Gte Seeks Protection From Competition Nation’s Largest Phone Company Claims It Qualifies For Rural Exemption

FRIDAY, FEB. 21, 1997

GTE is claiming it falls under an exemption for rural telephone companies and shouldn’t have to face competition for local phone service in North Idaho.

Competitors are skeptical of the claim, since GTE is the nation’s largest phone company. But if it succeeds, the move could keep competitors like AT&T; and GST Telecommunications out of the North Idaho phone market.

Mitzi Sachs, vice president and general manager of GST Telecommunications in Spokane, said an exemption for GTE could thwart her company’s plans to offer high-tech phone, data and Internet services to Coeur d’Alene businesses.

“I think the consumer is the loser, especially the business consumer,” Sachs said. “It’ll delay technology getting to Coeur d’Alene that much faster.”

The Idaho Public Utilities Commission agreed Thursday to schedule a hearing on GTE’s claim within the next 45 to 60 days. The move came just as the House State Affairs Committee is deliberating on a bill that would grant small, rural companies an automatic, three- to five-year exemption from competition.

GTE, with 123,000 telephone customers in Idaho, is the state’s second-largest provider of local phone service. But its North Idaho service area doesn’t include any communities with more than 50,000 people - which could allow the company to fit under the legal definition of rural phone companies.

“This catches me totally flat-footed - I can’t imagine what their thinking is,” said Rep. Ron Crane, chairman of the House State Affairs Committee and sponsor of Idaho’s telecommunications deregulation bill. “There’s a lot of support among the legislators for what we consider to be the rural telephone companies - we’re a rural state.”

But legislators generally think of the tiny firms that provide phone service in towns like Albion, Cambridge and Weippe when they think rural, Crane said.

“We have a lot of rural area in Idaho that’s high-cost,” said Carol Rutgers, director of external affairs for GTE. “We think there should be some consideration of how that’s going to impact universal service.”

When competitors come into the market, they tend to pick off the higher-profit business customers, not the expensive-to-serve remote residences, Rutgers said.

GTE provides local phone service throughout North Idaho.

Small rural companies have been lobbying the Idaho Legislature strongly on the deregulation issue. They persuaded lawmakers to give them protection from competition in the state legislation, saying immediate competition from such competitors as AT&T;, Sprint and MCI would pose a hardship for small firms.

GTE probably wouldn’t qualify for the three-year exemption in the state legislation, because the bill includes a requirement that qualifying companies have less than 2 percent of the nation’s subscriber lines. But if the PUC upholds the company’s claim to rural status under the federal law, GTE might be able to keep competition at bay.

Eileen Benner of AT&T; said of GTE’s claim, “That’s something, isn’t it? Poor old little GTE. “Is that the kind of company that needs to be shielded from competition?” she asked.

Three companies have received PUC approval to compete with GTE in North Idaho, once they negotiate agreements with GTE to use its lines.

AT&T;, one of the three, has requested that the PUC arbitrate between it and GTE because the two firms haven’t been able to reach an interconnection agreement. But Rutgers sent a letter to the PUC this week saying the agency can’t arbitrate anything because GTE is a rural company that’s exempt from competition.

Under the 1996 federal law deregulating telecommunications, the PUC must look into whether allowing competition against a rural phone company would be economically burdensome, whether it’s technically unfeasible and whether it would interfere with maintaining universal phone service. The PUC must use those criteria to decide whether to allow competition.

“All we’re asking is just keep that in mind as we go forward,” Rutgers said.

GTE has argued unsuccessfully for rural exemptions in at least two other states, Ohio and Minnesota.

GTE is all for competition where it will be fair, Rutgers said. “We’re talking about rural and hard-to-reach areas.” , DataTimes


Click here to comment on this story »