EDITION 15
RELEASE DATE: APRIL 21, 1999
TOPIC: BELL ATLANTIC-GTE MERGER IN PENNSYLVANIA
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PA. PUC: get out of the way
by Albert Paschall

     Some days the information super highway is a rat race with just three rules: lead, follow or get out of the way. Technology’s speed risks making anyone standing still road kill in cyberspace. There are good reasons why digital road rage runs rampant. One rarely gets a person on the line anymore, interminable voice mail messages dominate the day. Beepers and cell phones are electronic blast horns, never letting the weary rest. Somewhere in hell they invented caller interruption service, the personal hold button, that can tell you with an abrupt clunk just how important your call is to the party on the other end.
     Though it’s all perspective. Shifting gears into voicemail you can return the calls of the long-winded and boring late in the night, knowing the machine will be waiting. The convenience of the palm size phone that makes its way over fairways and beaches with equal ease is coupled with the caller ID that screens out pesky telemarketers. Succinct e-mail messages have mercifully replaced long painfully written office memos. The marvelous and the maddening age of technology is here and to compete we must be wired to the world.
      Except in Pennsylvania. The state’s archaic system of utility regulation has put the expansion of telecommunications on hold. Twelve years after a Federal judge crashed AT&T long distance competition had made for impressive consumer savings. Congress moved to open local telephone service markets completely and in ‘96 passed the Freedom In Telecommunications Act, leaving the details up to each state. In Pennsylvania the long distance companies jumped at the chance. AT&T, ATX, LCI, MCI and PACE all called on the state’s Public Utility Commission to open up the lines.
     That’s where the wires got crossed. In the midst of de-regulating electricity and natural gas the bureaucrats got overloaded. In the process they woke up the mother of all phone companies, Bell-Atlantic, and found out that deregulating electricity was easy an easy call compared to sorting out the complexities of competitive telephone service.
     If the issues are complicated. Fact is local phone competition will work just like long distance. Only the industry leaders like AT&T, MCI and Sprint have their own wires. The second tier companies rent blocks of time from them and sell it to their own customers. Called re-sellers they are the cottage industry of telecommunications. Nimble companies like ATX go after the business that the big hitters don’t want. The same thing will happen with local service. The difference is that Bell will lead the pack, as its done for 70 years, especially now that Bell proposes to merge with GTE, the second largest carrier in Pennsylvania.
     While 24 of the 38 states affected by the Bell-GTE merger have approved it, Pennsylvania has hoisted roadblocks to the plan. State Senators Madigan and Fumo introduced irrelevant legislation that merely whines about the merger. An organization called Pennsylvanians For Local Competition, who lists AT&T among its largest contributors, runs hysterical newspaper ads across the state, with Bell responding page for page.
     The race to compete in the information age can only be won with wires. For the remote Pocono Mountain cabin to become an Internet commerce center there has to be a wire down the hill. If you want to schmoose a customer in Scranton while sailing on the Susquehanna River you’ve got to be connected and hi-tech connections don’t come cheap. In 1998 Bell spent $961 million to re-wire the state with fiber optic cable, the information super-highway’s roadbed. From ‘95 to ‘98, Bell added more than 300,000 miles of the stuff, bringing the Commonwealth’s total to nearly 800,000 miles. Just 20 miles of fiber optic installed this month in tiny Millheim Borough in Centre County rang up a tab of $690,000, a fraction of the $3 billion Bell will spend to wire Pennsylvania. If businesses in the state are going to compete in the next millennium, this technology is essential, and if Bell doesn’t pay for it, who will?
     Fearing a monopoly, the Public Utility Commission and the State Senate have put the Bell-GTE merger on hold, creating a futile detour on the route to our digital on-ramps. Technology’s expressway has only three rules: lead, follow or get out of the way. Bell’s taken the lead in investment and the competition will follow, just as it did in the long distance business 15 years ago. Now all it takes is for the state to get out of the way and let the race for real phone competition get underway in Pennsylvania, the consumers will be the big winners.

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Albert Paschall is senior commentator for the Lincoln Institute Of Public Opinion Research a non-profit educational foundation in Harrisburg, Pennsylvania.

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