AT&T today announced that it will stop competing for local and long-distance residential customers in Ohio, Missouri, Washington, Tennessee, Louisiana, Arkansas and New Hampshire -- states comprising a population of nearly 38 million Americans. The company claims the move is a result of new wholesale rules that could mean an increase in the fees local competitors have to pay to access Bell facilities. But USTA, the association representing incumbent local carriers, says the AT&T move is just posturing.
“AT&T is engaged in slight-of-hand,” says USTA President and CEO Walter B. McCormick, Jr. “It claims it will no longer compete with telephone, cable, wireless companies and other CLECs in offering voice service to residential consumers. But in the very same press release, it announces that it will serve the more profitable business markets and will offer to residential consumers its new, high margin voice-over-Internet product in the same states that it says it is withdrawing from! This appears to be a political statement directed at presidential battleground states, rather than a real business announcement.”
AT&T says, however, this action is a result of a June 9 decision by the Bush administration and the FCC not to appeal a recent federal court decision that overturned FCC wholesale rules put in place to introduce competition in local markets. The reversal of local competition policy by the Bush administration will permit the Bell companies to raise wholesale rates as early as November.
David Dorman, chairman and CEO of AT&T, says that for the consumer market, the ability of a competitor to bundle a variety of services -- particularly local and long-distance service -- has essentially been eradicated by the June 9 decision. "We foresee a future with less choice for consumers," he says. "Competitive alternatives are simply not available today for most Americans, because as AT&T loses the ability to provide them with an alternative to the Bell companies, they will have virtually no choice of telecommunications provider."
AT&T says it will continue to serve its existing residential customers in the affected states, and that its announcement today does not affect its enterprise, government and other small- and medium-sized business customers. It will also not affect customers with DSL and cable modem offerings who subscribe to the company's voice over IP offering, AT&T CallVantage Service.
