AT&T abandons plan to expand local service in Florida

AT&T said it is not economically feasible to provide local telephone service to residential customers in Florida outside of its cable footprint, despite last week’s decision by the Florida Public Service Commission to lower the rates BellSouth can charge for unbundled network elements (UNEs).

Claudia Davant, president of legislative and regulatory affairs for AT&T Florida, said the rates set by the PSC--which were reduced by 12% to 19%--“are still as much as twice as high” as rates in other large states such as California, Illinois and Michigan. She said the Florida rates are still too high for AT&T to compete in the state’s local residential market.

Currently, AT&T provides local voice and data services to business in major markets, and residential service in South Florida and Jacksonville, as well as through cable operator AT&T Broadband. The interexchange carrier said it would reconsider its decision should the PSC set “appropriate discounts.”

“[They] failed to understand that wholesale rates for the unbundled network elements of BellSouth’s network must be fairly priced in order to facilitate competition,” Davant said in a press release.

Joe Lacher, president of BellSouth-Florida, countered that AT&T has nothing to complain about because the new rates--which Bellsouth said are the lowest in the southeastern U.S.--are based on the TELRIC (total element long range incremental cost) cost model specified by the FCC.

“This model is designed to emphasize the cost of providing service and not to produce a profit for high-cost competitors,” Lacher said in a statement. He added that AT&T could make money in local residential service, just not enough to satisfy them.

“AT&T has apparently chosen to use the same UNE rates to compete in the business market, where profits are higher, instead of venturing into a market where the margins are lower,” Lacher said.

--Glenn Bischoff, Senior Writer