Local Competition: AT&T CEO Michael Armstrong Says Competitive Local Phone Market Will Spur Investment. `We Need to Replace the Bell Monopoly in Local Phone Service With Market Forces.’

Local Competition: AT&T CEO Michael Armstrong Says Competitive Local Phone Market Will Spur Investment. `We Need to Replace the Bell Monopoly in Local Phone Service With Market Forces.’ – Industry Trend or Event

AT&T Chairman C. Michael Armstrong said local phone competition will spur telecommunications companies to invest in the broadband networks Pennsylvania needs to become a leader in electronic commerce. Broadband networks carry large volumes of information, including voice data, video and audio signals, at high speeds.

Armstrong delivered the keynote speech Wednesday at a conference on electronic commerce sponsored by the World Affairs Council of Philadelphia.

“To realize Philadelphia’s future as a hub in the emerging digital economy, we need to replace the Bell monopoly in local phone service with market forces,” said Armstrong. “Bell Atlantic still controls 98 percent of the local phone market in the territory it serves.

“I think we’ve demonstrated that AT&T is willing to make the investments necessary to put a big dent in that local service monopoly,” he said. “But we expect regulators to keep their end of the bargain by opening local markets to competition before they let the regional Bell monopolies into long distance.”

On April 22, AT&T announced a $58 billion bid for MediaOne Group, one of the nation’s largest cable companies. Earlier this year, AT&T completed a $48 billion acquisition of TCI, another leading cable company, and an $11 billion acquisition of Teleport Communications Group (TCG), a local phone service provider in Philadelphia, Pittsburgh and other U.S. metropolitan markets.

AT&T has an infrastructure investment of more than $1.2 billion in the Philadelphia metropolitan area, a major portion of AT&T’s total $3.3 billion infrastructure investment in Pennsylvania to date. AT&T plans to invest $100 million to upgrade TCI’s cable infrastructure in Pittsburgh, one of the first markets where AT&T will test advanced cable telephone services.

Armstrong called for several actions to open the state’s local phone market to competition. He said the Bell companies must “let competitors use [their monopoly facilities] at economically viable, cost-based rates,” and “cooperate in switching customers from their network to ours.”

“Three years after the Telecom Act was passed, not one Bell company has developed efficient systems and processes to do that,” he said. “I’m sure you’ve read newspaper stories about business customers losing dial tone — or their directory listings — when they tried to switch their local service to another company.”

Armstrong also said, for competition to develop, regulators must reduce to cost the inflated fees the Bell companies charge long distance companies to connect their calls. By reducing inflated fees to cost, the government would eliminate a huge financial advantage Bell Atlantic and other Bell companies could use to thwart competition in their home markets.

“Excess access fees are costing the residents of this state more than $170 million a year,” he said. “The fact is, the Bells have been using access fees to finance their ambitious overseas investment, not to upgrade local lines right here at home.”

Calling the fees a “hidden tax,” Armstrong said inflated access fees cost consumers nationwide $10 billion.

“Local phone companies charge about 4.6 cents a minute to complete both ends of a long distance call,” he said. “Their actual cost is about a half a cent a minute.”

Armstrong noted that instead of opening local markets to competition, Bell Atlantic is “looking to make its monopoly market even larger” through its proposed merger with GTE, Pennsylvania’s second largest local phone monopoly.

“That may be good for Bell,” he said. “But it would be bad news for Pennsylvania’s consumers.”

Armstrong urged the capacity crowd of business and civic leaders to express their concerns about the proposed Bell/GTE mega-monopoly at a public hearing to be held by the state Public Utility Commission Wednesday at 6:30 p.m. at Philadelphia City Hall.

“Fortunately, the Pennsylvania Public Utility Commission is approaching this merger with appropriate caution,” he said. “[They are] listening to the concerns of Pennsylvania consumers and small businesses across the state.”

With nearly 3.5 million shareowners, AT&T is the most widely held stock in the United States. AT&T is the world’s premier voice and data communications company, serving more than 90 million customers, including consumers, businesses and government. With annual revenues of more than $51 billion and some 126,000 employees, AT&T runs the world’s largest, most powerful long distance network and the largest digital wireless network in North America. The company is a leading supplier of data and Internet services for businesses and the nation’s largest direct Internet service provider to consumers.

COPYRIGHT 1999 EDGE Publishing

COPYRIGHT 2000 Gale Group