The Federal Communications Commission has, as reported briefly, acted to open up the US local telephone market. The Baby Bells have lost their virtual monopoly in providing local access to customers, but as recompense, the Commission has given them new freedom over how they charge long-distance companies for carrying their traffic. The bad news for the regional Bells is that they will have to offer direct connection into their central switching centres to rival competitive access providers, or customers wanting to provide their own local connections into the network. Until the old rules, access providers could offer competing services, but they had to lease transmission lines and switches from the Bells, making the process more expensive. To ensure a level playing field, the Bells’ charges for connection to their switches must be based on direct costs, and overhead loadings onto their tariffs must be justified. The regional Bells have 120 days to file their proposed tariffs. The good news is that their new freedom to charge long distance carriers on a cost basis will enable them to compete more efficiently with any new local players. It was ruled in 1982 that the Bells’ charges for transporting traffic had to be equal, per unit of traffic delivered or received, for all interexchange carriers, a move designed to ensure that the more established long-distance players did not have an unfair advantage. However, because the smaller operators with shared facilities were effectively being subsidised by those with dedicated – and consequently more efficient – connections, the Bells had complained that they were unable to compete with so-called by-pass operators, which were signing up individual long-distance carriers to cheaper alternative connections. To try to rectify this, the Commission has now said that the Bells’ can separate the costs of dedicated connections from those shared by one or more carrier, giving greater flexibility to relate pricing to costs.
