FCC Debates Network Leasing

Outcome might influence competitive carriers' fate.

The debate over local competition in Washington is defined by arcane regulatory rules on which parts of the local network incumbent telephone carriers must lease to rivals. But for small businesses, its just about good service.

With the Federal Communications Commission deliberating rules on incumbents network leasing responsibilities, lawmakers are trying to duck a fractious issue, insiders say. An FCC ruling could come within the next few weeks, leaving competitive carriers and their customers concerned about choices and levels of service.

About 10 million lines that were once served by the RBOCs (Regional Bell Operating Companies) are now served by rival carriers because of the Telecommunications Act of 1996. In many cases, business users say, they switched carriers after prolonged frustrations and unacceptable treatment from the one-time RBOC monopolies.

Five years ago in Macon County, Ga., The Salvation Armys three thrift stores, 150-occupant shelter, and safe house for abused women and children switched local and long-

distance service to Access Integrated Networks Inc. The organization now saves $100 per month on its phone bill, but the primary reason for the switch was poor customer service, said Sally McLemore, development director for The Salvation Army, in Macon.

Still, the switch didnt solve the problems. In fact, many small businesses around the country report similar anecdotes about treatment from the incumbent carrier after they left. "We pay every month for a listing [in the telephone directory], and BellSouth [Corp.] cannot get our listing correct," McLemore said. "Last year, they even left out our crisis line number. We ... could not get them to publish it."

Large enterprises, with hefty buying power, often report different experiences with incumbents responsiveness. Some, including SunTrust Banks Inc., in Atlanta, are trading in long-distance carriers for RBOCs, now that they have regulatory approval to offer such service. "BellSouth knows us better than anybody else, and we know them better than anybody else," said John Hutto, SunTrusts senior vice president for Network and Telecommunication Services.

As early as next month, the FCC may revise the rules that allow CLECs (Competitive Local Exchange Carriers) to lease portions of the RBOCs local networks, and CLECs fear that the revisions could drive them out of business. "Its way too early in the development of the industry to make those sorts of changes," said Richard Burk, president and CEO of NII Communications Ltd., a CLEC in San Antonio.

Last week, lawmakers criticized FCC Chairman Michael Powell for his willingness to consider cutting some of the RBOCs obligations, arguing that the competitive goals of the Telecommunications Act have only begun to reap results. Sen. Ernest Hollings, D-S.C., said, "Orders that the FCC may soon implement would destroy competition at the very moment its about to take hold."