SAN FRANCISCO (AP) _ Pacific Bell should not be allowed to sell long distance service in California until it sorts through a tangle of service issues, a report to the state's Public Utilities Commission concludes.

Pacific Bell wants a piece of California's $14 billion long-distance market. But first the company must pass muster with the PUC, which must determine how fairly Pacific Bell is treating other local service phone companies.

That process is expected to last well into next year.

Federal law requires Pacific Bell cannot provide long distance until it opens its monopoly on local service to smaller competitors.

Those competitors use Pacific Bell's hardware to carry calls because they do not have the capital to build duplicate networks from scratch. Pacific Bell, in turn, is not supposed to discriminate against piggybacking carriers when it comes to service. Indeed, that's a requirement before regulators will let Pacific Bell sell long-distance service.

A report for the PUC released Friday said Pacific Bell must improve in at least 10 service areas. Among those, the company must prove that it is able to handle large volumes of orders from competitors that use Pacific Bell lines.

The report was written for the PUC by consultants at Cap Gemini, Ernst & Young and GE Global eXchange Services. It examined what happens when Pacific Bell's customers opt for an alternate carrier or when the carriers request access to Pacific Bell's network equipment to provide service.

``These are things that we can move forward with and continually address,'' Pacific Bell spokesman Bill Mashek said.

Mashek said Pacific Bell now processes 81,000 orders from competitors each month, nearly all for businesses wanting to switch local phone companies. That shows Pacific Bell's systems are ``capable of handling a large volume. These results show that we provide efficient, excellent service to our wholesale customers.''

Only two states have seen regional local phone companies win the right to sell long-distance service: Verizon Communications in New York, and Southwestern Bell in Texas.