Fourteen companies have received Mississippi Public Service Commission approval to provide local telephone service, and another 37 have filed to receive approval for providing local telephone service. But currently only business customers in Jackson and on the Coast actually have an option besides BellSouth for local telephone service.
Randy Tew, telecommunications specialist for the Mississippi Public Utilities staff, said that not all of the companies approved are expected to immediately enter the market providing local telephone service. He said some long distance service providers have filed for the Competitive Local Exchange Carrier (CLEC) license as a kind of insurance against losing business to “one-stop shopping” services for telecommunications.
If, for example, a major long distance service started losing a lot of businesses because a local telephone service provider put local, long distance, Internet access, and cellular services all in one package, the long distance carrier would have the option of competing by providing a similar one-stop package.
About half of the 14 companies who have CLEC approval are pre-paid phone companies. These companies provide service to credit-impaired people who can’t get service from the local exchange companies. “A lot of companies are trying to get into that business,” Tew said.
While companies in some states are allowed to charge $50 per month for pre-paid phone service, the Mississippi Public Service Commission has set the rate at $35.40 per month, which is 20% higher than regular residential rates charged by BellSouth.
The companies with CLEC tariff approval include American Communication Services of Jackson, Inc. (ACSI), American Metrocomm/Mississippi, Inc., AT&T Communications of the South Central States, Brooks Fiber Communications of Mississippi, Inc., Business Telecom, Inc., Cellular Holding, Inc., Cellular XL Associates, Inc., Dan’s Rent to Own, Inc., DAVCO, Inc., Entergy Hyperion Telecommunications of Mississippi, LLC, Intermedia Communications, Inc., Mississippi Cellular Telephone Company, NOW Communications, Inc., and U.S. West Interprise America, Inc.
Tew said applications from the remaining 37 companies who have applied for CLEC licensing are expected to be approved once the companies file tariff or rate schedules and met other requirements.
“The commission is providing every opportunity we can to allow competition to be available to the public,” Tew said.
“Right now we have not denied any applications for local exchange carriers. We are trying to help foster competition in the marketplace.”
Currently only three companies are known to be actually providing an alternative to BellSouth for local telephone service, Brooks Fiber Communications of Mississippi and ACSI in Jackson, and American Metrocomm on the Coast. The three companies are providing service to business customers only, although residential customers are expected to be added later.
Tew said Jackson and Coast are the logical first areas for competition in local telephone service because of they are the state’s two largest population areas. Initially only business and not residential customers are being offered service.
“I think businesses will be the first ones to benefit from competition, and then it will move into the residential market,” Tew said.
“Businesses will be first to see the benefits. The rates are higher with businesses, so profitability is higher. There is more money in business market. Residential customers tend to be high-cost customers with low profitability. So naturally the fallout is that residential customers will probably be the last ones to see competition.”
American Metrocomm, which is based in New Orleans, is currently approaching businesses and all city and county government on the Mississippi Coast promising significant savings for switching to American Metrocomm.
The company which provides local exchange, long distance and Internet services promised the City of Pass Christian savings of $3,000 per year.
Metrocomm President Gary George said the company can provide the best value for business customers with 10 or more telephone lines. “Even though we will sell services to a customer with less than 10 phone lines, we can really create added value for a customer with 10 phone lines or more,” George said. “That is where we can truly offer a distinction compared to any other carrier.”
Currently Metrocomm is buying local exchange services wholesale from BellSouth for resale to the customer. But the company plans to install its own fiber optic network in the Coast area, and later in other areas of the state. The company plans to offer service to residential customers in late 1998 or early 1999.
Metrocomm currently has a fiber optic network in New Orleans, and has one under construction in Montgomery, Al. Fiber optic networks are planned in four or five other cities in Mississippi.
George said the company plans to offer local exchange service in Starkville, Jackson, Hattiesburg and other Mississippi cities within the next year.
George said his company can offer cheaper rates than BellSouth because of the way the company uses its technology. “We have similar technology, but how we use it is different,” George said. “Being smaller gives us more flexibility in providing solutions to our customers.”
Larry L. Johnson, public affairs vice president for BellSouth, said BellSouth knows that as the market becomes more competitive, the company will lose customers. “But we are going to compete for every customer we have, and for every new customer who moves into the area,” he said.
Johnson said consumers will benefit from lower rates due to increased competition in the telecommunications business.
But BellSouth could also benefit from increased competition that is being allowed in telecommunications. BellSouth has applied to the Public Service Commission for approval to offer long distance telephone service. Johnson said BellSouth wants to provide long distance service so it can offer customers one-stop service for all of their telecommunications needs: local exchange, long distance, Internet, cellular and cable television.
BellSouth has already presented its case to the PSC for being allowed to offer long distance service. After certification from the Mississippi PSC, BellSouth intends to file for approval with the Federal Communications Commission.