Bell Atlantic Corp., seeking to become the first of the nation's former local Bell companies to sell long-distance service in its core market, yesterday won the endorsement of the New York Public Service Commission, a major step in the company's bid to win approval from federal regulators.
Under the Telecommunications Act of 1996, the former Bells can enter the long-distance field only after convincing the Federal Communications Commission that they have opened their home markets to local competition, allowing rivals to connect to customers unhindered via their phone lines.
"This is a significant endorsement," said Linda Meltzer, managing director of telecommunications at Warburg Dillon Read LLC, said of the New York decision. "It should get a lot of credibility at the FCC."
Like others of the so-called Baby Bells, Bell Atlantic seeks the right to sell long-distance as a key part of its strategy to offer consumers and businesses a full package of communications services.
The FCC is expected to lean heavily on the state commission's findings. FCC Chairman William E. Kennard has publicly praised state authorities for working with Bell Atlantic and extracting concessions aimed at opening the market.
Even if it wins FCC approval, Bell Atlantic also must gain the endorsement of the Justice Department. And Bell Atlantic's rivals--long-distance companies and competitive local companies--continue to battle the application, arguing that Bell Atlantic's systems can't handle a flood of orders from customers wanting to change carriers.
"It should be as easy to switch your local company as it is to switch your long-distance company," said John Windhausen Jr., president of the Association of Local Telecommunications Services. "There are huge delays."
AT&T Corp., Bell Atlantic's loudest critic, accused the New York commission of papering over deficiencies in the company's record. The state commission's filing acknowledges that Bell Atlantic could not now electronically process a large volume of orders to change local carriers, company officials noted, though the filing does assert that Bell Atlantic is on track to develop such capabilities as volumes grow.
"It's a promise of future performance," complained AT&T Government Affairs Director Robert W. Quinn. "Paper promises don't cut it."
But Maureen O. Helmer, chairman of the New York commission, said that under the proposal Bell Atlantic negotiated with state regulators the company is legally bound to follow through on its plans or face fines up to $190 million. "We think we have created assurances in the plan," Helmer said.
Bell Atlantic's experience is being watched around the country, as other Bells seek to gain entry into long-distance service. What they see may be a mixed bag: Bell Atlantic's prospects now seem excellent, but it paid dearly to reach this point, submitting to two years of hearings and negotiations with the state commission, and spending more than $1 billion to upgrade its systems.
"On the one hand, you're probably not happy to see a bar that may be too high," said Robert B. Wilkes, an analyst with Brown Brothers Harriman & Co. "On the other hand, I think a lot of companies are just happy to see the bar. The bar's been kind of fuzzy."