Friday, March 14, 1997

Local, long-distance phone companies dueling publicly

By JEANNINE AVERSA Associated Press Writer

WASHINGTON (AP) - With billions of dollars at stake, local and long-distance phone companies are locked in an ad war aimed at influencing a government decision that could affect what customers pay.

MCI launched its most ambitious effort Thursday with a mix of print and TV ads, contending that local phone companies are overcharging customers $14 billion in fees the companies collect for handling long distance charges.

The local companies immediately attacked the ads, calling them inaccurate and a scare tactic. The United States Telephone Association is running a counter campaign on behalf of the local companies, including the Baby Bells.

The Federal Communications Commission is examining ways to lower some of the $23 billion in fees, called access charges, that long distance companies pay to local companies. The agency has said it will make a decision in May.

Long-distance companies want the FCC to cut the fees by half, saying they are well above local phone companies' costs to handle the calls. They say they'll pass the savings to their customers.

Local phone companies say the fees accurately reflect their costs and should remain about the same.

Importantly, a portion of the fees goes to keep local phone rates affordable for low-income customers and people who live in high-cost areas. If the fees are cut too deeply, local phone rates could go up.

MCI's 30-second TV ad opens with a politician, then people on a bus, a basketball player, a model, lovers, a fisherman and a biker each saying "moo."

During this, an announcer says: "Cows. That's how the big Bell monopolies see you. Big fat cash cows. The local phone monopolies overcharge you by $14 billion dollars. They call it access charges. You're a human being. Demand that the big Bell monopolies stop their access charge rip off." The ad closes with the onscreen message: "Stop being milked."

"I think it's really deceitful," said USTA spokeswoman Elizabeth Brooks. Local phone companies don't determine the fees, as the ad implies, she said. Regulators set them. Long-distance companies pay the fees to local companies for using their networks and pass the costs to their customers, she said.

"They got $9 billion in reductions, and they haven't passed that on," Brooks contended. "Their basic rates keep going up."

Long distance companies are not required to pass along such savings, but they insist they have. Local companies contend that long-distance providers usually pocket most of the savings.

MCI spokesman Robert Stewart defended his company's ads as accurate.

But Bell Atlantic President James Cullen said he wants to stop the ads. "It's a totally preposterous, inaccurate, unnecessary, stupid thing for a responsible company to do."

MCI is running the ad in Austin, Texas; Washington, D.C.; Atlanta; Sacramento, Calif.; Albany, N.Y.; and Springfield, Ill. Other markets are planned.

Bell Atlantic, Nynex, PacBell and Ameritech, which serve Washington, Albany, Sacramento and Springfield respectively, are considering airing counter ads.

USTA is now airing print and radio ads in Washington, D.C., aiming for policy-makers. One ad in The Washington Post challenges MCI and makes a subtle pitch on access charges.

"MCI can't seem to get its fact straight about local phone competition ... they want to have it both ways," the ad says. "On one hand, they want to serve only the best business customers, just like their ads say. But on the other hand, they want the FCC to give them a discount to use the local phone networks the rest of us depend on."