There's a new kid in the long-distance business in Texas.
SBC Communications Inc. (www.sbc.com) landed an approval late June 30 from the FCC (www.fcc.gov) to provide long-distance services in Texas, where the BOC already operates as the local service incumbent. The company will do business as SBC Long Distance.
SBC's Section 271 approval is the second handed out by the FCC since last December when the federal agency approved Bell Atlantic Corp. (www.bellatlantic.com) to provide in-region long-distance services in New York. Following a rocky start, Bell Atlantic now is up to speed, reportedly pulling thousands of customers away from the Big Three long-distance carriers.
"SBC's approval promises substantial benefits for consumers in the form of new service providers, lower prices, tailored and bundled service packages, and better customer service," according to the commission's order.
"Competitors can only hope that [the] decision was not premature, but rather was based on a sound evidentiary foundation," comments Dena Alo-Colbeck, director of public policy for Miller Isar Inc. (www.millerisar.com). "Of the RBOCs, SBC historically has followed one of the most aggressively narrowed interpretations of its market opening obligations under the Telecommunications Act."
In fact, the FCC cited a number of elements SBC met that were particularly important to opening its local phone markets to competition in Texas: independent OSS testing and adoption of adequate performance measurements. The FCC also noted that despite its approval, it would continue to keep an eye on the Bell company.
The FCC emphasized that the application's approval may close a chapter in this 271 proceeding, but it isn't the end of the story. "SBC must continue to comply with the checklist requirements [of the Telecommunications Act of 1996], and the commission has a number of enforcement tools at its disposal, including imposing penalties or suspension of approval," the commission warned in its order.
SBC's "post-approval enforcement framework," as the FCC refers to it, is detailed in the commission's Bell Atlantic New York Order. Among other things, the SBC order is similar and says the FCC will receive and review complaints filed by carriers concerning alleged failure by the BOC to meet conditions required for long-distance approval, and specifies several enforcement actions that the FCC can take to address BOC backsliding.
"We envision exercising our Sec. 271 suspension power, when appropriate, through a 'standstill' order that could prohibit a non-compliant BOC from enrolling additional subscribers and from marketing and promoting interLATA service," according to the FCC's order.
Working in concert with the Texas Public Utility Commission (www.puc.state.tx.us), the FCC says it will closely monitor SBC's compliance with Sec. 271 of the Telecom Act. SBC is required to provide the FCC with the same monthly performance measurement reports that it provides to the Texas PUC for at least one year from the date of the release of the order.
"We stand ready to exercise our various statutory enforcement powers quickly and decisively in appropriate circumstances to ensure that the local market remains open in Texas," according to the order.
And the FCC has shown its willingness to employ such enforcement remedies. For example, in New York, the commission responded to numerous competitor complaints that Bell Atlantic was backsliding in its market opening obligations.
On the lighter side, FCC Chairman William E. Kennard commended SBC "for its decision to settle down to the hard work of opening their markets to competition."
"At the signing of the 1996 act, President Clinton said the act would "bring the future to our doorstep. Now those doorsteps include the farms and ranches of Texas, the businesses in its glittering cities, and its millions of homes and schools and churches," Kennard said.
Edward E. Whitacre Jr., SBC's chairman and CEO, says that long-distance will play an important role in SBC's growth.
"It is more than just another service offering," he said after the approval was announced. "Long-distance rounds out our full-service bundle and is key to capitalizing on our company's single biggest growth opportunity and new core business: data."
Whitacre said that SBC's 271 approval will give Texas consumers one-stop shopping for communications and entertainment services. For Texas business customers, it means that SBC is closer to being able to follow them around the globe, offering integrated, end-to-end and customized packages of advanced voice and data products, he added.
"It's not all about long-distance. It's about the bundle," says telecom analyst Jeffrey Kagan (www.jeffkagan.com). "Bundles will be king. Everyone will be marketing bundles of local, long-distance, Internet and wireless. The more services a customer uses from one company, the less chance they will switch away."
Kagan also says that the FCC's ruling will unleash a flurry of competitive offers from all the competitors in Texas. "All of a sudden," he says, "customers will have loads of choice, not just from SBC, but also from the competitors who will also crank up their marketing of local and long-distance bundles."
The FCC's approval is effective July 10. At that time, SBC Long Distance will officially launch service under the Southwestern Bell brand and announce specifics of its residential and business long-distance product offerings.
