U S West’s competition

With new legislation ending U S West’s monopoly on local telephone service, several new telephone carriers are attempting to enter the Colorado market and provide competitive service to businesses.As of July 1, the state’s local phone system was changed from a monopoly controlled by U S West to a competitive system. However, regulatory controls have held up the process, and local competition isn’t expected to begin until sometime next year.
By mid-October, 13 applicants had filed to provide local telephone service in the state, said Barbara Fernandez, spokeswoman for the Colorado Public Utilities Commission.
Companies that have filed with the PUC to offer local service include AT&T, MFS, Tellinet of Colorado Inc., Win Star Wireless, MCI Metro Access Transmission Services, Western PCS III License Corp., ICG Access Inc., Sprint Communications, LCI International Telecom Corp., Popp Telecom Inc., Dial & Save of Colorado, TCG, and Sterling International Funding Inc.
Additionally, American Communications Services of Colorado Springs has applied to provide service only to the territory served by the 719 area code, Fernandez said.
The PUC is required to conduct hearings on each applicant and determine if there are any complaints against the companies in other states, she said. Some hearings have already been conducted by the PUC, but others are pending, she said.
“Most of these companies are in negotiation with U S West to use their network and resell their services,” Fernandez said. “Some companies don’t have any facilities here, so they must make agreements with U S West.”
These interconnection agreements are being hammered out in arbitration hearings, and PUC rulings on these agreements are expected to be issued in November, she said.
Due to the lack of facilities, some companies are considering offering initial service only in Denver or at the Denver Technological Center, she said.
The PUC has set interim rates, or wholesale rates, setting the amount that a reseller company must pay to U S West to use its network.
Those resell rates for businesses are $31.41 a month compared with U S West’s regular monthly charge of $37.39 for a business line, she said.
“The resell rates must offer a 16 percent discount to business off the current rate,” she said. That interim rate does allow the reseller to make a profit, she said.
Fernandez said a hearing on final telephone rates will be held in March.
Diane Callahan, spokeswoman for the state’s Office of Consumer Counsel, which represents small business and residential interests before the PUC, said it’s still unclear as to when local competition may start up against U S West.
The competition will take two forms – resale and facilities-based, she said.
Some companies have their own switches and fiber-optic networks at the Denver Tech Center and in downtown Denver. But they lack facilities in outlying areas of Colorado and would have to build or lease facilities to enter those markets, she said.
Because of the lack of facilities in other parts of the state, it’s likely that some of these facilities-based companies will offer service first in the Denver area and later expand service to other areas such as Fort Collins, she said.
Resellers, however, can operate throughout the state more easily, even though they may also focus first on a major metropolitan area, she said.
“The price of wholesale is the key,” she said. “We don’t know if there will be a fixed rate that will make a big difference.”
MCI, a major long-distance carrier, has plans to begin offering local service to mid- to large businesses in Colorado by the beginning of 1997, said company spokesman Marty Filipowski.
“The timing depends on the regulatory environment,” he said.
MCI typically offers a savings to new customers when it enters a market to compete for local service, Filopowski said.
Currently, MCI offers local telephone service in Seattle, Portland, Atlanta, Chicago, Milwaukee, Detroit, Pittsburgh, Cleveland, Baltimore, Philadelphia, New York City, Hartford and Boston.
He said the company concentrates its local service in these large metropolitan areas at present but hopes to extend service to outlying areas in those states eventually.
Dede Blackwood, a spokeswoman for MCI’s regulatory department, said the company’s plans to offer local telephone service in the Fort Collins area are currently unclear.
Since MCI already has facilities in the Denver Tech Center and in Denver, it will probably begin initial local service there. Later, it could build or lease facilities or interconnect with another network to provide service in other parts of Colorado.
“We want to be there,” she said. “We want to be everywhere.”
Wyoming law also was changed in 1995 to provide telephone competition in local markets, said Dave Walker, a spokesman for the Wyoming Public Service Commission in Cheyenne.
So far, about six companies have applied to provide local service – mostly in areas such as Cheyenne and Laramie, which are served by U S West, he said.
AT&T’s application has been approved, and other applications are pending before the commission, he said.
Walker said it’s uncertain when local competition may actually begin, because several proceedings on interconnection service and the rate level itself must be completed first.ÿ