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Local Phone Service Hoopla? You Can Calm Down Now

Telecom: The heralded lower rates and robust competition to Pacific Bell and GTE have yet to materialize.


It has been more than six months since competition was introduced into the residential phone business in California, and the early returns might make you wonder what all the fuss was about.

Thus far, competing carriers--including the big long-distance companies and some smaller firms--have persuaded about 80,000 residential customers statewide to leave Pacific Bell; that's less than 1% of the Baby Bell's customer base. Competitors are not even marketing their service aggressively--they say PacBell can't process the switching orders as fast as they come in.

The competitive story is even worse in GTE territory, which includes big chunks of the Southland. So far, not a single major company has begun offering local phone service in competition with the Stamford, Conn.-based company because they are still trying to hammer out crucial interconnection agreements.

Last week, the consumer group Americans for Competitive Telecommunications released a report lambasting the Baby Bells for throwing up roadblocks to real competition for local phone service. Although many phone companies have signed agreements to allow would-be competitors into their territories, no state has yet seen lower prices as a result, according to the report.

When would-be local phone service providers lobbied for the chance to compete against the historic monopolies of GTE and the Baby Bells, they promised to build state-of-the-art networks and generally upgrade the nation's telecommunications infrastructure.

But so far, nearly all of the new competitors provide residential local phone service strictly on a resale basis--they buy capacity at a 17% discount, then pass it along to consumers under their own brand names. That margin was big enough to make PacBell and GTE worry that competitors would drastically undercut them.

That hasn't happened yet. AT&T and MCI Communications--the two biggest companies to challenge PacBell in the Southland--offer virtually the same rates for the basic dial tone, local toll calls and add-ons like call waiting and caller ID. Although you can keep your phone number if you switch local carriers, you must give up your voicemail service until early 1998 due to technology limitations.

Customer service agents at AT&T and MCI emphasize that their service is just like the service from PacBell.

"At the moment, it's the same features, the same prices, the same everything," said an AT&T customer service agent, who didn't even try to persuade a caller to switch. "You wouldn't notice one thing different until you get the bill, which would be in AT&T printing, but all the prices would be the same."

AT&T offers local home phone service for $11.25 a month, which includes unlimited calls in a 12-mile radius. Calls to places 13 to 16 miles away are 2 cents a minute, and local calls to places beyond 16 miles cost 8 cents a minute. Those prices are essentially the same as Pacific Bell's basic rates. AT&T offers a 21% discount to customers who order two custom calling features (three-way calling and call return, for example) and a 29% discount to those who order three or more.

AT&T tries to make sure that customers are switched within 10 days, but that has stretched into weeks as PacBell struggles to keep up with AT&T's new orders, said spokeswoman Nilda Weglarz.

MCI offers a bigger (though still quite modest) discount for its residential local service, with a monthly fee of $10.95 and a 25-cent discount on custom calling features. Rates for local toll calls vary depending on time of day and day of the week but are roughly in line with PacBell's rates. MCI also has a plan that costs $24.95 a month for unlimited local and toll calls.

Sound enticing? Too bad. The company has stopped taking new orders for either of its local calling plans because of disputes with PacBell, said Judy Levine, MCI's executive director of local service.

Sprint, the third major long-distance carrier, has introduced local residential service in San Diego and Santa Barbara. The company plans to enter all major markets--including Los Angeles--eventually but has not given a timeline.

The only other company offering residential local service in the Los Angeles market is Genesis Communications International. The San Diego-based company, which also offers long-distance, charges a standard monthly fee of $11.25 but offers a 10% discount on calling rates. Customers who also use Genesis for long-distance are entitled to an additional 5% off their entire bill, said Derek Gietzen, the company's president and chief executive.

Customers who have switched to the new competitors said in interviews that their phone service is just as good as Pacific Bell's and that the customer service is superior. They also said their local phone bills have dropped at least a little bit.


Karen Kaplan covers technology, telecommunications and aerospace for The Times. She can be reached at

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