ADVANTAGE OF LOCAL PHONE PROVIDERS NEEDS TO END : LOCAL VIEW.

Byline: Robert Sexton 

THERE is one word that explains why today's long-distance telephone customers enjoy lower prices, greater choices and better service - competition.

With more than 700 long-distance providers aggressively competing for each customer, the price on the long-distance calls has fallen dramatically.

The Federal Communications Commission (FCC) reported that long-distance prices fell nearly 19 percent from 1992 to 1995. And last year, prices fell an additional 4 percent, according to Stanford economist Robert Hall. Unfortunately, this same price decline has not occurred in the protected regional local telephone monopolies.

Long-distance customers have been exercising their freedom of choice for years - residential customers changed their long-distance companies 50 million times in 1992. So why can't we choose an alternative local phone company?

There is one important reason why local regional monopolies have not opened up - ``network access charges.''

Because of these charges local telephone companies are gouging American consumers out of $14 billion a year. That is roughly $110 for the average long-distance customer.

Did you know that 40 cents of every dollar that consumers spend on long distance goes into the pockets of local telephone monopolies for beginning and ending long-distance calls? The real cost of providing this ``network access'' service is estimated to be less than a nickel.

Local monopolies collect $22 billion in access charges and at least $14 billion of that is unnecessary and should not be collected. If this hidden tax is not abolished before local monopolies are allowed to offer in-region long distance, they will be able to use this money to compete unfairly in long distance while solidifying their stronghold over local customers.

In 1996, when the amount of the access charges that long-distance companies must pay to local telephone monopolies remained essentially flat, long-distance revenues per minute declined 6.2 percent from 1995.

According to FCC statistics, long-distance rates fell twice as much as local companies reduced access charges from 1992-95. Over the past decade, in real terms, long-distance rates have plummeted 72 percent while local phone bills have declined a mere 5 percent.

As part of its responsibility under the telecommunications Act of 1996, the Federal Communications Commission is in the process of reviewing interstate access charges; and a decision is expected in the next several weeks. It is imperative that reform of the inflated access charge system take place, otherwise competition in local markets will never come to fruition.

Two important consumer groups - The Consumer Federation of America and the Consumers' Union - have released a study that calls for the FCC to lower consumers' bills by ordering significant reduction in access charges.

If the FCC reduces access charges to their actual costs, American consumers and business people will save billions of dollars.

While the Telecommunications Act was a victory for American consumers, it is only a start.

One year after the Telecommunications Act was passed, competition remains fierce and vibrant in long distance but virtually nonexistent in local markets.

Customers will not realize the Act's full promise of lower prices, greater choices and better services until federal and state regulators complete the job of opening local telephone markets to real competition.