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MCI's CEO CALLS FOR COMPETITION IN THE LOCAL EXCHANGE

 NEW YORK, Nov. 15 /PRNewswire/ --The Regional Bell Operating Companies (RBOCs) should not be allowed into the long distance business until there is "strong vibrant competition" in the local exchange areas, Bert Roberts Jr., the chairman and CEO of MCI, said today.
 Speaking before the National Association of Regulatory Utility Commissioners (NARUC) here, Roberts challenged the RBOCs' drive to lift the restrictions put on them by the federal court at the time of their divestiture from the Bell Systems in 1982.
 The restrictions prevent the local exchange companies from getting into the long distance business.
 Real competition in local telephone service would drive prices down and will stimulate development of new services, just as it has since competition came to the long distance industry, Roberts said, citing a 63 percent drop in long distance revenue per minute since 1985.
 "Competition also will be the catalyst for driving greater investment in the local exchange network," he said, pointing out that, despite an excessive rate of return, the Bells have invested insufficiently in local systems. He cited a recent study that shows that since 1984 the BOCs have invested more than $15 billion in businesses that have nothing to do with the local exchange -- for a net loss of a half a billion dollars.
 "They could afford those investments because of their excess rate of return," the MCI official charged. "Since 1984, the interest rate on 10-year Treasury notes has dropped nearly seven points, from 12.44 percent to 5.75 percent. And yet, while interest rates steadily declined, the Bells have been allowed a rate of return in excess of 12 percent."
 Roberts told the regulators' meeting that despite the claims of the RBOCs, the local telephone companies are a long way from having a sufficient degree of local competition today. One measurement, he said, is to look at where the money goes for access charges, the fees long distance companies pay to connect to their customers through the local firms.
 "MCI spends less than half a percent of our access costs with access providers who compete with the RBOCs. All of the rest goes to the local exchange carriers (LECs)," Roberts said, adding that those alternative providers have revenues of only $200 million a year, in contrast to $20 billion in access charges that go to the LECs.
 The MCI chairman said there is general agreement that real competition can develop in the local exchange but warned it will not happen until several problems are eliminated that impede local exchange competitors.
 "First, it's impossible to provide total coverage within a RBOC region without the proper interconnection to the local exchange," said Roberts. "Competitors do not have total interconnections, with multiple access points and fair rates."
 Roberts said policy-makers also need to eliminate franchise restrictions on entry to the local exchange market and controls over conduits and right of ways. He said the basic network functions of the local exchange should be unbundled to permit interconnection at any level a competitor chooses and added that number portability is imperative.
 "The RBOCs have a huge customer base that won't switch to an alternate dial tone provider if it means giving up there current phone numbers," he said. "In the future, when personal communications services (PCS) gives every individual a personal number for life, the ability to move your phone number to an alternative local exchange carrier may no longer be an issue. Until the day that technology supports this option, we must establish an independent database of local numbers that assure true local number portability."
 -0- 11/15/93
 /CONTACT: MCI Corporate News Bureau, 800-289-0073 or 202-887-3000/
 (MCIC)


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Publication:PR Newswire
Date:Nov 15, 1993
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