Originally created 07/14/97

Local phone competition to heat up in Georgia



ATLANTA - Like 49ers during the gold rush, local phone prospectors are making their way through Georgia trying to stake their claim to a share of the state's $2.5 billion telecommunications market.

The Telecommunications Act passed by Congress last year has forced the BellSouth monopoly to loosen its grip on local customers if the company wants a share of long-distance profits.

BellSouth says it has already lost 950,000 customers to long-distance giants AT&T and MCI, which are using their own fiber-optic networks to market local phone service to Atlanta-area businesses.

Meanwhile, BellSouth is pressing state regulators for permission to compete against those carriers in the lucrative long-distance business.

The Georgia Public Service Commission has fielded nearly 100 requests to enter the state's market, with 14 applications already approved.

But telephone customers need not worry yet about a barrage of dinnertime sales calls.

Industry watchers predict most marketing will focus on businesses, a richer field to be mined than individual consumers. A company can run one telephone line into a building and charge multiple times with little overhead cost.

"We will all go in and try to skim off high-volume, high-profit customers. That is what you are witnessing right now that somebody in first-quarter, first-year economics will tell you," said John Silk, executive vice president of the Georgia Telephone Association, which represents 30 small phone companies already operating.

Home customers may prove tough to pluck from BellSouth or the handful of other local phone companies already long-established in Georgia.

Telecommunications industry watcher Mike Cummins said upstart companies might have a hard time overturning the BellSouth establishment, especially cable companies.

"BellSouth has a solid reputation. Why would you want to go off with a stranger?" said Cummins, director of the Georgia Center for Advanced Telecommunications Technology at Georgia Tech.

"Cable companies have real reputation problems. Bad service, lousy customer service, high service rates and growing," he said. "It's only recently that the regulatory arena said (deregulation) is inevitable that they got religion quickly and said, `We may want to create a different image."'

Cost-cutting is but one way to grab the consumers. A promotional package could include much more than a dial tone when the giants begin open-throttle campaigning for business.

"I guess it will be a rush to come up with new services," said Leon Bowles, principal utilities engineer with the Public Service Commission.

To get into the business, companies must file a proposed rate structure and background on their finances with the PSC to prove they are financially viable.

To pry customers away some of BellSouth's 2.5 million customers, PSC analysts predict competitors will offer cheaper optional services, such as call waiting, or fancy cable-phone-Internet packages.

"The package of the future will include voice, data, Internet, cable TV and health-related services," said BellSouth president Carl Swearingen.

"There's no reason not to check pulse, do an EKG or check your vital signs" by phone, he said, describing those services of the future as the "electronic house call."

Call waiting costs BellSouth about 5 cents per customer, according to PSC figures, but it sells for about $3.50 a month.

While that profit now helps BellSouth defray any losses on serving isolated rural customers, BellSouth does expect to cut prices for custom calling features as competition develops, Swearingen said.

Prospectors don't need much to enter the market except the ability to buy BellSouth service and then resell it. Entrepreneurs lining up for the chance include state House Speaker Pro-tempore Jack Connell, D-Augusta.

Connell, who operates several Augusta businesses including an electronics store that sells pagers and cell-phones, is seeking bad-credit customers kicked off BellSouth's service for non-payment.

Offering a prepaid service, Connell has been approved by the PSC to charge as much as $48 for basic monthly service - about three times the cost of BellSouth's basic calling plan.

Other companies are already building their own systems, rather than renting BellSouth's fiber-optic network, such as American Communication Services of Columbus Inc. Silk said ACSI will first target the midsize business market in Columbus before scouring the rest of the state.

The real grappling for business won't begin for some time, Silk said.

"There's no dust to settle. There hasn't been a sufficient level of competition to say there's a winner and a loser," he said.