State hearings to discuss splitting up Ameritech

INDIANAPOLIS -- Some unlikely allies have come together as state regulators prepare to open hearings on the latest battle over Ameritech Indiana's dominance in local phone service markets.\nOrganizations that complain Ameritech offers poor service and engages in anticompetitive practices are supporting its campaign against a proposal that would force it to split into two corporate subsidiaries.\nSome rivals argue that Indiana will not have true phone competition until Ameritech is broken up into a retail unit handling phone service and a wholesale subsidiary overseeing the phone network and competitors' access to it.\nAmeritech contends a forced breakup would only raise prices and stifle innovation.\nIndiana's Office of Utility Consumer Counselor says now is not the time to consider a breakup, known in industry jargon as "structural separation."\nThe office, which represents consumer interests in utility issues, has submitted testimony arguing that the state's Utility Regulatory Commission should resolve other pending phone-competition cases before considering a breakup of Ameritech Indiana.\nOther groups that have not seen eye-to-eye with Ameritech in the past have come out more firmly against a breakup.\nOrganizations that announced opposition last week include the Indianapolis Urban League, the Indiana Manufacturers Association and Connect Indiana, a group backed by local phone service providers -- including Ameritech and competitors -- as well as the AFL-CIO and Communications Workers of America.\nRegulators are holding hearings today and Tuesday, with the witness list including representatives of Ameritech, AT&T and other parties that submitted testimony.\nThe five-member IURC will not issue a ruling for at least several days and possibly months, commission spokeswoman Mary Beth Fisher said.\nThe IURC is considering a petition filed last May by rivals that support a breakup. They include AT&T, McLeod USA and two trade organizations, the Competitive Telecommunications Association and the Association of Communications Enterprises.\nThose parties also have backed efforts in other states to divide the operations of "Baby Bells" like Ameritech that emerged from the breakup of AT&T in the 1980s.\nIn the last two years, at least a dozen states have considered legislation to order breakups or requests to state regulatory agencies to do so.\nBut the only state to move in that direction has since partially retreated.\nIn 1999, Pennsylvania regulators ordered a full structural separation of Verizon Communications. Last April, the company accepted a deal that allowed it to avoid the breakup on the condition that it take steps to compete fairly with other companies trying to enter Pennsylvania's local telephone market.\nAT&T wants Indiana to go further, arguing that regulatory oversight has not forced Ameritech to fairly open up its network.\n"What exists today isn't enough to get them to cooperate with potential competitors," AT&T spokesman Mike Pruyn said. "And this has led several competitors to end up in difficult financial straits."\nAmeritech Indiana spokesman Mike Marker said the demise of structural separation proposals elsewhere indicates that Indiana should follow suit.\nA breakup would cause Ameritech to become far less efficient, Marker said. A consultant's study paid for by Ameritech concluded retail phone rates would increase 44 percent, costing the state's consumers $700 million per year.\n"Hopefully, this proposal will be seen for what it is -- a risky idea, without precedent and one that would harm Hoosiers and benefit no one but AT&T," he said.