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AT&T Asks Baby Bells to Agree to Arbitration

May 15, 2004|James S. Granelli | Times Staff Writer

AT&T Corp. on Friday called for binding arbitration to settle disputes over its use of local telephone networks owned by the regional Baby Bells.

The nation's largest long-distance carrier and other telecommunications companies lease the Bells' networks at regulated rates as part of a 1996 federal law intended to promote competition in local phone service.

It's an arrangement that saves customers $10 billion a year. But a federal appeals court in March threw out key aspects of the rules and gave the Bells and their rivals until June 15 to negotiate deals on their own.

AT&T Chairman David W. Dorman said private talks with three Bell companies and mediation with the fourth were not producing results. Only a few small rivals have reached contracts with the Bells, which own nearly all the nation's local phone networks.

"We must not lose sight of the real purpose of these negotiations: to ensure that consumers and small businesses continue to realize the benefits of local telephone competition today," Dorman said.

Big hikes in wholesale lease rates, consumer groups and many politicians say, could lead to less competition and higher prices -- an unappealing prospect in a presidential election year that already has seen soaring gasoline prices and continuing concerns about the economy.

The Federal Communications Commission, which had welcomed a previous AT&T effort to broaden talks, said it "supports all genuine efforts to break the logjam."

The Bells say AT&T is as much to blame for the logjam as any company.

"AT&T can't have it both ways again," said Paul Mancini, assistant general counsel of SBC Communications Inc., California's dominant local phone company. "They can't complain about the lack of progress while refusing to come to agreement with any phone company anywhere in the country."

But Mancini said SBC would take one step it previously had refused to take: mediation.

"Before we move to the drastic step of binding arbitration, let's see if a mediator can help us bridge our differences," he said.

AT&T said it would accept only mediated sessions that were binding.

Qwest Communications International Inc. has been the only Bell to accept mediation.

The talks, off and on since the Telecommunications Act of 1996 was adopted to break up the monopolies in local phone service, took on new urgency when the federal appeals court threw out FCC rules governing local phone competition.

The court initially gave the agency 60 days to devise in- terim rules, get the industry to reach agreements or appeal its decision to the U.S. Supreme Court.

The FCC and the Bush administration won a 45-day delay to June 15 and are trying to come up with ways to get some results from the negotiation process.

Qwest contends that AT&T has been unwilling to negotiate, a charge AT&T denied.

"AT&T's tactics to date and strong interest in debating this issue through press releases and other public forums -- rather than at the negotiating table -- make us wonder how serious they are about finalizing a commercial agreement," said Steve Davis, senior vice president of public policy for Qwest.

Qwest and other Bells, however, have issued news releases as well to set out their frameworks for talks.

Verizon Communications Inc. said it was anxious to talk with AT&T and other competitors. "But the AT&T release shows just how stuck in the old regulatory mind-set AT&T is," said Verizon spokesman Eric Rabe.

Saying arbitration should be reserved for settling disputes over existing contracts, Rabe insisted that the two sides must agree to terms first.

"Can't we just get to the table and discuss them?" he said.

Other Bell competitors and some consumer groups supported AT&T's proposal.

"It's obvious that the current negotiations between the Bells and their competitors aren't working, and why should they when the Bells hold all of the cards?" said Mark Cooper, research director for the Consumer Federation of America.

Separately Friday, SBC said former U.S. Commerce Secretary William Daley quit as president. The company named Forrest Miller to the new position of president of external affairs and planning.

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