Pac Bell Takes Long Shot at Long-Distance : Telecommunications: The regional Bells want federal restrictions overturned as PUC staff prepares to back rivalry from long-distance firms.

As California regulators move closer to letting long-distance carriers compete in the state’s local calling market, Pacific Bell on Thursday joined four regional phone companies in a long-shot effort to overturn federal rules that bar regional phone companies from the lucrative long-distance business.

The staff of the California Public Utilities Commission is expected to recommend today that PUC commissioners allow MCI, Sprint, AT&T; and others to provide “local long-distance” service, which involves calls traversing more than 16 miles, now carried exclusively by Pacific Bell or GTE.

The calls involved might be from Burbank to Riverside, for example, and are carried largely by the Pacific Bell unit of Pacific Telesis. Other long-distance service remains the exclusive province of carriers such as AT&T; and MCI. The cost of local long-distance has been kept artificially high to subsidize basic residential rates.

The recommendation to add California to the other 42 states that permit such competition is aimed at making the $90-billion market for local service as competitive as the $55-billion long-distance market, where prices have fallen by half in the last decade as AT&T;, MCI, Sprint and others have battled fiercely for customers.

Greater competition is likely to drive down the cost of local toll calls, but basic telephone rates could rise as local carriers seek to recoup any lost revenue. For example, about a quarter of Pacific Bell’s $8.7 billion in revenue last year came from local toll calls.

Pacific Bell and other local Bell companies aren’t taking such inroads lying down. On Thursday, the five regional Bells petitioned the Federal Communications Commission to eliminate what they view as outmoded restrictions on telephone competition included in the 1982 antitrust consent decree that broke up the Bell system.

The FCC does not have to act on the request, and there is some question as to whether the agency has jurisdiction to change a decree that is still being overseen by U.S. District Judge Harold H. Greene.

“They are in Fantasyland,” Jim Lewis, vice president for regulatory and public policy at MCI Communications Corp., said of the regional Bells’ FCC filing. “The (regional Bells) realize they would lose if they asked for this in court.”

The Baby Bells say letting them into the long-distance market would help consumers and businesses obtain lower rates and better service. William F. Adler, executive director of Pacific Telesis Group’s office of federal regulatory relations, said, “customers will benefit if a regional telephone company can provide some or all of their (long-distance) phone service.”

Even if the FCC lacks jurisdiction or takes no action, the petition could help spur action in Congress, where some lawmakers believe the regional Bells should be unshackled to compete against long-distance carriers, fiber-optic telephone networks, cable TV and others that have encroached on the regional Bells’ turf.

Rep. Edward J. Markey (D-Mass.), chairman of the House telecommunications and finance subcommittee, has been talking about lifting some restrictions on the regional Bells, but no legislation has emerged.