Washington The Justice Department warned of possible competition problems Monday about SBC Communications' bid to offer long-distance to its local customers in Oklahoma and Kansas.
The department advised communications regulators to review independently the prices that SBC charges rivals to lease portions of SBC's phone network. If these prices are improper, they could limit the ability of companies to offer competing local phone service in those states, the department said in a filing with the Federal Communications Commission.
The FCC is reviewing whether to permit SBC, one of the four Baby Bells, to provide long-distance service to its local customers in those two states. By law, Bell companies cannot offer long-distance in states within their local calling regions until they show that the local market is open to competition.
A 1996 telecommunications law laid out a series of steps that Bell companies must take to demonstrate local competition in a state. SBC met requirements of the law earlier this year to begin offering long-distance to local customers in Texas.
The company filed a joint application in October to provide long-distance in Oklahoma and Kansas. The final decision rests with the FCC and is expected in January, but the commission must give substantial weight to the findings of the Justice Department.
In this case, the department noted that many of the prices charged by SBC to lease out phone lines were significantly higher in Oklahoma and Kansas than in Texas.
These prices are considered important because many new local phone companies do not run or have not built their own networks. Instead, they lease phone lines from the Bells to offer competing service. SBC noted that state regulators set pricing levels. Still, the SBC said it would submit any necessary information to the commission.
"We are confident that we will be able to demonstrate to the FCC that evidence supports approval of these applications," spokesman Matt Miller said.
Regulators in both states lent unanimous support for the applications, which the FCC also must take into account in weighing its decision.