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FCC Proposes Rules for Phone Services' Access

Telecom: Adoption of national standards is meant to foster competition in the $90-billion local market.


WASHINGTON — In a step toward opening up the local phone business to greater competition, the Federal Communications Commission on Friday signaled its intent to adopt national standards that would curb the traditional role of states in regulating telephone service.

In a 99-page document seeking public comment on its proposals, the agency sided with long-distance carriers, who favor specific rules covering the network resources a local phone carrier must make available to rivals.

The FCC's proposals to stimulate competition in the $90-billion local phone market--issued in response to a far-reaching telecommunications law enacted in February--are likely to undergo significant change as an army of telephone industry lobbyists presses alternative plans before the Aug. 8 deadline for issuing final standards.

Under the new telecommunications law, the nation's local phone companies must open their phone systems to long-distance companies and other rivals in one of two ways: A rival could negotiate a wholesale price to gain access to the local phone company's network to complete calls under a resale agreement; alternatively, companies with some of their own telephone facilities could buy use of various services such as call switching or directory assistance.

The FCC's final rules will have a huge impact on the ability of companies to secure the billions of dollars in financing it will take to enter the local market, said Regina Keeney, chief of the common carrier bureau at the FCC.

AT&T estimated it would have to invest about $29 billion to construct new telephone facilities to reach just 20% of the 117 million telephone access lines controlled by the seven regional Bell telephone companies.

Those huge capital costs will affect the price consumers pay for telephone service as well as the speed with which new competitors and services--such as electronic home banking and high-speed data transmission--enter the market.

Federal regulators say they will pay particular attention to counterproposals that further the agency's goal of increasing competition and driving down rates.

"We really want to make sure the consumer is king," Keeney said.

In its preliminary proposal, the FCC said it tentatively agreed that local carriers should provide at least four services to potential rivals, including access to the local phone loop, telephone switches, electronic databases and signaling systems used to route telephone calls to their destinations. Local carriers have argued that federal law doesn't require such specificity and that such issues should be handled through industry negotiations.

The agency's preliminary proposals drew a muted response from long-distance and local telephone carriers alike, who said they would reserve judgment until later in the process.

"Most of [the proposal was] pretty well thought out and we were buoyed by a national standard," said Gerry Salemme, AT&T's vice president of federal government affairs.

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