Customers want and deserve choice in local phone service AT&T Chairman tells Cleveland business leaders.

CLEVELAND--(BUSINESS WIRE)--May 22, 1996--Customers want and deserve choice in local phone service as they have in long distance service, AT&T Chairman Robert E. Allen told members of the Cleveland Committee on Foreign Relations today.

"The global telecommunications industry is going through fundamental and exciting changes," Allen said. "And those changes are driven by two powerful forces: competition and technology. The two forces aren't being applied uniformly around the world. But in virtually every country, they do hold out a common promise of more customer choice."

Allen noted that customer choice is a relatively new concept for the global telecommunications industry. Telecommunications technology is the enabler of free enterprise, he said, yet it is the product of an industry shaped by over a century of monopoly, regulation and subsidies.

Around the world, he said, telecommunications monopolies are moving towards competition and customer choice -- only grudgingly, because it's the nature of a monopoly to try to perpetuate itself.

"Make no mistake about it," Allen said. "Global telecommunications today is still a sea of monopoly sprinkled with islands of competition. And the biggest monopoly of all is right here in the United States."

In the long distance market, Allen noted, there is fierce competition among more than 500 companies, large and small, with customers switching long distance carriers at the rate of one per second.

"The American long distance market is one of those islands of competition, by far the biggest island," he said. "You might think of it as Australia. The other islands are more the size of Maui, in terms of the actual competition they have right now.

"But the American market for local telephone service is a monopoly just as airtight as any state controlled telephone monopoly in Europe. This monopoly is controlled by the regional Bell companies, like our friends at Ameritech.

"The local phone companies' monopoly has to be opened up to competitors," Allen said. "The new telecommunications law clearly says that real competition must develop in the local market before the local monopolist can be allowed to enter the long distance market.

"And because of the nature of telecommunications, new competition can't develop in the local markets without the cooperation of the current monopolists. By virtue of their monopoly control of the local network, the local companies control access to the long distance companies' customers."

So the local monopolies such as Ameritech, Allen said, are required to sell capacity on their local networks to competitors at wholesale, cost-based prices, just as AT&T was required to sell capacity on its long distance network to competitors when the long distance market opened to competition more than 10 years ago.

"The whole world watched as the U.S. long distance market accommodated real competition, with long distance prices reduced 66 percent in the 10 years following 1984," Allen said. "The U.S. long distance experience was to global telecommunications what the American Revolution was to world politics, a graphic demonstration of what was possible, if unprecedented.

"So you can be sure the world will be watching as America launches a second revolution in customer choice," he said. "If we zealously protect the intent of the new law as we implement the details, I think we can offer the world something to admire."

CONTACT: AT&T

Mike Pruyn

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John Heath 

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