PHONE WARS CONSUMERS NOW ARE LEARNING THEY HAVE A CHOICE WHEN IT COMES TO LOCAL SERVICE, TOO.

Byline: Barbara Correa Staff Writer

Richie Baliotti, a 30-something actor in Burbank, makes a lot of calls to New York and keeps meticulous track of the best deals available for both long-distance and cellular phone service. But when it comes to his local phone bill, Baliotti's smart shopper instinct fades. ``I have PacBell,'' said Baliotti. ``I think it's the cheapest. I don't give it a whole lot of thought.''

It's probably time to start.

A landmark ruling last summer that pried open California's local phone service market to long-distance competitors like MCI and AT&T has set off a vigorous loyalty war for callers in California, the nation's largest market.

When the dust settles, phone customers across Southern California should see lower prices and more options.

On one side of the battle are WorldCom's MCI and AT&T, which serve nearly 70 percent of the long-distance market. The two telecom companies are finally getting their chance after salivating over the 25 million-line local market for years.

On the other side is SBC Pacific Bell, which, together with Verizon, provides over 90 percent of Southern California's local phone service. Verizon will likely be dragged into the phone wars early in 2003, when the California Public Utilities Commission is expected to decide whether it will have to lower its fees to competitors, paving the way for more competition. To date, only SBC has lowered its rates, as part of a trade-off with regulators to get clearance to enter the long-distance market.

So far, local phone service wannabes are pulling out all the stops.

``Subscribers to unlimited local calling can accrue miles on American, Delta and Continental (airlines),'' said Gordon Diamond, West Coast spokesman for AT&T, which started offering local service with unlimited long-distance calling last summer for $19.95 a month. ``Finally the walls are starting to come down and consumers are starting to say, hey, I have a choice now. They're anxious to try something else.''

MCI's Neighborhood plan, which bundles unlimited long distance, local toll calls and local calls for $49.99 a month, came out last spring, and claims to have signed up 1 million subscribers since then.

But regardless of what deals they offer, AT&T and MCI face a formidable challenge in trying to woo customers away from PacBell, which has two huge advantages: It is embedded in the public consciousness as the default phone company, and most people aren't even aware yet that they have any options. Secondly, PacBell is starting out with almost 100 percent of the customer base.

It has already shown that it won't give up a single one of those customers without a fierce fight.

Phone wars

Right after MCI came out with Neighborhood, PacBell vowed to introduce its own bundled plan to compete. The result was SBC Total Connections, a plan launched in November that provides Internet service, wireless - through the company's Cingular unit - long-distance and local service starting at $85 a month.

SBC got the green light last month from regulators to provide Californians with long-distance service.

In a move to distance itself from consumers' negative associations with the Pacific Bell name, the company said last month it has dropped Pacific Bell and will move forward in the new competitive environment as SBC.

Consumer advocates say it's too soon to tell whether SBC customers will start jumping to the competition. But judging by the sparring so far, the consumer isn't yet in the winner's circle.

``It seems like AT&T and MCI are going after the high-value customer who tends to spend more,'' said Lee Biddle, telecommunications attorney at Utility Consumers' Action Network, a consumer group with 40,000 members in Southern California. ``MCI is pushing the $50-a-month plan. That's good for high-volume users or people who want extra services like voice mail and caller ID. But if you're going for no-frills phone service, PacBell is still the one. You're not any better off than you were six months ago.''

In an analysis of local phone service providers, UCAN rated SBC fair, but cautioned consumers to watch bills closely ``for products and services you didn't order,'' a practice called cramming (as in cramming the bill with add-on charges consumers may not notice). Biddle adds that it gets cramming complaints about all the phone companies, not just SBC.

AT&T and MCI both got a ``needs improvement'' grade in the study for being overpriced, with MCI singled out for ``forcing you to buy overpriced long distance.'' The group gave the best rating to Cox Cable, which offers phone service in parts of Orange and Santa Barbara counties.

Indeed, for thrifty consumers who don't mind doing a little research, local cable operators offer a great alternative for phone service, said Natalie Billingsley, program and projects manager for the Office of Ratepayer Advocates at the state PUC.

Crossed wires

One problem with locating local service, however, is that each municipality makes its own separate franchise agreements with cable providers, whose products vary. So someone in Pasadena may be able to get local phone service through a cable company, while a resident of Long Beach or Covina is out of luck in getting the same service.

Adding even more complications, phone and telephone companies are authorized to operate in the state, but they pick and choose the specific areas. That's why AT&T Broadband, for example, is available in parts of the San Fernando Valley, but not in Hollywood.

``People are confused,'' said Margaret Schoener, a telecommunications analyst for technology consulting firm Gartner. ``A lot of people still think their local provider is AT&T.''

The bundling of services into one simple telecom plan is a natural development in an industry that has to market fairly technical products to every consumer with a phone line or signal.

With the new competition, the trend of telecom companies consolidating their services will grow. ``This whole idea of bundling is what's attractive to the customer. It's trying to get at a simple model,'' said Schoener, who also expects more customized plans designed for cost-conscious users concerned about being sold something they don't need. ``It's the concept of roll your own,'' she said.

Until such customized plans become part of the public lexicon, some phone users have devised their own simplifying solutions.

Allen Perada of Los Angeles uses his Verizon cellular phone for almost all his calls. ``I have PacBell service, but I never use it,'' he says. ``It's the number I give people I don't want calling me.''

CAPTION(S):

drawing, box, chart

Drawing:

(color) no caption (Man, phone)

Warren Huskey/Staff Artist

Box:

THE RIGHT NUMBER

Chart:

LOCAL SERVICE RATES

SOURCES: Utility Consumers' Action Network; Federal Communication Commission

Staff Graphic