Printer Friendly

AT&T CHAIRMAN SAYS COMPETITION IN LOCAL PHONE SERVICE WOULD BENEFIT AMERICAN PUBLIC

 WASHINGTON, Sept. 8 /PRNewswire/ -- AT&T Board Chairman Robert E. Allen, testifying on legislation to update national communications policies, today told the Senate the time has come to see if the benefits of competition can be introduced in the local telephone business.
 Allen, appearing at a hearing of the Senate Commerce Subcommittee on Communications, endorsed a proposal (S. 1086) that he said would "provide the freedom and incentives" for new companies to enter the local telephone market.
 Competition in the long distance market has meant wider choices, more innovation, higher quality and lower prices for consumers, he said. But he added the local telephone market still lacks competition and choice.
 "Virtually every person in this country must answer `no' to the following questions," said Allen. "Do you have a choice of companies for local telephone service? Can you switch to another company to get better service or better prices?"
 He contrasted this with the long distance market, where 16 million consumers switched long distance carriers in 1992; where nine or more companies offer service in 45 states, 81 companies offer service in four states -- and customers in every state can choose among several companies.
 Allen corrected some misperceptions about cellular calling and the proposed merger of AT&T and McCaw Cellular Communications. He said 99 percent of all cellular calls go through the local telephone company facilities and only a tiny fraction -- mostly calls between cars within a cell -- avoid the bottleneck.
 "In short, without the telephone company," he said, "there's virtually no cellular service. So, people who claim that the AT&T/McCaw merger would cut out the phone companies don't know what they're talking about. It's not true today. And it won't be true for the foreseeable future."
 AT&T, he said, has no designs on getting back into the local telephone market. "But the local telephone companies want to get into long distance, even though they are still monopolies and control access to the customer.
 "When real competition breaks the (Bell company) bottleneck, concerns about monopoly abuse should end, and the (Bell companies) should be free to enter the long distance market," Allen said.
 The following is oral testimony of Allen before the Committee on Commerce, Science and Transportation, Subcommittee on Communications, before the U.S. Senate:
 First Mr. Chairman, I would like to commend you and Senator Danforth for introducing S. 1086. It recognizes:
 -- the importance of the telecommunications infrastructure to the nation;
 -- the importance of competition in enhancing the capabilities and value of that infrastructure;
 -- and, perhaps most significant, it provides a framework for testing competition in the one market in the telecommunications industry that has remained an entrenched monopoly -- the provision of local phone service.
 Although my filed testimony outlines some additions and suggested changes that we believe are important, I applaud the thrust of the bill and the lion's share of its provisions.
 When we contemplate the future of this important industry we envision Information Age products and services that could revolutionize the way we live -- dramatically changing the way we deliver education and health care, the way we run our businesses, the way we entertain ourselves.
 But we can't be star-struck by the galaxy of possibilities that technology promises: We have to deliver the full benefits of information technology to the nation. We have to deliver the vision of the Information Age.
 Turning this vision into reality means even more changes in the telecommunications industry.
 The experience of the last decade in the long distance business gives us an important guide for the future.
 Competition transformed the long distance business. While competitive policies had been smoldering for years, the break-up of the Bell System ignited the marketplace. When the Bell System's local monopoly was separated from long distance and manufacturing, competition really began to flourish.
 Since then, competition in the long distance business has created wider choices, more innovation, higher quality, lower prices.
 I don't think the American public would want to turn the clock back. The long distance communications superhighways are world class and getting better. The reason is competition.
 The time has come to see if we can get the same benefits by introducing competition in the local telephone business.
 There is no local phone competition now. Virtually every person in this country must answer no to the following questions: Do you have a choice of companies for local telephone service? Can you switch to another company to get better service or better prices?
 Compare that to long distance, where 16 million customers switched long distance companies in 1992; where nine or more companies offer service in 45 states, 81 companies offer service in four states -- and customers in every household in every state -- rural and urban -- can choose among several companies.
 Much is being written about what telephone companies, cable companies and others may be capable of doing and what they may be permitted to do. But no one should confuse what might be, what could be, with what is. What exists now is essentially what existed in 1984: local telephone company monopolies.
 Today there are too many barriers to entry in the local telephone market. And too many obstacles to testing whether real competition can develop. The FCC and a few states have removed some of these barriers. But it will take the kind of provisions contained in S. 1086 to provide the freedom and incentives for new carriers to try to make it in the local telephone market.
 This might be a good time to set the record straight on some misperceptions about cellular calls -- and the proposed AT&T/McCaw merger. I think this chart will make it clear. Ninety-nine percent of all cellular calls go through the local telephone company facilities. Only the tiniest fraction -- mostly calls between cars within a cell -- avoid the bottleneck. In short, without the telephone company, there's virtually no cellular service. So, people who claim that the AT&T/McCaw merger would cut out the phone companies don't know what they're talking about. It's not true today. And it won't be true for the foreseeable future.
 AT&T has no designs on getting back into the local telephone exchange business. But the local telephone companies want to get into long distance, even though they are still monopolies and control access to the customer. When real competition breaks the RBOCs bottleneck, concerns about monopoly abuse should end, and the RBOCs should be free to enter the long-distance market.
 Competition has made AT&T a better company. More efficient. More innovative. More responsive to customers. I dare say that competition would do the same for the local telephone companies. The companies would benefit. The public would benefit. The nation would benefit.
 The economic vitality of America will depend, in part, on the capabilities and efficiency of its communications and information infrastructure. We have learned that competition and monopoly don't mix. And we've learned that competition is the best safeguard of consumer interests, the best guarantor of innovation and value. The task ahead is to apply these lessons throughout the communications industry -- for the good of the industry and the good of the nation.
 And that's why -- subject to the important modifications described in my written testimony -- AT&T is prepared to support S. 1086.
 Thank you.
 -0- 9/8/93
 /CONTACT: Herb Linnen, 202-457-3933 or, home, 202-333-9162, or Jim McGann, 202-457-3942 or, home, 301-585-5519, both of AT&T/
 (T)


CO: AT&T ST: District of Columbia IN: TLS SU: LEG

IH-MH -- DC006 -- 9728 09/08/93 10:32 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Sep 8, 1993
Words:1257
Previous Article:BEST PRODUCTS FILES PLAN OF REORGANIZATION
Next Article:GELMAN SCIENCES REPORTS RECORD SALES AND EARNINGS FOR FISCAL YEAR ENDED JULY 31
Topics:

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters