Pacific Telesis Appeals FCC Telecom Rules; Claims They Delay Competition, Stifle Innovation

Business Wire, Sept 6, 1996

SAN FRANCISCO--(BUSINESS WIRE)--Sept. 6, 1996--Pacific Telesis (NYSE: PAC) today asked a federal court to overturn Federal Communications Commission rules governing how competitors may connect to its network, claiming the new rules will slow the advent of full telecommunications competition.

In an appeal filed with the United States Court of Appeals in Washington, D.C., Pacific Telesis, along with Bell Atlantic and BellSouth, claimed the FCC's Aug. 8 rules overstepped the boundaries established by Congress in the landmark Telecommunications Act of 1996. Unlike GTE, USWest and Southern New England Telephone, they are not seeking a stay of the Commission's rules.

Rather than stimulate competition, Pacific Telesis believes the FCC rules will stifle it, delaying benefits to California consumers and forcing those customers to subsidize the entry of long-distance companies in the local market.

"This isn't our understanding of what Congress intended," said Dick Odgers, Pacific Telesis executive vice president and general counsel. "The commission has chosen to micro-manage, when the Congress said to deregulate."

Specifically, the companies said the commission's array of detailed rules will impede their ability to offer innovative arrangements for competitors to connect to their networks. They will also virtually eliminate the role of state commissions in overseeing pricing issues and forcing them into a narrow one-size-fits-all model.

"The commission has simply taken over the regulation of local telephony," the companies said. "The transformation of local telecommunications will take place, not according to decisions made by hundreds of parties in the market or the localized decisions of state utility commissions in individual arbitrations, but rather according to the uniform mold cast by the commission."

In addition, the FCC rules also force local companies to offer their network services to well-heeled competitors at unrealistic discounts, in effect requiring the companies and their customers to subsidize industry giants such as AT&T, MCI and Sprint.

As a result, Californians may not only see a slowing of the competition that has been building in the state for years but be forced to subsidize it as well.

"California has been a national leader in bringing competition to the telecommunications industry," Odgers said. "No matter what the FCC rules may have intended, the result will be to slow the further development of true competition in California."

The appeal will not relieve Pacific Telesis of its obligation to comply with the FCC's rules. The corporation said it would continue to comply until the rules are stayed or overturned.

"We're anxious to get into long-distance," Odgers said. "But we want good rules that reflect the intent of Congress. The long- distance companies are more than happy with these rules because they know they will delay competition in their business. That's not what Congress intended."

Pacific Telesis, a diversified telecommunications corporation based in San Francisco, is the parent of Pacific Bell and Nevada Bell, which provide local telecommunications services in California and Nevada respectively.

CONTACT: Pacific Telesis

Michael Runzler, 415/394-3643