Rival Carriers to Meet With White House

RBOCs want deregulation, but competition is growing, prices are being reduced.

Rivals of local telephone companies plan to go to the White House next month to make an appeal for staying the course on telecommunications regulation, according to industry sources.

They plan to say that despite the legions of casualties in the telecom arena in the past 18 months, competition is starting to take hold and, in some cases, is bringing prices down.

During the previous administration, the White House and the Federal Communications Commission had a close connection by way of the longtime friendship between Vice President Al Gore and then-FCC Chairman Reed Hundt.

The Clinton administration took part in crafting 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 telecom regulatory matters, and no industry sector has been able to sway the White House to its side.

The incumbent telephone carriers—namely, the RBOCs (Regional Bell Operating Companies)—are trying to change that. Earlier this month, the RBOCs lobbying group and several incumbent carriers met with White House officials to try to persuade them to take a stand for deregulation. The RBOCs 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 has failed to bring about deregulation.

According to industry sources, the White House has invited RBOC rivals to meet Chief of Staff Andrew Card and the senior adviser to the president, Karl Rove, probably in October. Among companies expected to be at the meeting are Allegiance Telecom Inc. and Covad Communications Inc. 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 [RBOCs wholesale network] pricing structure."

As an indication of competition slowly taking hold, Covad this month reduced its small-business broadband access rate to $69.95 per month from $89.95. It also lowered its self-installation kit price from $275 to $199.

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 RBOCs have advanced more quickly into the long-distance market, however. To offer long-distance services to customers in their own territories, the RBOCs 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 states, leaving just two states, Florida and Tennessee, remaining before BellSouth can provide long-distance service throughout its territory.

Meanwhile, some providers are trying to give the RBOCs a run for their money in combining long-distance and local telephony. "We take away 3,000-plus business lines from the Bells every day," said Michael Caputo, Allegiance spokesman, in Dallas. "The hue and cry out of the Bells is a great indication that competition is finally getting some results."