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Legislators seek action on local-service deregulation

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by Paul Flemming

SBJ Staff

Third verse, same as the first, with perhaps a coda.

President Bill Clinton in February 1996 signed into law the Telecommunications Act Congress had sent him. In 1999, with plenty of regulatory, legislative and judicial wrangling since its passage, telecommunications executives say this may be the year that the federal act's intentions are fulfilled.

"Politically, there's a shift occurring," said Paul Lane, general counsel for Southwestern Bell Telephone in Missouri. He said legislators involved in producing the law aimed to deregulate local telephone service and allow regional Bell operating systems to enter the long-distance market, among many other regulatory changes want to see action now that it's entering its fourth year.

Among those legislators was Dennis Hastert, the Illinois Republican representative recently elected speaker of the house.

"The speaker was a part of the process" that got the Telecommunications Act passed," said Amy White, a spokeswoman for Southwestern Bell. "His knowledge is a benefit."

Not that the legislation has resulted in no changes. There are competitive local telephone service providers in Missouri and Springfield. Mergers, both national and local, have continued to consolidate the telecommunications and broadcast industries. And more of the same is likely in 1999.

In 1998, Iowa-based McLeod USA purchased two Springfield companies: Bi-Rite Directories and Dial US. As the company has elsewhere, company officials said plans are to pursue a strategy of increased name identification through its telephone directory publishing and push further into the competitive local telephone market.

Business accounts will continue to be the focus of those selling both resold Southwestern Bell services and facilities-based service, a strategy pursued by Dial US and continued under McLeod ownership.

"The preference so far has been in the business market," Lane said, noting that the majority of about 44,000 lines in Missouri provided by competitors are for businesses.

"There will continue to be more competition in the business side of the house," said Priscilla Hill-Ardoin, president of Southwestern Bell in Missouri.

Missouri's Public Service Commission has approved more than 40 companies' interconnection agreements with Southwestern Bell. About 17 of those are actively competing in Missouri, three in Springfield.

Much of the action is likely to revolve around decisions related to Southwestern Bell, including whether regulators will allow the incumbent local-service provider to enter long distance and if its merger with Ameritech is approved.

The Public Service Commission has scheduled hearings and conferences to consider Southwestern Bell's entry into the long-distance market. As planned, the state commission will, at the end of April, make its recommendation to the Federal Communications Commission. The FCC then has 120 days to make the final decision regarding Southwestern Bell's request.

Other companies, consumer groups and Missouri's Office of Public Counsel have opposed elements of Southwestern Bell's application.

"It is obvious that Southwestern Bell has greatly exaggerated its claim that competition on the local level exists in Missouri," said Diane Miller, a spokesman for Show Me Competition. The group is a coalition of competing telephone companies.

"The possibility of entry into long-distance markets is the only incentive they have to end their monopoly control of local markets," she added.

Also opposed by its competitors is Southwestern Bell's parent company's proposed merger with Ameritech, another regional Bell operating system, which operates primarily in Illinois, Michigan and Ohio. SBC Communications Inc. offered $61.4 billion for Ameritech Corp.

"All Southwestern Bell will be working to complete the Ameritech merger," Hill-Ardoin said. "When the Ameritech merger is approved, you will see SBC launch its national/local strategy."

The Ameritech proposal comes after SBC in 1997 finalized its merger with Pacific Telesis, another former Bell operating system on the West Coast.

Federal regulators must approve the Ameritech deal. Martha Hogerty, Missouri's Public Counsel, sought to have Missouri regulators rule on the deal. When the Public Service Commission said it had no jurisdiction, Hogerty and others in the state took their opposition to the federal level.

Southwestern Bell officials expect approval of the merger and, in addition to the broader geographic reach of the company, said the deal will foster another Southwestern Bell strategy in 1999.

"For business there will be a strong focus on providing data services," Hill-Ardoin said.

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