The Federal Communications Commission has granted SBC Communications Inc. approval to offer long-distance services in Nevada, finding that the phone giant has opened its local network to competitors and that there is at least one rival serving the residential local phone market: Cricket, a subsidiary of bankrupt Leap Wireless International Inc.
San Diego-based Leap yesterday filed for bankruptcy court protection, the same day the FCC granted SBC long-distance approval in Nevada.
In its bid for long-distance approval, SBC argued that Cricket is a competitor in the local residential phone market. In a filing with the federal regulator, SBC cited a survey, in which more than one in four Cricket customers polled said they “do not have a traditional landline phone at home.”
The FCC found that SBC had met the so-called Track A requirement in the Telecommunications Act of 1996. Under the requirement, before a regional Bell operating company can offer long-distance services within a state, at least one competitor must be providing local phone service to business and residential customers.
In a 1998 order, the FCC determined that broadband PCS service could meet the criteria if a Bell company could show that PCS is replacing the landline phone.
SBC told the FCC that competitive phone companies are serving between 22 percent and 25 percent of the business market within its Nevada Bell territory. Nevada Bell controls approximately 371,000 access lines, representing about one quarter of all the lines in the state. Sprint Corp. is the largest local phone company in Nevada, but it is not subject to the same federal regulations as SBC and the other three Bell companies: BellSouth Corp., Qwest Communications International Inc. and Verizon Communications Inc.
In Nevada, as in some other Western states, there is significantly less competition in the residential local phone market than in the business market. The FCC granted SBC long-distance approval in Nevada based on the evidence presented that Cricket competes with SBC for local residential phone customers.
In separate statements, FCC commissioners expressed their reservations with the Nevada decision, but none opposed it.
“The majority goes … further when they suggest that a particular wireless carrier’s service is a substitute for local wireline service. I am troubled by this aspect of the decision,” says FCC Commissioner Michael Copps. “I question whether such a far-reaching conclusion properly is based on the very limited survey evidence presented in this application.”
Qwest, the Denver-based company, has made the same argument as SBC, saying Cricket is a rival in New Mexico. Qwest presented a survey showing that consumers are opting for Cricket rather than a wireline phone, but the New Mexico Public Regulation Commission says the survey is flawed.
The FCC will rule today whether to grant Qwest long-distance approval in New Mexico, Oregon and South Dakota.
In the meantime, SBC is awaiting long-distance approval in Michigan. The FCC must make a decision on that request by tomorrow. SBC already offers long-distance service in Arkansas, Connecticut, California, Kansas, Missouri, Oklahoma and Texas.
