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In the meantime, Ameritech has signed an interconnection agreement with MFS Communications; Bell Atlantic with Jones Intercable; and BellSouth with Time Warner, MCI, and Hart Communications. These RBOCs claim that they already have satisfied the 14-point checklist, and they have stated their plans to file for permission to offer long distance services in the subject states [16-13] and [16-14]. In the case of the Ameritech/MFS agreement, the companies have agreed that Ameritech will lease circuits, only, with the cost of the switch unbundled. Additionally, customers will retain their telephone numbers should they switch to MFS. Finally, they have stipulated to exchanging local traffic at identical and reciprocal rates [16-15]. Ameritech, NYNEX and Pacific Bell all have stated that they have satisfied the 14-point checklist and that they expect to have approval to offer long distance services in-region by year-end 1996 [16-11].

Elsewhere, things are not quite so friendly. AT&T filed a complaint with several PUCs to the effect that Ameritech isn’t cooperating; Ameritech countered to the effect that AT&T wasn’t offering compensatory rates. MCI filed complaints with the California and Oregon PUCs, complaining about anti-competitive measures associated with the use of the 415 (CA) and 916 (OR) area codes [16-16].

Also in the meantime, investment pours into local access. MCIMetro has committed some $2 billion to building its own facilities [16-17]. The company plans to have such service available in 24 cities by yearend 1996, and at competitive prices. For instance, MCIMetro service is available in Baltimore at rates 5% below that of Bell Atlantic [16-18]. Sprint has teamed with several CATV companies to develop local networks [16-7]. AT&T, while not revealing a strategy, estimates that building loops in the top 50 markets would exceed $5 billion [16-17]. In AT&T’s hip pocket, of course, is the wireless option; the company is a leading manufacturer of Wireless Local Loop (WLL) systems and owns a huge cellular company.

While AT&T groused about the wholesale cost of local loops in Rochester, Time Warner took another approach. The company has built 13 SONET rings, offering direct fiber links to large businesses and undercutting Rochester Tel by 10%-30% for local loop access. The brass ring, of course, (not to be confused with the fiber ring) is the volume of long distance and other services that the company plans to capture. Rochester Tel claims that it has suffered only 3%-4% erosion in its customer base, with most of that attributable to AT&T’s brief but aggressive spurt of residential activity [16-12].

Although the LECs are restricted in their home states, they are free to compete for long distance business elsewhere. Elsewhere, they face the same problems as do the competing carriers on their home turf. As we have noted, SBC and Ameritech immediately filed in a number of states to provide long distance service to their cellular customers on a resale basis. Undoubtedly, many of the RBOCs will aggressively pursue the long distance business, and initially on a resale basis. In time, they will build their own backbone facilities and place their own switches on a selective geographical basis. Yet, the issue of local loop interconnection remains. As the RBOCs begin to compete with each other, their discussions about interconnection arrangements should be most interesting. (Note: The Act contains provisions for of rural and small telephone companies to petition for certain exemptions. Such companies are defined as those with less the 2% of the nation’s subscriber base. This clause effectively provides for possible exemption for all but the RBOCs and GTE.)

Access to Rights of Way

The Act contains provisions relative to pole attachments; those provisions were amended by the FCC in its August 1, 1996 preliminary implementation rules. The Act and its FCC interpretation provide for nondiscriminatory access by CATV providers and telephone companies to poles, ducts, conduits, and rights-of-way owned by power utilities and incumbent LECs.


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