AT&T Ceases To Compete In Seven States

AT&T will stop competing for local and long-distance residential customers in seven states, the company said Wednesday. It placed the blame for the action squarely on the Bush Administration and the FCC. The states targeted are Ohio, Missouri, Washington, Tennessee, Louisiana, Arkansas, and New Hampshire.

"This action," AT&T said in a statement, "is a result of a June 9 decision by the Administration and the FCC not to appeal a recent Federal court decision that overturned FCC wholesale rules put in place to introduce competition in local markets. The reversal of local competition policy by the Administration will permit the Bell companies to raise wholesale rates as early as November."

The November date is important, because the Administration has been striving to hold back increases on consumer telephone bills -- said by consumer groups to be inevitable after the June 9 decision -- until after the November elections.

AT&T's decision to include long distance in its decision was something of a surprise because long distance has long been the firm's telephone flagship in the consumer market. The company indicated that it cannot compete with "competitive bundles" -- the packages of local and long distance telephoning -- offered by the Bells, so it is dropping out of the seven states entirely. The states involved have a combined population of 38 million.

AT&T's action likewise goes to the heart of the breakup of the original AT&T two decades ago. The telephone colossus was broken up to provide consumers and business with competitive alternatives. "We foresee a future with less choice for consumers," said AT&T Chairman and CEO David Dorman in a statement. "Competitive alternatives are simply not available today for most Americans, because as AT&T loses the ability to provide them with an alternative to the Bell companies, they will have virtually no choice of telecommunications provider."