How The Bells Stole America's Digital Future

The Impact of the Bells' Entry In To Long Distance Markets

In order to promote competition and bring consumers a wide array of new information and communications services, the Telecommunications Act of 1996 requires that local phone markets be open to competitors before the Bells are allowed to sell long distance service within their own markets. But the standards that federal regulators are using to determine if there is sufficient competition are minimal.

Bell Atlantic is to date the only RBOC selling long distance service in its market. The FCC approved Bell Atlantic's entry into the New York long distance market in December 1999, despite the Justice Department's finding that 30-40% of all order confirmations to competitors were inaccurate and over 80% of all orders required some form of manual processing. Within weeks, competitors were complaining about Bell Atlantic's failure to process large numbers of orders for unbundled network elements, and the FCC launched an investigation. On March 9, the FCC entered into a Consent Decree under which Bell Atlantic agreed to make a $3 million payment to the U.S. Treasury and to file regular performance reports.

The FCC is now considering SBC's application to sell long distance service in Texas. After twice recommending that the FCC reject SBC's application, the Justice Department recently recommended that the FCC approve SBC's application.[53] But in its June 13, 2000 letter to the FCC the Justice Department noted that it still had concerns about SBC's willingness to provide competitors with access to critical information and databases, and acknowledged that SBC had not adequately addressed future competitive issues:

"We emphasize that additional performance measures and ongoing refinement of performance measurement processes are likely to be needed as new services and technologies are implemented. The Texas PUC is already considering these issues, and SBC has committed in this application to promptly institute performance measures regarding the provisioning of line sharing."[54]

Given the Bells' long history of broken promises, regulators should not be relying on SBC's commitment. If the Bells are permitted to sell long distance service before local markets are sufficiently competitive, America's digital future could again be put at risk.

Next: Part II: Bell Company Profits Are Outrageous | Table of Contents