BellSouth poised to face federal regulators

Posted 8:21AM on Sunday 27th January 2002 ( 23 years ago )

ATLANTA - In a ritual that has become both routine and frustrating, BellSouth Corp. will refile its application to sell long-distance service, while competitors carp that the telecommunications giant continues to rig the local phone game against them. BellSouth, the dominant local phone company in nine Southeastern states, wants to first enter the long distance market in Georgia and Louisiana, followed by its other states by year's end. The company withdrew its last application from the Federal Communications Commission Dec. 20 after the agency warned it would be rejected. BellSouth plans to file a revised bid next month, the company's fifth long distance application since 1997. Local Bells are required to pass a checklist before they receive FCC approval to sell long-distance. The Bells must demonstrate that they have opened up their local telephone market to competition and that they provide resellers of their networks the same level of service they offer their own retailers. But some of the competitive local exchange carriers, or CLECs, complain that BellSouth still falls woefully short when it comes to servicing the local business they resell. Competitors have accused the company of ``win back'' practices wooing customers before switching their phone line or offering discounts not to leave BellSouth. Some orders are rejected outright, while others disappear. Switching a customer can take a month or more in some cases. Orders also become error-riddled and some continue to be processed manually. ``It's death by a thousand cuts,'' said Mike Duke, director of governmental affairs for KMC Telecom, which serves businesses in 17 small- to medium-sized markets. ``There's no one thing that they do that is just so outrageous you can just point to it and everyone says, `Aha! So that's it.''' BellSouth is the third of the four regional Baby Bells to seek long distance, a market of relatively modest profit margins but a key component of the sort of bundled service plans many customers want. The FCC has given Verizon Communications and SBC Communications permission to market long distance service in a few states, including New York and Texas, after finding they met requirements of the 1996 Telecommunications Act, which opened local phone service to Bell competitors. Denver-based Qwest Communications, the dominant Bell in 14 Western states, has begun performance testing for its bid to sell long distance and faces similar complaints. BellSouth has been trying to get its application approved with as little effort as possible, said John Windhausen Jr., president of the Association for Local Telecommunications Services, a trade group for competitive carriers that recently called the regional Bells ``as bad as serial killers.'' ``Their success really lies in their own hands,'' Windhausen said. ``It's very clear now what they need to do because the FCC has set some national standards and everybody knows what the bar is. And BellSouth keeps trying to sneak in an approval below the bar.'' BellSouth officials contend they have spent nearly $2 billion upgrading their systems to service CLECs and measure more than 2,200 performance standards. Performance failures are fined. To date, BellSouth has paid nearly $39 million in fines in Georgia, Kentucky and Louisiana and faces more as other states begin testing. The company has installed new systems and procedures this year that will alleviate many problems and unethical ``win back'' tactics are investigated and punished, said Margaret Greene, BellSouth's president of external affairs. Worldcom's MCI unit, which sells local service in parts of Georgia and Florida, says more than 5,000 of its customers have lost dial tones after switching from BellSouth. ``Even if we're working cooperatively together on this it's a hard process, but we're competitors, so it's even harder,'' said Brian Sulmonetti, MCI's director of public policy in Atlanta. Worldcom Inc. has asked the Georgia Public Service Commission to convene a workshop with the company and the CLECs to develop solutions. That request is pending. BellSouth officials say there are plenty of existing forums to address operating snags and the company considers the request ``just another fly in the regulatory ointment,'' Greene said. Beyond the expense of fines, BellSouth faces a much costlier dilemma the longer it goes without long distance missed revenue that's already built into its 2002 and 2003 financial targets. BellSouth expects to gain 20 percent to 30 percent of the long-distance market in each state within a year of entry. For the region, that's more than $2.6 billion per year. The company hasn't revised its financial targets after it withdrew its last application. Despite their gripes, some CLECs say BellSouth has improved, especially in recent months. ``They've really shown a renewed commitment,'' said John Ivanuska, a vice president of Birch Telecom, which operates in nine states. The company says it's lost more than 30 percent of the local business phone market in its region to more than 840 CLECs. BellSouth still retains more than 90 percent of residential customers in the region. The CLECs now have 3.73 million access lines in the nine states ample evidence of fair competition, BellSouth executives and some state regulators contend. Most of BellSouth's competitors say the company's debut in the long distance market is a foregone conclusion and most expect few changes in their own businesses when it happens. Still, some are gearing up to oppose the company's FCC application yet again as a way to press for better BellSouth service, Duke said. ``That's the only stick I've got.''

http://accesswdun.com/article/2002/1/199609