Bell: Mergers Close, Texas Goes Long-Distance

FRAMINGHAM (07/05/2000) - The Fourth of July fireworks ushered in three key changes in the world of U.S. local exchange carriers.

Two changes over the holiday period involved mergers. Bell Atlantic Corp. and GTE Corp. closed their long-awaited deal and began doing business as Verizon.

Meanwhile, long-distance broadband upstart Qwest Communications International Inc. completed its acquisition of US West Inc.

The third change may have the most immediate impact for some users: SBC Communications Inc. won long-distance authority for Texas. That makes Texas the second state, after New York, where users can go to their Bell local carrier for both local and long-distance service.

But while that may help some users negotiate unified services and contracts, the two big mergers involve a reshuffling of assets that could make life more complex for other users. Qwest says it has spun off its long-distance voice and data services, plus Internet backbone operations, in the US West territory to emerging carrier Touch America. Meanwhile, Verizon has set a spinoff via an IPO of the former GTE's Internet unit Genuity.

Both of those divestitures were required by the U.S. Federal Communications Commission. The FCC prohibits regional Bell operating companies - or any company that merges with an RBOC - to carry long-distance traffic in the affected Bell territory until the FCC grants such authority state-by-state.

In effect, the two big mergers mean that GTE and Qwest are now considered RBOCs and must conform to long-distance restrictions for the regions of the Bell companies to which they are joined. The fact that Bell Atlantic won long-distance authority last December for New York - one of its 13 states - wasn't enough to keep Genuity in the fold for Verizon, the FCC ruled.

The FCC's approval of SBC's application for long-distance authority in Texas came after much debate over the degree to which SBC has opened up its local market. "This approval did not come easily," FCC Chairman William Kennard said in a statement. Kennard said he had challenged SBC to improve its methods of unbundling local loops and electronically linking to local competitors' ordering systems. He added that SBC had "responded in full" to these challenges.

AT&T said it wasn't so sure. "The FCC should have demanded more from SBC," AT&T said in a statement. "We raised a number of serious concerns that impair a new local carrier's ability to compete against SBC, and that remain unresolved."

AT&T said it was leaving open its options to decide "what further steps may be appropriate." Last December AT&T unsuccessfully sought a court stay against Bell Atlantic's New York long-distance approval.

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