SBC/Ameritech accused of degrading service for profits; SBC responds

SBC/Ameritech accused of degrading service for profits; SBC responds


CHICAGO, IL–The Illinois Coalition for Competitive Telecommunications has released a report charging that SBC, the parent company of SBC/Ameritech absorbed regulatory fines and doubled its profits. The $3 billion quarterly profit report followed record levels of local phone service complaints across the Midwest and months of fines by regulators attempting to get the telecom giant to achieve basic service standards, ICCT claimed.

“The sheep’s clothing is definitely off this wolf,” said Gary Mack, executive director of the ICCT. “We now have proof that SBC/Ameritech finds it more profitable to absorb fines than provide adequate service. We all assumed that they would be reducing profits to repair their problems, but they have simply made a business decision that it is cheaper to take the fines.”

As an example, ICCT cites that in Illinois, the Illinois Commerce Commission (ICC) recently fined SBC/Ameritech $1.52 million for failing to provide adequate service to competing local phone companies, as the law demands. While that may sound like a lot of money, it is less than one-tenth of one percent of SBC’s quarterly profits.

“SBC/Ameritech absorbs these fines and then ignores its obligation to provide quality basic local phone service and concentrates instead on new ways to make even more money in DSL, call packages and long distance,” said Mack. “Local phone service consumers deserve better; they deserve real choice.”

SBC/Ameritech’s earnings report prompted the ICCT to amplify its call for Illinois state legislators to promote local phone competition when they review telecommunications regulations this spring.

However, Michael King, spokesman for SBC, countered that the information is misleading. “ICCT is an AT&T-paid group,” he stated. “They regularly criticize SBC. That’s their function.”

He submitted a Federal Communications Commission (FCC) report showing summary statistics of its latest data on local telephone services competition in the U.S. Providers file such data twice a year under the Commission’s local competition and broadband data gathering program (FCC Form 477). The local competition and broadband data gathering program was adopted in March 2000.

The information released as of December 4 was filed by qualifying providers on September 1 and reflects data as of June 30, 2000. Noteworthy data include:

Competitive local exchange carriers (CLECs) reported 12.7 million (or 6.7 percent) of the approximately 192 million nationwide local telephone lines in service to end-users on June 30, 2000, compared to 8.3 million (or 4.4 percent of nationwide lines) at the end of 1999. This represents a 53 percent growth in CLEC market size during the first six months of this year.

• More than 60 percent of CLEC local telephone lines served medium and large business, institutional and government customers. By contrast, almost 80 percent of incumbent local exchange carrier (ILEC) lines served residential and small business customers.

• CLECs provided about one-third of end-user lines over their own local loop facilities. To serve the remainder of their customers, they resold the services of other telephone companies, or leased, unbundled network element (UNE) loops. Incumbent telephone companies provided about 5.7 million resale lines, compared to about 4.6 million at the end of 1999, and they provided over 3 million UNE loops, compared to about 1.5 million six months earlier.

At least one CLEC was serving customers in 54 percent of the nation’s zip codes at mid-year 2000. Over 86 percent of United States households reside in these zip codes. CLECs reported lines in all states except Idaho, and also in the District of Columbia and Puerto Rico.

The 78 providers of mobile wireless telephone services that reported mid-year data served about 91 million subscribers.

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