THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, October 27, 1996 TAG: 9610260215
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MIKE MILLS, THE WASHINGTON POST
LENGTH: 76 lines
Never mind the 10 years of debate, millions of dollars of lobbying and the signature of President Clinton: A federal court has put core provisions of the nation's new telecommunications law on hold. And a company called GTE Corp. is a big part of the reason why.
Ranked by revenue, GTE is the largest local phone company in the country, but it has always been a quiet giant, willing to let the regional Bell companies grab the attention from the public and government regulators.
Now the company is throwing its weight around. With former Bush administration antitrust czar William P. Barr on board as lead attorney, it played a central role in persuading a federal court in St. Louis last week to freeze key pricing provisions of the telecommunications law. That law orders local phone companies to help competitors get established by leasing them capacity on existing phone networks.
GTE has been busy in state regulatory bodies as well. It has sought rate increases in many states, arguing it will need more revenue to meet looming competition. GTE also is seeking status as a ``rural'' carrier throughout many states, which could exempt it from cooperating with competitors at all.
``They've been doing this all over the country,'' said William Irby, a telecommunications analyst for the Virginia State Corporation Commission. GTE's is ``the most contentious major rate case we've had in this commission since the early 1980s,'' Irby said.
The SCC decided last week that much of the area in Virginia getting telephone service from GTE does not qualify for rural status. The SCC, which disagreed with the phone company's contention that it is a rural telephone company under the federal telecommunications reform act, found that only GTE's service territory in portions of Buchanan, Tazewell and Bland counties in the southwestern part of the state met the rural-area qualification.
GTE, whose service area includes parts of Virginia Beach and Chesapeake, has about 50,000 customers in southeastern Virginia.
GTE says its regulatory assault has one aim: To make sure the company is properly compensated by customers and competitors who use its network. ``We have been negotiating and will continue to negotiate with any and all competitors,'' said Stephen Spencer, GTE's Virginia director of external affairs.
Many people are surprised to learn that the biggest local phone company isn't a Bell. But with revenue of $20 billion last year, GTE holds that title, having spent decades assembling a collection of phone systems. While the Bells control distinct regions of the United States, GTE's 28-state service territory looks like a shotgun blast on the U.S. map, with small phone systems dotting largely rural areas across the country.
GTE wasn't part of the deal that broke the seven Bells off from AT&T Corp. in 1984, and has often parted ways with them in the debate over telecommunications policy.
The biggest thing separating them now is long distance. The recently enacted law grants the Bells' wish to enter the long-distance business, which was barred to them by the 1984 deal, but it sets up a swap: They first must prove they face competition in their local phone monopolies.
That means negotiating ``interconnection'' deals with companies that want to compete against them in the local phone business. If voluntary agreements fail, state regulators can act as arbitrators.
That long-distance carrot does not apply to GTE, however. GTE has been free since 1992 to offer long distance. That gives GTE a bargaining advantage over future rivals that the Bells do not enjoy, said Dick Notebaert, chief executive of the Midwestern Bell company Ameritech Corp. ``The big difference between us and them is they're already in long distance,'' he said. ``What's their incentive'' to cooperate? he asks.
``It's one of the biggest shortcomings of the telecommunications act,'' said Irby of Virginia's State Corporation Commission. ``There's nothing in it for them, so they're doing everything they can to fight competition.''
GTE officials deny they have the upper hand, and say they will allow competitors into their market because the law requires it. ``It's not an incentive situation. It's the law of the land,'' said Bob Brand, GTE assistant vice president for external communications.
KEYWORDS: TELEPHONE SERVICE VIRGINIA RURAL AREA GTE
TELECOMMUNICATIONS LAW by CNB