December 21, 1996 in Nation/World

Telephone Service Fight Heats Up Gte Suit Challenges Ruling Regarding At&T; Leases

By The Spokesman-Review
 

A simmering battle over the future of telephone service in Washington surfaced Friday in Seattle with the filing of a GTE Corp. lawsuit against the Utilities and Transportation Commission.

The suit in U.S. District Court challenges the findings of a commission arbitrator who, according to GTE, would let AT&T; Corp. lease its lines, switches and other equipment at prices below cost.

The company says the findings violate its rights under the Telecommunications Act of 1996, which overhauled federal regulation of the telecommunications industry for the first time in 60 years.

The law was supposed to remove within months barriers separating providers of local and long-distance service. Instead, the process has bogged down in litigation over price-setting formulas and other rules.

GTE attorney Tim O’Connell said some contention should have been expected after decades of heavy regulation at all levels of government.

GTE, he said, has been a strong supporter of deregulation, and has already taken several steps to implement the law in Washington.

The company serves 775,000 state residents, including those in Pullman, the Tri-Cities and Wenatchee.

Commission arbitrator Karl Crane released his findings Dec. 11. The full commission is not scheduled to act on them until Jan. 10.

O’Connell said GTE filed suit before the commission vote because the company would be faced with a requirement it sign a contract based on the findings.

That procedure is unacceptable, he said.

Spokeswoman Marilyn Meehan said the commission is not bound by the arbitrator’s findings.

“It’s not different than the commission staff in a rate case,” she said. “They make a recommendation and submit it to the commission for approval.”

O’Connell said Crane determined GTE’s costs using a formula based on an imaginary, state-of-the-art network instead of expenditures for the equipment already in place.

The result was a discount so steep potential competitors like AT&T; would have no incentive to build their own network, which was one of Congress’ goals, he said.

Nor, he added, would GTE get the financial returns that would justify further investment in system upgrades.

“We have to submit that is not in the long-term economic interest of the people of this state,” O’Connell said.

The commission will rule next week on similar findings in a separate case involving US West Communications and AT&T.;

, DataTimes


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