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Justice Nixes BellSouth Expansion

November 4, 1997

WASHINGTON (AP) _ The Justice Department for the third time urged federal regulators Tuesday to reject a Bell telephone company request to provide long-distance service to local customers.

The department’s antitrust division said BellSouth Corp. should not be allowed to provide long-distance service to its customers in South Carolina because the company has not sufficiently opened its local phone market to competition.

The Federal Communications Commission ultimately will decide BellSouth’s request, but the law requires the commission to give the Justice Department’s opinion substantial weight. The FCC must act by Dec. 29.

BellSouth had no immediate comment.

Though BellSouth and other Baby Bells are free to provide long-distance service to states outside their local phone regions, no Baby Bell has been cleared by the FCC to provide long-distance service to states in its local territory.

A 1996 law deregulating the telecommunications industry allowed the Baby Bells to seek permission to provide long-distance service in local phone regions. The law frees local and long-distance companies to enter each other’s businesses, subject to regulatory approval.

The Justice Department had urged the FCC to reject requests by SBC Communications Inc. and Ameritech Corp. for authority to provide long-distance service in their local phone markets of Oklahoma and Michigan, respectively. The FCC denied both requests earlier this year.

AT&T and MCI oppose BellSouth’s request, saying the company doesn’t meet the basic requirements for opening the local telephone market to competition _ a prerequisite for being admitted into the long-distance market.

The Bells see their local markets as their opportunity to offer one-stop communications most cheaply and efficiently. But these markets also are where the entry requirements are toughest and the potential greatest for local phone companies to have local customers subsidize the companies’ investment in long distance, which is not allowed.

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