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California Regulators Approve Local Phone Competition

July 24, 1995

SAN FRANCISCO (AP) _ State regulators voted Monday to abolish local telephone monopolies in California under rules that would allow competition to start next year, a timetable expected to be delayed.

With many issues of pricing and service still unresolved, the Public Utilities Commission voted 4-0 to let companies with their own lines and switches enter the local market in January. Others, including long-distance companies such as AT&T and MCI, will be allowed to buy access to Pacific Bell and GTE service and start reselling it under their own names in March 1996.

``This is a significant step towards achieving the goal of opening all telecommunications markets in California to competition,″ said PUC member P. Gregory Conlon, chief author of the proposal.

The commission opened local toll call service to competition at the start of this year. Pacific Bell, a unit of Pacific Telesis Group, and GTE-California, a unit of GTE Corp., are the dominant local carriers. They hope to enter the long-distance market by 1997 but need federal as well as state approval.

After Monday’s vote, Pacific Bell vice president John Gueldner said the company expects competition ``in a big way ... with our biggest customers″ on Jan. 1.

He said Pacific Bell, which has about 10 million customers, would seek compensation from other companies for loss of market share and profits. Regulators have said they will hold hearings on the issue.

But Conlon said he did not expect substantial competition by June 1996, when the commission plans to pass rules that would require competing local companies to help pay for maintenance of service in high-cost areas. Others predicted a longer wait for meaningful competition.

Alan J. Gardner of the California Cable Television Association said the industry planned to invest $8 billion in the next two to three years to expand telephone networks in California. He said there is a potential for providing 70 percent of Californians with competitive local service sometime in 1997.

Gardner said Pacific Bell and GTE ``hold the keys to the castle″ because linkage with their networks is essential before cable companies can offer phone service. The PUC must set rules for prices and other details of the linkups, and for the prices the current monopolies can charge for resale of their services.

Also to be determined is the price monopolies can charge competitors for allowing customers to keep their present phone numbers when switching companies. Under Monday’s decision, those customers would have to forego data transmission and some other high-tech services, at least temporarily, in order to keep their numbers.

``This is a good start, but there will be no real competition for a couple of years,″ said Regina Costa, telecommunications analyst for the consumer group Toward Utility Rate Normalization.

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