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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era

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To: porcupine --''''> who wrote (306)	5/11/1998 10:10:00 PM
From: porcupine --''''>	Read Replies (1) of 1722

AT&T wants Baby Bells to separate call completion and local marketing. AT&T Corp Chairman C. Michael Armstrong on Tuesday joined other long distance carriers in calling for a restructuring of the 'Baby Bell' companies' local networks, and a cut in fees they pay to local phone companies. AT&T wants the Baby Bells separated into wholesale businesses that complete calls for other carriers, and into retail businesses that sell services to end users. AT&T's proposal follows similar plans outlined by other long distance companies including LCI International Inc and MCI Communications Corp . Under the 1996 Telecommunications Act, the Baby Bells must open their local telephone market to competition before entering the long distance market. The Federal Communications Commission has rejected all four Baby Bell long distance applications saying the companies had not yet done enough to open local markets. The call by AT&T and its long distance counterparts to split the Baby Bells' wholesale and retail businesses are beyond the measures outlined by the Telecom Act. But AT&T, MCI and LCI said the extra steps may be needed to ensure fairness as Baby Bells try to enter the long distance market. AT&T also said the fees long distance companies pay the local phone companies to complete long distance calls are at least eight to 10 times more than their actual costs. The long distance companies pay a fee to the Baby Bells in order to have a long distance calls transmitted over a local telephone network into a customer's home. AT&T contends these fees are too high and serve as a subsidy for the Baby Bells. "Separating the Bell companies' local networks from their other operations will ensure that the Bell companies can't subsidize their competitive activities from the inflated fees they charge long distance companies to have calls completed," Armstrong said. Splitting the Baby Bells would further fragment the companies created by the break-up of Ma Bell in 1984, when AT&T was split from the regional Bells. ((NEW YORK, May 5 (Reuters) - Jessica Hall, New York newsroom 212-859-1729))

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