A game of strategy, RHCs begin their moves to capture the long-distance flag >BY CAROLYN HIRSCHMAN, Special to Telephony

Ameritech made a decisive move this month when it became the first Bell regional holding company to ask regulators for permission to offer long-distance telephone service within its territory. Now other RHCs around the country are preparing to join in.

The game board could get mighty crowded this summer, and only time will tell which telcos will successfully maneuver their pieces to the finish. An RHC will likely sell in-region long-distance service somewhere in the United States by the end of this year. Federal and state regulators will decide which sells first.

Chicago-based Ameritech asked the Federal Communications Commission on Jan. 2 to grant it permission to sell long-distance service in Michigan, one of five states in its Great Lakes region. But there's rampant speculation that the company's application will be rejected because it does not have enough local service competition, as federal law requires.

The other six Bell companies say they're watching Ameritech's case closely to see what specific guidelines emerge from the FCC. They're also working closely with state regulators before going to the FCC in an effort to smooth the way for federal approval.

The Telecommunications Reform Act of 1996 permits the Bell companies to sell long-distance service outside their territories immediately. But to sell long-distance inside their areas-where they hold monopolies on most local services-they must prove there is serious competition on the local level. In addition, the FCC must agree that the new service offering is in the public interest.

The act's 14-point checklist, which the RHCs are scrambling to meet, is "one monstrous gray area," said Scott Cleland, managing director of the Schwab Washington Research Group, a Washington consulting firm. "This is all a political regulatory judgment. It's all trying to define what's enough [competition].

GTE has a leg up on the RHCs because it was free to enter the long-distance market right away. The former part-owner of Sprint Corp. signed up about 750,000 customers in 50 states last year-still way below the 14 million local customers it has in 28 states.

Despite the potential regulatory thicket, local exchange carriers are plunging ahead in hopes of capturing pieces of the $72.5 billion long-distance pie dominated by AT&T, MCI and Sprint.

Nynex plans to file with the FCC to offer in-region long-distance service in New York and Connecticut by March 31, said Thomas Tauke, executive vice president of government affairs.

The company will file for its other states-Maine, New Hampshire, Vermont, Massachusetts and Rhode Island-by June 30. Nynex's imminent merger with Bell Atlantic, which runs local service in six mid-Atlantic states and the District of Columbia, shouldn't affect the filing schedule, he added.

"We're on a fairly aggressive schedule," Tauke said. "We're attempting to work with each of the state commissions to make sure we comply with the 14-point checklist.

Pacific Bell will file by March 31 in both California and Nevada, with service set to launch in the second half of 1997, said Dan Jacobsen, director of regulatory and external affairs. He predicted success, given the level of local competition.

"I feel pretty confident the FCC will look at California and say, 'Yup, there's significant competition out there,'" Jacobsen said. "AT&T and MCI are both advertising to customers pretty heavily, so we'll have that kind of evidence.

Some carriers have filed comments in response to state proceedings to gather information about in-region long-distance service. These comments allow the RHCs to document their positions and then, hopefully, get a state's OK before moving on to a federal filing.

U S West, which runs local service in 14 Western states, has filed such comments in Minnesota, Oregon and Washington, said a spokeswoman. BellSouth Telecommunications did the same in Georgia on Jan. 3 and hopes to get a state ruling by mid-March, according to a BellSouth spokeswoman. BellSouth's filing schedule for other states is uncertain, but it wants to offer local-distance service throughout its nine-state region by the end of 1997.

As for Bell Atlantic, "Over the next several weeks, we'll be finalizing our filing schedule," said Al Binford, president and chief executive officer of Bell Atlantic Communications, the carrier's long-distance subsidiary. "Some of our larger state markets, like New Jersey and Pennsylvania, may be first." The telco wants to start selling long-distance sometime after June.

Southwestern Bell plans to launch in-region long-distance service in August and filed with the Oklahoma Corporation Commission on Jan. 15. The carrier sells local service in five states in the Midwest and South, and it started offering local landline service in Rochester, N.Y., through its Cellular One wireless arm earlier this month.

Before going to market, all carriers face substantial regulatory requirements. Chief among them is proof of competition at the local level.

The RHCs must provide network interconnection at "just and reasonable" rates.

At least one competitor must be facilities-based-that is, it must use its own equipment to provide service to both business and residential customers. The Bell companies must also allow access to unbundled network elements as well as poles, ducts, conduits and rights of way.

Competition brings more heat to Florida MCI Local Service has debuted in the Tampa/St. Petersburg, Fla., area, marking the first IXC challenge to GTE, the market incumbent. MCI will offer mid- and large-sized businesses a single bill for domestic and international long-distance, data, paging, cellular, Internet access and videoconferencing. Carriers name new public policy leaders Bruce Posey will succeed Laird Walker as senior vice president of federal Relations for U S West, starting Feb. 1. Posey, 44, is now vice president of public policy for MediaOne, U S West's cable TV operation in Atlanta. Also, Lucent Technologies has named James R. O'Neill, 42, as president of its unit service U.S. federal government customers.