A bonanza for businesses: IXCs pan local consumers for bigger fish, says trade group

Residential customers are getting "the pits" in terms of competition promised by the 1996 Telecommunications Act, a telco consumer advocacy group reported last week.

The group, Keep America Connected, conducted a telephone survey asking various interexchange carriers about their offerings and plans for local services. Their findings revealed considerable competition in the local business market but relatively little in the way of residential services. The results echo charges from the United States Telephone Association (Telephony, Oct. 27, page 8) and a study commissioned by SBC and BellSouth (Telephony, Nov. 10, page 14).

Of 78 companies that Keep America Connected surveyed in 13 cities nationwide, the group found 15 that offered any residential local service and three that advertised those services.

"Cherry picking in the market puts pressure on local rates, threatens the quality of the network and delays competition in local and long-distance services for consumers," said Angela Ledford, director of Keep America Connected.

Yet the report conceded that skimming the more lucrative local business customers is a "rational business plan" for the IXCs and that the situation will continue until the Federal Communications Commission lets the Bell companies compete for in-region long-distance services.

The proposed MCI/WorldCom merger may only exacerbate the problems that consumers face in getting true competition, Ledford said. Residential consumers are not likely to benefit from an MCI/WorldCom network, she said.

"Earlier this year, MCI was very open about going after the local business market," said Ledford. "Then, for marketing reasons, they calmed down a bit. WorldCom, on the other hand, has always seen business as its market. At one point, they even indicated they might drop residential long-distance altogether.

"It's good to see more capacity for local competition, but if that capacity is geared toward business, it is not geared toward consumers. So again, residential consumers lose," she said.