PacBell Fights Order to Open Local Market

Pacific Bell told state regulators this week that it has no plans to open California’s local toll market to competition until it wins entry into long-distance--an apparent violation of FCC rules recently upheld by the Supreme Court.

The move sets the company apart as one of the few continuing to challenge a portion of the federal law that mandates full competition by this past Monday for calls that fall between free local boundaries and long-distance.

If PacBell prevails, its California customers would be among the last in the nation to have the ability to pick their toll-call carrier the way they choose a long-distance provider--by subscribing to a company’s service.

“From a consumer standpoint, this is another obstacle to having real competition,” said Janice Grau, an attorney at the Office of Ratepayer Advocates, a quasi-independent arm of the California Public Utilities Commission. “It appears as if Pacific Bell believes it needs a court order, and nothing less, to implement [full competition in local toll].”

Some, however, are hoping the FCC will intervene. FCC Chairman William Kennard hinted at such action this week, saying, “The majority of states have implemented [toll-call competition], and we look forward to working with the remaining states to get it in place as soon as possible.”

At the heart of the dispute is competition for local toll calling, a $1.6-billion market in California. The state is by far the largest toll market in the country, accounting for nearly a third of the country’s toll-call volume, according to estimates from the Federal Communications Commission.

Before the recent wave of deregulation, local phone companies such as PacBell handled both local and short-distance toll calls as part of their monopoly franchise. In recent years, state and federal regulators have been working to give rival firms a chance to compete for that business.

California customers of GTE Inc. already have the ability to “subscribe” to a competing carrier for local toll calls. GTE, which is not an AT&T; spinoff and is thus not subject to the restrictions that apply to the Baby Bell companies, has already jumped into the long-distance business.

Under current state rules, however, PacBell will automatically handle those calls unless a customer punches in a special “dial-around” code before each call.

Such dial-around services are widely advertised for long-distance calls, but few consumers take the trouble to dial the extra digits for everyday toll calling.

State regulators ruled in 1997 that the switch to full toll-call competition would occur as PacBell moved into long-distance in California. But the Telecommunications Act of 1996 appeared to set a deadline of Feb. 8, 1999.

Phone companies challenged the Telecom Act in court, arguing that the rules and deadlines could be set only by the states. On Jan. 25, the Supreme Court ruled that the FCC had jurisdiction--a move that seemed to reinstate the February deadline.

Still, PacBell filed papers last week arguing that the state’s later deadline still applies “unless we’re ordered by the PUC or a court to do so earlier,” said Bill Mashek, a PacBell spokesman.

Competitors disagree. “Last time we looked, the Supreme Court was the highest court in the land,” said James Peterson, a spokesman for AT&T.; “Pacific Bell is stalling.”