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SBC Goes Beyond Local in Ark., Mo.

11/25/2001 7:00 PM Eastern

SBC Communications Inc., the second-largest local-phone company in the United States, gained Federal Communications Commission approval Nov. 16 to offer long-distance calling services in Arkansas and Missouri.

SBC — which had been blocked from the long-distance market since 1984 under the initial federal breakup plan for AT&T Corp. — now has approval to offer long distance in five states. Last year, it gained entry in Texas, Oklahoma and Kansas.

The Telecommunications Act of 1996 enables the four Baby Bells to offer long-distance service in states where they have opened their local telephony markets to the satisfaction of state regulators and the FCC, acting with the advice of the U.S. Justice Department.

The FCC unanimously okayed SBC's applications for Arkansas and Missouri, claiming the approvals would promote competition in the local and long-distance markets.

No. 1 U.S. local phone company Verizon Communications Inc. is the only other Baby Bell with long-distance approvals, for New York, Massachusetts, Connecticut and Pennsylvania.

BellSouth Corp. has an application pending for Georgia; a decision is due by Dec. 31. Qwest Communications International Inc., the 14-state Baby Bell based in Denver, is expected to file entry applications covering multiple states in the near future.

Since 1996, the FCC has approved nine Baby Bell applications and rejected five. Four have been withdrawn.

Once a Baby Bell receives permission to enter the long-distance market, it may transport voice and data communications between local-exchange markets. Before, such traffic had to be handed over to long-distance carriers.

AT&T Corp., the largest long-distance carrier, has repeatedly complained that the Bells are gaining entry before their local markets are fully competitive. AT&T also has contended that companies seeking to buy long-distance minutes get much larger discounts than those seeking to lease network elements from the Baby Bells or to resell Bell retail services.

SBC now has authority to offer long distance over 30 percent, or 17.2 million, of its access lines. Verizon may offer it over 54 percent of its access lines (24.4 million total), according to Legg Mason Equity Research.

To help SBC achieve its regulatory goals, the company last Monday named former Commerce Secretary William Daley as president, reporting to chairman Ed Whitacre.

"His appointment as president of SBC signals the importance of governmental matters to our company's ability to grow revenues, compete effectively and meet our customers' needs," Whitacre said in a prepared statement.

Daley, who chaired former Vice President Al Gore's presidential campaign, will oversee strategic planning, regulatory and governmental initiatives, external affairs and international affairs. He served as commerce secretary from 1997 to 2000.

Daley's appointment takes effect Dec. 1.

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