Apr 30, 2004 (10:04 AM EDT)
Regional Bells Cool To AT&T Proposal

Read the Original Article at InformationWeek

AT&T's latest proposal for access fees fell with a thud, as three regional telephone companies--BellSouth, Qwest, and SBC--reacted negatively to the offer. AT&T proposed that it give up leasing the former regional Bells' switches and instead take over access lines.

BellSouth was the first to respond to Thursday's proposal, calling the AT&T offer "a desperate attempt to perpetuate the regulatory scheme that was vacated by the D.C. Circuit Court."

An AT&T spokeswoman responded quickly: "BellSouth is now dismissing our offer out--of-hand," she said "Now that they've rejected the true facilities-based proposal that is in front of them, BellSouth's past rhetoric is ringing a hollow tone."

AT&T and other long-distance and independent phone companies have been engaged in a contentious debate with the former Bells over the access fees that they must pay the Bells. The debate took a sharp turn in favor of the Bells last month, when the appeals court essentially said they could raise the access fees.

One neutral observer, Pete Wilson, CEO of telephony consultancy Telwares, said the merits of the AT&T proposal are fairly weak. "The Bells do not want to sell unbundled local loops, the one thing they have that others cannot readily duplicate," he said. "It is much easier to put switching in than it is to put in local loops."

SBC and Qwest also issued negative statements in response to the AT&T proposal. SBC questioned AT&T's "sincerity, since it appears they are proposing more setbacks than improvements." Qwest questioned the costs behind the AT&T proposal.

The access fee issue has defied solution for more than 20 years, since the old AT&T was broken up. The Court of Appeals decision--which most observers believe will be appealed to the Supreme Court--will enable the former Bells to hike fees sharply if the decision holds up.

"This is a public relations battle between the Bells and AT&T," said Wilson.