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Veto Shakes Long-Distance Market Lowry Action Enables Phone Giants To Simplify Dialing Within State

A surprise veto by Gov. Mike Lowry is sitting around the capitol in Olympia like an unanswered, ringing telephone.

Two weeks ago, Lowry rejected legislation that would have turned back efforts by major long-distance carriers to simplify the dialing of phone calls within Eastern and Western Washington.

The measure, SB5156, had swept through the House and Senate by overwhelming margins after intense lobbying on both sides of the issue.

Passage appeared to preserve GTE and US West Communications monopolies on 1+ long-distance dialing within territories divided by the Cascade Mountains and, in Western Washington, the Portland and Seattle market areas.

Calls, for example, made between Spokane and the Tri-Cities, or Bellingham and Olympia.

AT&T;, MCI, Sprint and other long-distance carriers can offer service in the same areas, but phone users must dial a five-digit access code to initiate the call.

Richard Severy, the San Francisco-based director of regulatory and government affairs for MCI Telecommunications Corp., said the codes so discourage phone users that they automatically dial through US West, which has 95 percent of the market for so-called intra-LATA calls.

He estimated that market in Washington is worth $340 million.

Last fall, at the request of the Washington Utilities and Transportation Commission, AT&T; submitted guidelines that, after a year-long review, could open up 1+ dialing to all carriers.

US West responded with SB5156, which would stay commission review of the AT&T; proposal for three years, or until Congress completes work on a comprehensive overhaul of legislation governing telecommunications in the United States.

US West Area Manager Sharon Matthews said the long-distance carriers are trying to encroach on the company’s intra-LATA business while preventing it from carrying calls across or outside the state.

If AT&T; and the others want deregulation, she said, barriers to all competition in all segments of the business should be eliminated.

Matthews said 25 percent of US West revenues in Washington are generated by intra-LATA calls. Those revenues help subsidize local phone rates, which will increase if those subsidies are lost or reduced. “We’re projecting a heavy market loss,” she said.

US West has not automatically opposed competition, Matthews said, noting company testimony supported the entry of new companies into the market for local dial-tone service.

MCI’s Severy said US West may lose revenues initially, but eventually competition will expand the market and bring revenues back up to those the company enjoys as a monopoly.

The upshot for consumers, he said, is a potential saving of $70 million on their bills because MCI rates are about 25 percent less that those of US West.

“We think that’s a compelling argument,” Severy said.

Legislative leaders said Thursday the prospects for an override of Lowry’s veto are unclear at best.

Because the legislation originated in the Senate, the House will withhold action until a vote is taken there, Speaker Clyde Ballard said.

Sen. Sid Snyder, head of the Democratic caucus in the Senate, said lobbying continues, but the votes don’t appear to be there for an override, which requires a two-thirds vote.

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