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Sprint Stakes Out Bigger Share of Utah Phone Market

Posted on: Tuesday, 9 September 2003, 06:00 CDT

Sep. 9--Sprint Corp., the nation's No. 3 long-distance company, is challenging Qwest Communications International Inc. for a share of the residential telephone service market in Utah.

The Overland Park, Kan.-based company is using lines leased from Qwest and other regional telecommunications companies to offer competitive residential phone services in 36 states, Sprint spokesman Dave Mellin said.

Sprint's new Utah residential telephone plan is being marketed as part of a bundle of local, long-distance and wireless phone services. "Those services should now be available throughout most of Utah although there may be some neighborhoods that do not yet have access," Mellin said.

The company announced it intended to expand into the residential phone service market after the Federal Communications Commission issued new rules three weeks ago that allow regulators in Utah and other states to set discount rates that new competitors must pay to use the networks of large regional telephone service providers.

AT&T Corp. on Monday announced it, too, is broadening its assault on the local telephone market. Already the largest reseller of local service over Bell lines, AT&T said it plans to test or launch the service in 22 more states by the end of the year. The company, which provides local service to 3 million customers in 13 states, had planned to enter only nine more states in 2003.

Utah, though, will not be on AT&T's expansion list.

AT&T late last year sold its interest in AT&T Broadband to Comcast Communications, which continues to offer residential telephone services in many Utah neighborhoods along the Wasatch Front using cable television lines. MCI also offers residential service in some areas although Qwest still claims the dominant share of the residential telephone market, serving more than 686,000 lines compared with its competitors' 60,000 lines.

The announcements by AT&T and Sprint both cited the report by the FCC released last month that provided strong reassurance the long-distance carriers would not lose their affordable access to the Bell lines any time soon.

The four regional Bells -- Verizon Communications Inc., SBC Communications Inc., BellSouth Corp. and Qwest -- have sued to block provisions of the FCC's order and requested a delay in next month's implementation of the new rules until the suit is resolved.

The Bells claim the state-regulated rates at which they are required to lease their lines to competitors are well below the cost they incur in operating and maintaining service over those lines. Rivals and the state regulators who set the rates contend that the Bells exaggerate their costs.

"The benefits customers realize in better, more valuable bundles of services will continue as long as the states make sure that fair rules and prices are protected and enforced," David Dorman, AT&T's chairman and chief executive, said Monday.

But in a petition filed with the FCC last week, the Bells said they "lose thousands of lines every day to the purely synthetic competition" spawned by the commission's rules, which they said will cause them "massive, immediate, and irreparable harm."

While a clear-cut answer on whether the Bells are compensated fairly for their lines remains elusive, the FCC has undoubtedly succeeded in its goal of fostering competition for consumers, who until recently had only one choice for buying local phone service.

By the end of June, even before the latest ruling, about 13 million consumers were getting their local phone service over a Bell wire that was rebranded under a rival's name, an increase of more than 25 percent since the start of the year. AT&T and MCI account for slightly more than half that total, with the balance served by Sprint and an assortment of smaller providers.

The increase in local phone customers comes as AT&T, MCI and Sprint are losing millions of their core long-distance subscribers to the Bells, which have won regulatory clearance to offer that service in a growing number of states.

To stem their losses while winning new business, both the Bells and their rivals have focused on package deals that bundle local and long-distance -- and sometimes wireless and Internet service -- on the same bill, hopeful they can lock in customers with the lure of one-stop shopping and related discounts.

Sprint's plans offer a combination of local, long-distance and wireless-phone services for $49.99 to $189.99 a month, depending upon the state. A plan for $189.99 a month offers unlimited local, long-distance and wireless calling.

Utahns can check to see if Sprint's service is available by going to the company's Web site at www.sprint.com.

AT&T, which says 19 percent of its consumer revenue is now derived from bundled services, sells unlimited local and long-distance for $55 or $60 per month, depending on what it pays to use the Bell lines in any particular state. In two markets, AT&T is also testing a package that includes cellular service in tandem with former subsidiary AT&T Wireless.

To fight back, the Bells are offering packages that also include high-speed Internet connections via DSL, a service that relies on the same copper phone line as telephone calls.

However, as a result of the FCC policy, the Bells may encounter increased competition in this arena as well, because once a non-Bell company leases a residential line to provide local phone service, it also holds the right to provide DSL over that line.

With the added certainty provided by the FCC's policy, companies including MCI and AT&T have partnered with Covad Communications Group Inc., a company that has the equipment necessary to transmit DSL signals over lines already installed at the Bells' local network hubs.

--The Associated Press contributed to this story.

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(c) 2003, The Salt Lake Tribune. Distributed by Knight Ridder/Tribune Business News.

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