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Published: Thursday, 5/2/2002

Results of Ameritech study prompt skepticism

BY JULIE M. McKINNON
BLADE BUSINESS WRITER

Northwest Ohio would add 5,200 jobs if regulators give SBC Ameritech permission to offer long-distance service, a study commissioned by the telephone company found.

But regulators say Ameritech first needs to open its territory to local phone-service competition, which it has not done. And at least one consumer group questions the validity of the figures in the Ameritech long-distance service study.

To offer long-distance service, Ameritech must be approved by the Public Utilities Commission of Ohio and Federal Communications Commission. State regulators are relying on word from KPMG Consulting of McLean, Va., which is examining how well Ameritech has done at permitting competition in the local-service areas. So far, KPMG has not said Ameritech is performing acceptably.

Ameritech, the primary local-phone service firm in the Toledo area, is pushing its study in stops throughout Ohio, including one tomorrow at the Toledo Club. Toledo's Regional Growth Partnership is co-hosting the session.

The study contends that allowing more long-distance competition would slash phone rates by 20 percent over two years and increase area companies' productivity by 2 percent, which in turn would result in those firms hiring more people and boosting the regional economy by $380 million. Further, it says, the expected rate cut would boost personal income in the area by $200 million.

Statewide, nearly 44,000 jobs would be added through 2006, including about 12,000 service, 10,000 retail, 5,900 construction, 4,535 manufacturing, and 4,400 transportation and public utilities posts, the study contends. Ohio's gross regional product would increase by more than $3.4 billion, personal incomes would rise by $1.82 billion, and state taxes would go up by more than $202 million, according to the study.

The projections assume long-distance rates would be reduced by 20 percent within two years; rates have fallen 15 percent to 40 percent elsewhere when such competition began, the study maintained. But it bases its calculations on historical data and does not take into account advanced wireless technologies on tap for this year that could draw more customers from traditional services.

The study, done by the Center for Regional Economic Issues at Case Western Reserve University in Cleveland, should help the regulatory process, said Greg Connel, an Ameritech spokesman.

But it will be KPMG's report, not an economic-development study, that regulators will use to make their decision, said PUCO spokesman Shana Gerber.

Under the federal Telecommunications Act of 1996, companies such as Ameritech must open local-service competition before joining the long-distance fray. Results of KPMG's audit should be done in late summer, which is roughly on track with expectations, Ms. Gerber said.

“Our position is that the study is interesting, however, it's not relevant to the question that the PUCO and FCC must answer,” she said. “Only when they show that market is open will they be eligible ... to enter the long-distance market.”

Meanwhile, a local-service competitors' group, Coalition for Customer Choice, called the job-creation claims “curious” because Ameritech's entry into long distance wouldn't require much capital investment. Ameritech should concentrate on supplying verifiable data to KPMG, said Wayne Hill, the Columbus coalition's executive director.



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