Illinois Mulls Local Phone Competition

Telephone customers are constantly bombarded by reminders that there’s more than one way to place long-distance calls, but this could be the first place where people are given a choice about calling across town.

Regulators in Illinois say they may be willing to allow competition for local telephone service, perhaps setting the stage for breakups of the monopolies enjoyed by the Baby Bells.

It will likely be years before consumers actually have a choice about getting local service from Illinois Bell or one or more competitors. But officials of the Illinois Commerce Commission hope to be at the forefront in giving local business customers access to more than one local phone company.

ICC Chairman Terry Barnich recently indicated that Illinois regulators might consider establishing a “telecommunications free-trade zone” that would allow such competition. Since then, he has been inundated by calls.

“They all want to come in,” Barnich said. “I was afraid I’d call for a party and nobody would show up--it’s just the opposite. . . . My point is, in the middle of the recession, you’ve got people looking to invest here.”

Vigorous competition among such giants at AT&T;, MCI and Sprint has become a dominant feature of long-distance telephone service after the seven Baby Bells were spun off from American Telephone & Telegraph Co. in 1984.

Competition in local telephone service could be next.

Last week, Metropolitan Fiber Systems Inc. of Oakbrook Terrace, Ill., became the first company to ask the ICC to let it to buy and then resell some Illinois Bell services to Metropolitan customers.

A second company, Teleport Communications Group Inc. of New York, plans to soon file with the ICC for similar rights, said Bob Atkinson, senior vice president for regulatory and external affairs.

“What we’re seeing is the beginning of a process,” Atkinson said. “The end of the process is Illinois Bell (having) competition for basic local telephone service.”

Teleport and Metropolitan make money by letting businesses bypass local phone systems and connect directly to long-distance carriers. In Illinois, they want to enable businesses to bypass Illinois Bell for local phone service, said Calvon Monson, director of telecommunications policy for the ICC.

As a first step, Teleport would install the fiber network necessary to provide competing service, Atkinson said. It may also ask the ICC to require Illinois Bell to give alternative carriers access to pieces of its network.

“The Barnich initiative opens the possibility,” Atkinson said. “We have the potential for being the second telephone company.”

Barnich put it this way: “Chicago could be the first example of an area where you’d have competition at the local exchange, competing with the incumbent monopoly.”

“There are other states that have talked about it, but Barnich is the first regulator to go so far as to encourage (competition) with a local phone service,” ICC spokeswoman Beth Bosch said Friday.

Illinois Bell, owned by Ameritech, said it would welcome the competition. But spokesman Larry Cose said if Illinois Bell does face competition, it wants more flexibility from regulators in pricing its services.