Bell Rivals to State Their Case at White House

Allegiance, Covad and others are going to the White House to ask the administration not to tamper with the 1996 Telecom Act.

Rivals to the local telephone companies plan to go to the White House next month to make an appeal for staying the course on telecommunication regulation, according to industry sources. Despite the legions of casualties in the telecommunications arena in the past 18 months, competition is starting to take hold and in some cases even bringing prices down, they plan to say.

During the previous administration, the White House and the Federal Communications Commission enjoyed a close connection by way of the longtime friendship between Vice President Al Gore and former FCC Chairman Reed Hundt. The Clinton administration was involved in the crafting of the Telecommunications Act of 1996, and it was generally understood that the FCCs stance reflected the administrations views. But under President Bush, the White House has remained generally agnostic on specific telecommunications regulatory matters, and no industry sector has been able to sway it to side.

The incumbent telephone carriers--namely the Regional Bell Operating Companies--are trying to change that. Earlier this month, the Bells lobbying group and several incumbent carriers met with White House officials to try to persuade them to take a stand for deregulation. The Bells want the government to eliminate rules forcing them to lease elements of their local networks to rivals at regulated prices, which they say compel them to give rivals access below cost. More than two years of high-priced lobbying on Capitol Hill failed to bring about any deregulation.

According to industry sources, the White House has invited Bell rivals to meet with Chief of Staff Andrew Card and senior adviser to the president, Karl Rove, probably in October. Companies expected to be at the meeting include Allegiance Telecom Inc. and Covad Communications Inc., among others. They plan to ask the administration not to tamper with the 1996 Telecom Act, sources said.

"Competition is growing slowly but surely," said Russell Frisby, president of the Competitive Telecommunications Association in Washington. "Investment in facilities is down, but I think that is a result of the general economy, not a result of the [Bells wholesale network] pricing structure."

As an indication of competition slowly taking hold, Covad this month reduced its small-business broadband access rates to $69.95 per month from $89.95. It also lowered the self-installation kit price from $275.00 to $199.00.

Long-distance companies have gradually moved into local markets as well, but not at the pace lawmakers envisioned in 1996. AT&T Corp. provides local telephony services in eight states, and WorldCom Inc. last week announced that it won its millionth customer for The Neighborhood combined local and long-distance service.

The Bells have advanced more quickly into the long-distance market, however. To offer long-distance services to customers in their own local territories, the Bells must first demonstrate to the FCC that their local markets are open to competition. This month, the FCC approved BellSouth Corp.s applications for five, leaving just two states, Florida and Tennessee, remaining before BellSouth can provide long-distance service throughout its footprint.

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  • CLECs Push Lawmakers to Break Up Bells