After a seven-year trek, the four regional U.S. local telephone companies on Wednesday crossed the finish line and all can offer lucrative long-distance telephone and data services nationwide.
THE BABY BELLS that dominated the local telephone business since 1984 when AT&T Corp. had been barred from the long-distance market until they opened their local networks to rivals, an effort to boost competition.
Federal Communications Commission approved on Wednesday Qwest Communications International Inc.’s application to offer long-distance services in Arizona, proving its local networks were sufficiently open to competition.
Qwest was the last Bell to win such approval for the final state in its home turf, which stretches from Minnesota to Washington.
“The barrier between local and long distance service has finally been removed,” said FCC Chairman Michael Powell. ”Consumers throughout the country will continue to enjoy innovative new choices that make the concept of separate local and long distance markets a thing of the past.”
BellSouth Corp. finished almost a year ago, while Verizon Communications completed the process in March and SBC Communications Inc. in October.
Since 1999, when the Verizon won the first approval to enter the long-distance market, in New York, the carriers have been battling to offer an all-in-one package of services that would lure customers who want a cheap rate and only one bill.
The top long-distance carriers, AT&T Corp. and MCI , tried to slow the advance of the Bells into their markets, but Verizon has made huge inroads in the long-distance market, leapfrogging Sprint Corp. to become the No. 3 provider.
The FCC said the number of long-distance carriers ballooned to 1,090 in 2002 from 569 in 1997 when the Bells first started applying to the FCC for approval. The number of local telephone companies rose to 2,037 from 1,666 over the same period.
The agency also said that long-distance rates dropped from 11 cents a minute to 7 cents between 1997 and 2002.
AT&T and MCI urged the FCC to keep the Bells’ feet to the fire to keep their markets open to competition. Their main complaint has been that the Bells control the lines into most American households, making it hard to compete.
“Only by ensuring fair access to the monopoly-controlled ’last mile’ to the customer can the promise of the Telecom Act be fully realized,” said Wayne Huyard, president of MCI Mass Markets.
And those long-distance companies have made some progress in capturing local telephone customers, with MCI gaining some 3 million subscribers who have the company’s “Neighborhood” program that offers them unlimited, any-distance calls for $49.95 on average.
To stem some of those losses as well as cut costs, carriers like Qwest are planning to launch residential telephone service over high-speed Internet lines, first in Minnesota and then eventually other parts of its local calling area.
Verizon and SBC also have similar plans to launch Internet-based telephone residential service.
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