At&T; And Competitors Will Broaden Services

AT&T Corp. and its rivals are expected to offer more premium-priced services, such as Internet access and caller ID, following a federal ruling that makes the nation’s No. 1 long-distance company more competitive.

The Federal Communications Commission ruled that AT&T is no longer a “dominant” long-distance telephone carrier, which means the company can change its telephone rates as fast as its competitors. Its former status, created before a 1984 court-ordered breakup that separated AT&T from seven regional Bell telephone companies, forced it to wait 45 days before changing prices.

The FCC ruling takes away an advantage formerly enjoyed by MCI Communications Corp. and Sprint Corp., which no longer will be able to create discount packages for long-distance customers faster than AT&T, analysts said. The companies now are expected to use new services rather than price cuts as a way to gain a bigger share of the $70 billion U.S. long-distance market.

“MCI and Sprint are going to have to outdo AT&T in terms of offering enhanced services since they won’t have a head-start in pricing any longer,” said Donna Coward, analyst at Wheat First Butcher Singer. “They will have to come up with more catchy things.”

New York-based AT&T already has new services on tap. The company said in August that it would begin offering access to the Internet, a global computer network. Last month it unveiled an on-line computer service specifically for businesses.

The success of any long-distance company’s new services could depend on a carrier’s marketing, where AT&T has the most clout, analysts said.

AT&T last year spent $1 billion to regain market share lost to MCI. Its marketing budget is about five times as large as MCI’s, Coward said. AT&T has about 60 percent of the market, while MCI has 20 percent and Sprint has 10 percent.

The FCC ruling is the latest event that could spur AT&T to expand its market share. It said last month that it plans to split into three companies - long distance, equipment and computers —so that each can focus on gaining a bigger piece of its market. A pending bill in Congress also would let long-distance and regional telephone companies compete in each other’s markets, which could entice AT&T into trying for a share of the $90 billion regional market.

“I wouldn’t be surprised to see AT&T take a shot at buying one of the Bells,” William Baxter, a former head of the anti-trust division at the Justice Department and a law professor at Stanford University, said last month.

AT&T is prevented from investing in the Baby Bells by the 1984 consent decree.