Local telephone wars expected to heat up

By Bruce Meyerson

Associated Press

NEW YORK -- AT&T; Corp. is broadening its assault on the local telephone market, the second long-distance provider to pounce on a federal order that fuels competition by forcing the local Bells to lease out their residential lines to rivals at attractive rates.

Already the biggest reseller of local service over Bell lines, AT&T; said Monday it plans to test or launch the service for consumers in 22 more states by year-end. The company, which provides local service to 3 million consumers in 13 states, had planned to enter nine more states in 2003.

The move comes two weeks after long-distance rival Sprint Corp. began selling local service using Bell lines in parts of 36 states and Washington, D.C., that reach 80 percent of the nation's households, up from 5 percent beforehand.


The two companies are targeting higher-spending business customers: AT&T; said Monday it now provides local service to 1 million businesses using Bell lines, an increase of more than 25 percent for the year, and Sprint has said it plans to introduce local service for small businesses as well.

The announcements by AT&T; and Sprint both cited a report by the Federal Communications Commission released last month that provided strong reassurance the long-distance carriers would not lose their affordable access to the Bell lines any time soon.

The four regional Bells -- Verizon Communications Inc., SBC Communications Inc., BellSouth Corp. and Qwest Communications International Inc. -- have sued to block provisions of the FCC's order and requested a delay in next month's implementation of the new rules until the suit is resolved.

The Bells claim the state-regulated rates at which they are required to lease their lines to competitors are below the cost they incur in operating and maintaining service over those lines. Rivals and the state regulators who set the rates contend that the Bells exaggerate their costs.

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