Business News – Sprint Seeks Withdrawal From Local Market in California

Posted: 05/2001

Sprint Seeks Withdrawal From Local Market in
California
Filing Represents Fourth Unprofitable
State
By Josh Long

Sprint Corp. (www.sprint.com) filed an
application with the State of California in March to pull out of the local
residential voice resale market, marking the fourth state this year in which the
carrier moved to discontinue local services that were not sold on a bundled
basis with high-speed Internet access.

The carrier filed a request to withdraw from local service with the
California Public Utility Commission (www.cpuc.ca.gov)
on March 2, and notified customers of its plans. Sprint has resold local phone
service in California through Verizon Communications Inc. (www.verizon.com)
and Southwestern Bell (www.swbell.com). The
carrier began service there in October 1996.

"We decided to pull out of residential local offerings because it is
just not a financially viable business for us now," says Monica
Evans-Trout, a spokeswoman for Sprint.

Evans-Trout says the RBOCs were inhibiting competition. The fees the
incumbents charged to access the home telephone lines did not change, she says.

However, Sprint "had expected better compliance with equal access
regulations," Evans-Trout explains. "Instead, we constantly found the
RBOCs were using their office systems, engineering and network management
facilities to inhibit our entry."

RBOCs "inherently are these big slow-moving machines" that follow
their business sense and consequently provision their own customer before
activating a line for a competitor, says Atlantic-ACM Inc. (www.atlantic-acm.com)
analyst Nick Regas. In some instances, orders are lost or replaced, he adds, and
the RBOCs are not consistently pro-active in notifying their competitors.
Industry sources concede that all of these circumstances can result in delays
and threaten to erode a competitor’s revenues and customer base.

"Whenever there is more than one person involved, it just gets
increasingly difficult to provision that line," Regas says.

Earlier this year, Sprint filed applications to conclude its local service
offerings in Georgia, New York and Texas. The withdrawals will have no effect on
Sprint business customers. Evans-Trout says the number of residential
subscribers to local service is proprietary information.

Sprint has received approval to exit the local voice business in New York and
Georgia, and customers will receive future service from Verizon and BellSouth
Corp. (www.bellsouth.com) respectively,
Evans-Trout says. Customers were notified of Sprint’s plans at least 30 days in
advance, she adds.

In Georgia, customers were given notice as far back as December, Evans-Trout
notes. Sprint officially disconnected service in Georgia in late March, only
seven months after introducing the service. Customers receiving high-speed
Internet services in New York and Georgia will continue to receive local voice
as part of the Integrated On-Demand Network (ION) service, she says.

In Texas, Sprint decided to continue to provide local service after the
Public Utility Commission of Texas (www.puc.state.tx.us)
told the long-distance carrier it could expect denial of its request unless it
relinquished its certificate of authorization to provide other communication
services, Evans-Trout says.

"In an effort to keep our certificate, we are going to abide by the
commission’s recommendation and continue providing service," Evans-Trout
says.

Sprint does not want to lose its right to provide its ION
services–high-speed Internet access services bundled with local and long
distance.

In light of plans to cease unbundled local voice service, Sprint will
aggressively market ION, MMDS and PCS services to "differentiate Sprint’s
offers in local markets," she says. Sprint offers ION and other broadband
services in the greater metro areas encompassing Austin, Dallas and Houston,
Texas; and Los Angeles and San Diego.

Evans-Trout says the long-distance carrier does not plan to terminate local
service in the 18 states where it operates as the incumbent.