<A> (hope SI server problems get fixed) Lot's of news from Friday - for the collective record:
#1
Suddenly, Baby Bells Are Getting Antsy, Aggressive
By Brian Steinberg
NEW YORK (Dow Jones)--The Baby Bells are ringing mad.
Beset on all sides by competitors large and small muscling in on their home territories - and gaining access to frontiers they themselves have been denied - the nation's large and very profitable regional phone giants are making their collective presence felt on the legal and regulatory fronts.
"This is Tattle-Telling and Finger-Pointing Central," said Scott Cleland, who follows Washington telecom policy for Legg Mason Precursor Group. "Everybody's complaining about everybody else. The sector is like an unruly day care center."
To be certain, the nation's phone companies often display their aggressive streaks, whether they be long-distance giant, Baby Bell, or up-and-coming alternative provider. But the Bells in recent days have shown increasing signs that they are tired of the treatment they've been receiving.
"I think we're frustrated and, frankly, angry at how slow the regulatory authorities in both the states and the feds have been to recognize that the marketplace is way ahead of them," said Ivan G. Seidenberg, Bell Atlantic Corp.'s (BEL) vice chairman and president.
The most obvious of the Bells' efforts centers on a Texas court case that ruled the companies were unfairly hampered by the federal government from entering the nation's $80 billion long-distance market. Federal regulators and long-distance companies have asked for a delay of the ruling until an appeal can be heard. Originally filed by SBC Communications Inc. (SBC) with U S West Communications Group (USW), the suit has since been joined by Bell Atlantic.
In order to gain long-distance entry, the Bells have been asked to prove that their local markets are open to competition. So far, attempts by Ameritech Corp. (AIT), SBC and BellSouth Corp. (BLS) have all been refuted by the Federal Communications Commission. BellSouth has another filing in Louisiana to be considered, while Bell Atlantic has been gearing up for an effort in New York state.
But the companies are also asserting themselves on other fronts.
When AT&T Corp. (T) and Teleport Communications Group Inc. (TCGI) announced a proposed $11.3 billion merger Thursday, both Bell Atlantic and BellSouth Corp. (BLS) slammed the deal,
In a statement, Bell Atlantic said the deal "puts the lie" to the myth that local markets are not competitive.
"The long-distance companies continue running to the referees, saying these guys are moving too fast,' said Seidenberg. "AT&T could have bought Teleport a year ago, but they didn't, In the interim, they want us to slow down."
BellSouth, meanwhile, will file a protest against the deal with the FCC, said Sid Boren, the company's executive vice president of planning and corporate development. BellSouth has already filed a protest against an upcoming merger between WorldCom Inc. (WCOM) and MCI Communications Corp. (MCIC).
The competitive market "is a condition in the long-distance industry," said Boren, "and should not be permitted unitl permission is granted" for the Bells to enter long distance.
Of course, in the contentious world of telecommunications, the Baby Bells have their critics.
Long-distance players like MCI and smaller, alternative phone-service providers have routinely accused the Bells of dragging their corporate feet when it comes to opening their home markets to competition. The Bell companies are routinely said to delay the process of opening their networks to local resellers, as well as setting rates too high, so that rivals cannot enter the fray.
And at least one analyst suggested the Bells have little to fear from the proposed AT&T-Teleport pact.
"Competition is inevitable and will come over the next few years, but AT&T-Teleport is not an immediate disaster for the Bells," said Sanford C. Bernstein & Co. analyst Tod Jacobs.
Still, Bell Atlantic's Seidenberg and BellSouth's Boren both said deals such as AT&T-Teleport, WorldCom-MCI, and even SBC's recent maneuver to purchase Southern New England Telecommunications for $4.4 billion show quite clearly that competition exists.
"Bell Atlantic takes no umbrage with people working the market," Seidenberg said. "These transactions, among others, prove the market is working just fine." He added, "The thing that's irritating to us is you have all these moves going on and these companies are still seeking the government to stand behind them, like they need a big partner."
With all the sector activity, Boren said, "we're seeing a rationale being established that it's past time that the Bells be allowed into long distance, and you're going to hopefully see that on every front."
But others suggest the Bells' theories have a few holes. "Mergers don't show competition. Competition shows competition," said Goldman Sachs & Co. analyst Richard G. Klugman. "Mergers show perceived opportunity, but not actual competition."
Still, the Bells will surely push forward. Regulators, said Seidenberg, "are so bogged down in technical rules and footnotes and regulations that the market is speeding past all the things they are trying to do."
The Bells, noted Klugman "have used every opportunity to state their case that the world of telecom has changed so dramatically that the old restrictions keeping them out of long-distance are rendered obsolete."
The companies' response to the proposed AT&T-Teleport merger, he said, offers a typical example. "They never fail to find a development, an opportunity, and this is no exception."
The Bells "are using this momentum" resulting from the Texas court ruling, said Amanda McCarthy of the Yankee Group, a Boston telecommunications consultancy.
"But more than momentum, I think there is a lot of activity right now (in the sector)" she said. "and there's a qualitative difference. One is going forward, one is swirling in the wind, and no one knows what's going to happen right now." |
