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And now at bat: Bell Atlantic tries for long distance

Bell Atlantic Corp. today announced it is filing an application to offer long-distance services in New York, just two days after the Department of Justice rejected a similar bid by BellSouth Corp. in South Carolina.

Today's announcement makes Bell Atlantic the fourth regional Bell operating company to make the attempt this year. The three earlier attempts, by Ameritech Corp. in Michigan, SBC Communications, Inc. in Oklahoma, and BellSouth Corp., have been rejected by regulators.

There are billions of dollars at stake, since competitors are whittling away at the RBOC home markets while the RBOCs are kept out of the $80 billion long-distance market, which is growing faster than the local markets, according to analysts. When the RBOCs are able to offer long distance, they can become full-service phone providers for local customers; offering one-stop shopping for local and long-distance services.

Bell Atlantic executives, in a press conference called to make the announcement said there is plenty of evidence that competition is in full bloom in New York. The Telecommunications Actof 1996 says the RBOCs can offer long-distance services in their home markets, but only after they open up their markets to competition. Regulators have rejected the other RBOC long-distance bids, saying there has not been enough evidence of competition in the states where the long-distance applications were filed.

But there is plenty of competition in New York, Bell Atlantic executives said. The company is processing 2,000 orders for lines from competitors every day, and has the to process six times that amount, executives said. The company expects that within 12 months it will have spent a billion dollars revamping its operating support systems so that competitors can easily order lines for resale or connection, officials said.

So far, 100,000 lines have been ordered by competitors for resale, and competitors have 250,000 of their own facilities-based lines connected to various elements in the Bell Atlantic network; which was the NYNEX Corp. network in New York before the merger with Bell Atlantic in August.

These figures will make a strong case for the regulators, said officials.

"If not New York, who? If not now; after everything we've spent and after all of the evidence we have - if not now, when?" asked the CEO and president of the company's telecom group, James Cullen, at the press conference.

Today the company is filing with the New York Public Services Commission, and expects to file with federal regulators within the next two months, officials said. It expects to get approval and start long-distance services in the first half of next year.

Bell Atlantic officials expect long-distance companies and competitive local carriers to protest. Among competitive carriers, Bell Atlantic has a better reputation for opening its market than other RBOCs, such as SBC. Nevertheless, its ordering and operating support systems fall short of what competitors would like to see.

"A lot of it is just lack of experience," said John Nitka, senior operations manager for WinStar Communications, Inc., a competitive local carrier. "After divestiture [of the Bell system in the 80s] it was simple - it was just AT&T ordering lines from the Bells." Now, however, multiple competitive local carriers can order all types of network elements from the RBOCs, and the process of finalizing the types of order forms and procedures necessary to do this has not been completely worked out, said Nitka.

But analysts said there is more competition in New York than anywhere else in the country.

"I would totally agree that they still have some glitches in the system; why else would they be spending so much money to fix it up?" said Ron Cowles, an analyst at New York-based Northern Business Systems, a subsidiary of Gartner Group, Inc.

"But they are ahead of the rest of the [RBOC] pack in terms of competition in their market. I wouldn't be surprised if the orders from competitors that Bell Atlantic processes in one day equals the total amount of orders processed by Bell South to date in South Carolina."

Part of the reason for this is that New York is such a lucrative and attractive market. But this doesn't take away from the fact that, for example, NYNEX started opening its market even before the Telecom Act was implemented. As of last year, NYNEX had 87% of the local residential market and 80% of the business market, far lower than local-market shares of other RBOCs, Cowles noted.

Cowles agreed with Bell Atlantic executives that the company's case will rest on whether regulators want to see every last kink worked out of the company's ordering systems, or whether they take a broader view and look at the amount of competition in the New York area.

"We can look into micro details about ordering systems and everything ... or we can look outside this window and see the evidence [of competition] in satellite dishes [placed by competing carriers]," Cullen said.