GTE Fights to Protect Its Local Monopolies

By Abrahms, Doug | The Washington Times (Washington, DC), January 25, 1997 | Go to article overview

GTE Fights to Protect Its Local Monopolies


Abrahms, Doug, The Washington Times (Washington, DC)


Taking full advantage of what rivals say is an unfair edge in the marketplace, GTE Corp. is waging a bare-knuckled legal fight to protect its local phone monopolies while rapidly building up its long-distance service.

The nation's second-biggest phone company yesterday filed suit against Oregon's utility commission - the 16th legal challenge the company has lodged against a state regulatory body in the past two months to block or delay competitors from challenging GTE's existing local phone monopolies.

Critics and competitors say GTE's legal blitz, directed by former U.S. Attorney General William Barr, has thrown a huge monkey wrench into the Telecommunications Act of 1996, the massive reform package that was supposed to offer a carrot-and-stick approach to break open the nation's phone monopolies.

"So far, they've been able to delay [competition] for quite a while," said Steve Davis, an AT&T vice president of government affairs. GTE has "no incentive to lose their monopoly."

GTE is exploiting its unique position as the only large phone monopoly that was granted the authority to offer long-distance service under the 1996 reform.

The law forced local phone companies to allow new rivals to connect into their phone systems or lease lines at wholesale rates for resale to consumers and businesses. In return, the local phone companies were granted the power to offer long-distance services for the first time.

But unlike the mid-Atlantic's Bell Atlantic and the six other Baby Bells with local phone service, GTE was given the right to offer long-distance services under the 1996 law without any restrictions. GTE was not spun off from AT&T in 1984 but instead built or bought local phone monopolies scattered in markets throughout the country, including Southern California, Seattle and Manassas.

Thus, GTE has no incentive to negotiate with competitors on local service and is taking full advantage, analysts say.

Through legal challenges, the company has delayed opening up its local phone network for months if not a year, said Kim Wallace, an analyst at the brokerage firm Lehman Brothers. …

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