SBC Withdrawal A Minor LD Delay

April 18, 2003
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SBC Communications Inc. plans to quickly launch another attempt to secure federal approval to enter the long-distance telephone market in Michigan.

Terming its withdrawal last week of a hotly contested application as a “minor delay” rather than a setback, SBC plans to file a new long-distance request within 30 days to the Federal Communications Commission. The San Antonio, Texas-based telecommunications giant said it needed “a little more time” to address lingering questions by federal regulators about billing problems involving competing providers of local telephone services that lease space on SBC’s network.

“We’re right back at it,” said Gail Torreano, SBC’s president in Michigan. “We’re going to provide the additional information and go ahead. This is a delay, but a minor delay.”

Under terms of the federal Telecommunications Act of 1996, SBC and other so-called Baby Bells may seek to provide long-distance telephone service once they can demonstrate that competition exists for local phone service in their previously exclusive service territories.

SBC’s long-distance bid in Michigan apparently fell victim to problems it had in billing competing local exchange carriers that lease space on SBC’s telecommunications network to offer consumers an alternative local telephone service.

The application had the support of state regulators in Michigan but failed to win the backing of the U.S. Department of Justice, which earlier said it had “serious questions” about SBC’s process of informing local phone service competitors about changes to its operations support system, notification procedures informing competing carriers when a customer selects a new phone company, billing errors, and the reliability of its reported performance data.

Despite an extensive examination, questions remained on “whether SBC is currently providing wholesale billing functions” for local competitors in a manner that meets federal requirements, Federal Communications Commission Chairman Michael Powell said.

Although SBC “generally met” federal requirements to enter Michigan’s long-distance market, the FCC wants the company to demonstrate that billing problems have been reconciled, Powell said.

“Ultimately, the outstanding issues that prevented approval were very narrow, but nonetheless important. Perhaps the most troubling of these issues relates to billing,” Powell said.

Competing local exchange carriers seized on the withdrawal to hammer home their contention that SBC’s wholesale billing problems were the result of attempts to block competition.

“The fact that competitors have achieved some success in local markets in Michigan does not justify granting SBC unfettered access to the long distance market,” said Mike Pruyn, a spokesman for AT&T Corp., which entered the local telephone market in Michigan last year.

“SBC has not fully opened its local markets to competition in Michigan, and its conduct continues to constrain the ability of other carriers to compete,” he said.

Pruyn concedes that SBC ultimately will get federal approval to offer long distance. The question is the terms under which it will occur, he said.

AT&T believes federal regulators must force SBC to fix wholesale billing problems first.

“If they don’t fix it before they get approval, they’ll never fix it. They’ll have no incentive,” he said.

Dave Waymire, a spokesman for the Michigan Alliance for Competitive Telecommunications, a coalition of local phone service providers, says the application’s withdrawal will force SBC to address wholesale billing and other problems.

Problems with SBC’s wholesale billing system have in turn caused problems for competing local exchange carriers when they bill their customers, Waymire said.

“Billing is a huge issue,” he said.

SBC’s Torreano contends that the wholesale billing problems that stalled the long-distance bid were the result of a billing system installed at the request of local exchange carriers. Glitches in the new system have since been fixed, she said.

“There were some issues we ended up having to reconcile,” Torreano said. “They have been corrected.”

Local competitors claim otherwise, saying wholesale billing errors persist monthly.

“We think they’ve definitely still got some problems that need addressing. Hopefully they’ll finally do it now that the FCC is going to hold their feet to the fire,” Pruyn said,

SBC now offers long distance in 13 states — the most recent approval came April 14 for Nevada — and wants to bundle together local and long-distance telephone services in a single package for customers, bringing the “full benefits” of telecommunications competition to Michigan. Torreano claims that local exchange competitors — including telecom giants AT&T, WorldCom and MCI — are themselves blocking competition by fighting SBC’s bid.

“They are doing whatever they can to delay, delay and delay,” Torreano said.               

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