Ameritech ordered to lower switching fee

INDIANAPOLIS -- State regulators ordered Ameritech Indiana Thursday to slash the one-time switching fee it charges competitors to use its phone network from $102.50 to 37 cents.\nRival companies have said the fee amount was an obstacle to opening up the state's local phone service market. They say the order should go a long way toward eroding Ameritech's dominance in local phone service.\nAn Ameritech spokesman said the ruling will hurt his company's ability to pay for maintenance and improvements to its network and allow competitors to access the network at far below the cost Ameritech needs to run it.\nAmeritech was reviewing whether to appeal the Indiana Utility Regulatory Commission's 61-page order, company spokesman Mike Marker said.\nThe order, which takes effect immediately, involves a provision of the federal Telecommunications Act of 1996 requiring established local phone service providers to open their networks to competitors through phone line leases.\nThe five-member IURC had set the one-time network-access fee at $102.50. Ameritech has charged competitors that amount each time they signed up a new local-service customer.\nCompetitors including AT&T and MCI that are seeking a bigger share of Indiana's local phone-service market have urged the IURC to drastically lower the fee. Those companies maintain the fee is far above Ameritech's costs to lease phone lines to new providers and switch customers over.\nThe prices charged for accessing Ameritech's network "made it prohibitively expensive for competing carriers to provide alternative local services to Indiana customers," AT&T said in a news release issued after Thursday's order.\n"The commission has taken an important first step with today's order," said Bob Veneck, AT&T's assistant vice president for state government affairs. "We commend the commission for an order that should go a long way to promote local phone competition in Indiana and finally give Hoosier consumers a choice in local phone companies."\nMarker said the old $102.50 fee more accurately reflected Ameritech's costs than the new amount, adding that switching a customer over to a new provider involves far more than flipping a switch.\n"The concern is that when you have artificially low pricing, it drives competitors to continue reselling over our network, which hurts the state and hurts consumers in a multitude of ways," Marker said.\nMarker maintains large companies like AT&T have the resources to build their own local service networks but have chosen not to do so.\nIn the long-term, the one-time switching fees make up a smaller portion of the costs competitors face than the recurring fees they pay Ameritech each month to provide local phone service, Marker said.\nIn its order, the IURC also ordered Ameritech to reduce those fees, Marker said.\nMarker maintains competitors in the local-phone service market have been eager to offer business service but have been hesitant to provide less-lucrative residential service -- a service Ameritech is obligated to offer.\nCompeting companies provide just 3 percent of Indiana's residential service but 23 percent of business service, Marker said.\nA report issued last summer by the IURC said established service providers -- largely Ameritech, Verizon Communications and Sprint -- control 92 percent of all access lines in the state and nearly 98 percent of residential lines.