that the FCC has lost sight of the policy it has been instrumental in creating over the past two decades: introducing effective competition in the interexchange market," said Brophy of GTE.
"The commission would have an enormous beneficial impact on making divestiture work in the public interest, if it would stop pretending that everything is all right," McGowan added.
FCC Chairman Fowler argued, however, that the transition is working. "The future of a competitive market is basically assured," he said. "The competition process is robust."