The US Federal Communications Commission has ruled in favour of opening the interstate switched transport segment of local exchange services to competition. The ruling opens up the portion of the local exchange network that carries interstate calls between the local telephone company switch and long distance carriers, a market guessed to be worth $4,200m. The FCC’s decision is in response to the Local Equal Access Initiative filed by MFS Telecom, a subsidiary of the Chicago-based MFS Communications Co Inc, in November 1989. The FCC’s move strikes a further blow at the monopoly-based telephone companies in the local exchange market. Last September the Commission required the Baby Bells to open up the narrower market for special access services, allowing competitors easier access to the public switched telephone network. MFS was pleased but not thrilled at the announcement, saying that while the FCC’s earlier decision had opened the starting gate and allowed MFS and others to enter the race and this one meant that they were now rounding the first turn, the race was still unfairly handicapped. Chief of its objections is that customers must pay over 80% of any switched transport revenues back to the phone companies. These charges, called residual interconnection charges, are reimbursed to the telephone companies for costs associated with overheads and losses in revenues resulting from the increased competition. MFS wants to see the rediual charges reduced so that they cover no more than the actual subsidy, and for them to be administered by a neutral third party. MFS also takes exception to the FCC’s provision to allow local telephone companies to give volume and term discounts, a complaint it has in common with FCC commissioner Ervin Duggan, who dissented from that part of the ruling. Duggan maintains that if the FCC gives too much leeway on pricing emerging local competitors could be stalled at the gate. MFS says that other areas that should be investigated include the administration of local telephone numbers and local telephone number portability. We’re a long way from the finish line, says MFS president Royce Holland: a number of issues remain to be addressed by the FCC and state commissions before this last monopoly bastion is open to competition.
