AFT OF PROBLEMS. A variety of other knotty problems also loom large on the horizon. “We see nothing but additional problems for the next couple of years,” because of new tariffs and the deregulation of customer-premises equipment, asserts Page Montgomery, vice president of the Boston consulting firm, Economics & Technology Inc.
For example, the Federal Communications Commission (FCC) is allowing AT&T and its former Bell operating companies to share billing records until July 1985. But since local phone companies will have the records, and AT&T the telephone equipment, information on customers changing equipment will go first to AT&T and then be forwarded to the local company. That’s “two more changes for error,” says Mr. Montgomery.
Business can also expect more complexity ahead in the ordering of phone lines. Local Bell phone companies, now on their own, will want to be more careful about their own planning and investments. “They’ll want to lock in customers, as part of their marketing,” Mr. Montgomery declares. Thus, they’re bound to make obtaining telephone lines more of a longer-term “lease-like” arrangement and penalize month-to-month-type line rentals, Mr. Montgomery notes.
“Whereas a few years ago a company may have ordered telephone lines, say a month ahead of time, we see a situation emerging where people are going to have to plan and order their facilities and networks with much longer notice”–maybe even as much as two years in advance to be sure to get them, he says.
“Ultimately, business will have to be making much more of a capital investment in phones” as opposed to “month-to-month rentals.” And amortization of those investments, he speculates, will encourage companies to retain equipment longer.
ACCESS CHARGES. And beyond simple procedural changes lie other more complicated and unresolved issues: the whole issue of costs, in general, and access charges in particular.
On a cheerful note, overall costs aren’t–as was once feared–likely to double for most organizations in the next several years. In fact, one corporate telecommunications executive sees his company’s phone costs rising only about 7% to 8% in 1984–if access charges are imposed as expected in april.
However, that’s a big if. Neither the question of how state access charges will be applied to intrastate telephoning nor when the FCC-ordered access charges–once set to begin Jan. 1 but now postponed until April–will begin have yet been resolved.
A House-passed bill would eliminate the access charge for residential customers and single-line business users. A Senate version, due to be voted on this month, calls for a two-year moratorium on access charges for those two categories of phone users.
But if Congress vetoes the imposition of such charges, it would cause about a $2 billion shortfall. “And our feeling is that business would be asked to pick up that [deficit], which is unfair,” beefs James Carty, vice president for governmental regulations and competition at the National Assn. of Manufacturers.
Another point of controversy: that the access fee for users of Centrex–local operating companies’ central office equipment that provides direct connections to phones on a customer’s premises–is too high. Although the FCC has set this charge at $2 per line–less than the charge to other business customers–Centrex users, mostly big organizations, point out that each line in the Centrex system goes from the customer’s building to the central office’s switch, making access charges overall more costly than with a PBX–a system in which lines are bundled before going to the telephone company switch.
STALLED? Linked to the access-charge brouhaha is the question of long-distance phone rates. They were supposed to drop in 1984 since AT&T’s long-distance service would no longer be subsidizing local service. (Access charges were to help compensate local Bells.) But AT&T’s request to drop long-distance rates 10.5% has been postponed pending an agreement on access charges. (Still, all long-distance rates wouldn’t have tumbled. For instance, AT&T had sought an average 15% hike in private-line service and a 1% boost in 800-number service.)
But headaches and question marks aside, some good news can be unearthed about AT&T’s divestiture. Long term, the Bell breakup should uncork opportunities in cost savings, by creating more choices in telecommunications equipment. Companies can obtain equipment “that better serves their own needs,” points out Victor Kruegar, vice president of the market research firm, Dataquest Inc., San Jose, Calif. More options in pricing should also evolve as the already hot competition in telecommunications turns on to broil. There will be “more distinctions in the quality of service. For lower quality, a customer would pay less,” says Mr. Kruegar.