Dial-tone competition: has choice for local telephone service become a reality in Indiana?

• Author: McKimmie, Kathy
• Position: Communications

Prove you've opened your local phone markets to competition, Congress told the monopolistic Bells with the Telecommunications Act of 1996, and you'll be able to enter the long-distance market. Seven years later, none of the states served by the old Ameritech--now part of Texas-based giant SBC and including the old Indiana Bell territory--have been given the green light.

No fair, says SBC Indiana spokesman Mike Marker. Competition is alive and well in Indiana, he says, so much so that SBC Indiana is losing 14,000 customers a month to the competition. Therefore, he says, its long-distance application, pending before the Indiana Utility Regulatory Commission, should be approved posthaste.

Wait just a minute, says Mike Pruyn, spokesman for long-distance giant AT&T, which just began offering residential service in SBC Indiana's territory in January. "We're starting to see competition," he says. "And it will continue to develop if the Indiana commission doesn't have its authority taken away." Nationally, SBC still has a long way to go to prove it's meeting required performance measurements, says Pruyn, as evidenced by the more than $80 million in fines it paid to the U.S. Treasury from December 2000 to February 2003.

AT&T, McLeod and other competitive local exchange carriers, or CLECs, were already serving business customers in major Indiana markets, but waited to enter the residential market until the IURC set wholesale rates to access the lines of SBC and Verizon, the state's largest incumbent local exchange carriers, or ILECs. These wholesale rates, known as UNEs--unbundled network elements, will heat up competition, they say, and a study by their national trade association, CompTel, predicts Indiana consumers could ultimately save $193 million a year.

But the IURC set the UNE rates way too low, protests Marker. Competitors can get end-to-end connection including caller ID, call waiting, call forwarding--10 to 12 features--all for $12.19 per month per line. SBC's true cost is more than $20, he contends. If bargain-basement UNE rates are left as they are, what company would choose to invest in its own network and switches? When AT&T entered the residential market this year, he says, it offered SBC's package of services for double the wholesale rate.

Verizon operates in northern Indiana, Lafayette, Richmond, Terre Haute and Seymour, and also must make its local phone lines available to CLECs below its costs, says spokesman Bruce Childs. "We're...