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Published: Thursday, 3/4/2004

Higher Ohio phone costs possible

BY MARY-BETH McLAUGHLIN
BLADE BUSINESS WRITER

Ohioans could be hit with higher prices and less competition in local telephone service because of an appeals court decision this week and a proposed rate increase before state regulators today.

Rules had required regional phone companies to lease their networks to rivals at reasonable rates, and the Federal Communications Commission had delegated to the states the power to set these rules.

In some cases, such as in Ohio, regulators forced the state's major local-phone provider, SBC Communications, to lease its lines at relatively low rates.

But a three-judge panel of the U.S. Court of Appeals for the District of Columbia threw out the FCC rules Tuesday.

That could open the door to higher lease charges, which either could boost bills to customers using a competitor to the traditional local phone carrier or could drive away rivals who no longer think they can provide competitive service.

Nationally, about 19 million households and small businesses get local phone service from a company other than the four Baby Bells, such as SBC.

"They are all in jeopardy as a result of this ruling," said Mike Pruyn, a spokesman for AT&T Corp., which provides local-phone service to more than 4 million customers in 40 states. "This will drive competition out of local phone markets."

Separately, the Public Utilities Commission of Ohio will be asked today to consider SBC's request to double its wholesale line access charge to competitors, to $28 a line.

The company first sought the increase nearly two years ago.

"We are opposed to the doubling of the wholesale rate and are in the state Supreme Court to prevent them from going forward with that increase," said Eric Stephens, the deputy Ohio Consumers' Counsel.

A PUCO spokesman said the agency does not comment on requests until a decision has been made.

In a letter yesterday to AT&T and MCI, SBC said it was willing to negotiate with its rivals "commercially reasonable pricing" for its lines nationwide.

The appeals court decision was seen as a clear cut victory for Baby Bell phone companies.

Besides SBC, they are Verizon Communications Inc., BellSouth Communications Inc., and Qwest Communications International Inc.

The decision was a defeat for long-distance companies such as AT&T and MCI, which have been gaining market share by offering low rates.

"This is a terrible decision," said William Schuck, executive director of Competition Ohio.

The organization is a nonprofit group made up of 1,300 individuals, businesses, and organizations that support a competitive telecommunications industry.

Baby Bell competitors talked of appealing the court decision.

Anticipating that, the appeals court issued a 60-day stay to its order, a period in which AT&T will be evaluating whether it can afford to stay in certain markets, Mr. Pruyn said.



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