Calling the Shots

In the Southwestern Bell and AT&T slugfest over supposed consumer savings, the biggest sucker punch of all is headed your way

It started with a lady in the clouds issuing you a challenge in a 30-second TV commercial.

"As you look at your next phone bill," she said as dark billows moved rapidly across the sky behind her, "try and make sense out of the fact that it's more expensive to call within Texas than it is to call another state."

The lady spoke indignantly as you lay supine on your sofa. "That's right," she said. "It costs more to call from Marfa to Midland than it does from Marfa to Honolulu."

How can that be? you thought.
"Southwestern Bell, GTE and other local monopolies have no effective competition," she explained, "allowing them to set long-distance access rates that are among the highest in the country."

You didn't know an access rate from a prime rate, but you were galled at Southwestern Bell.

And she was glad.

The on-screen debut of the lady in the clouds during the fall of 1996 launched a high-stakes scuffle over telephone service that is working toward its denouement in the Texas Legislature. In a legislative session devoid of any crisis, AT&T helped create one with its barrage of TV ads that spawned an equally aggressive ad campaign by Bell.

Legislators, keenly aware of the storm clouds swirling over access rates, feel pressured to act. Somehow. Some way. "In the absence of the ads, it's questionable whether the Legislature would even be inclined to do anything on these issues," says Representative Sylvester Turner of Houston.

Yet telecommunications is a subject that even the most learned of legislators has trouble understanding. Seemingly innocuous bill language can cost consumers millions of dollars. In the haste to pass a telecommunications bill before the Legislature shuts down on May 31, legislators are poised to make a decision without really grasping the implications.

As one legislator puts it, the telecommunications freight train has left the station. And just in case legislators forget that there is no turning back, AT&T has the lady back on your TV, still seated in front of a backdrop of storm clouds but sporting a different hairdo and issuing a call to arms. "Demand low phone bills," she says, as she slams her fist on her khaki-covered knee.

You are under her spell. You either call the toll-free number or call up the Web site that appears on the screen. From there, a group called Texas Partnership for Competition encourages you to contact your state legislator and, darn it, you're mad, so you do just that.

Congratulations. What you have just done is help fan flames that almost certainly are going to come back to singe your behind and those of other residential phone customers.

The lady, you see, is a tramp for AT&T. And she has drafted you into AT&T's war of greed with Southwestern Bell.

AT&T sees Bell as a future competitor in long distance, local phone and other telecommunications services. Since February AT&T has spent about $5 million on political ads, according to filings with the Texas Ethics Commission. Bell spokesman Glenn Smith says the company has matched AT&T dollar for dollar on defense ads that slam AT&T. The strategy behind the AT&T ads is to seize profits from Bell by pressuring the Legislature to reduce long-distance access fees.

An access fee is the surcharge Bell imposes on long-distance companies, including AT&T, to tap into Bell lines within the state. The fee, currently 11.63 cents a minute, gets passed down to you, the customer, every time you place a long-distance call within the state. That's why long-distance companies such as AT&T charge you more to call from Marfa to Midland than from Marfa to Honolulu. It's not their fault. It's Southwestern Bell's.

But before you become an AT&T soldier and contemplate how sexy you look in camouflage, understand that as you fight for AT&T, you are actually helping Southwestern Bell. Whenever Bell gives a little at the Legislature, it expects to take a lot in return. The company almost assuredly will walk away from this fight with a trove of new rights, including an ability to raise prices essentially at will on most of its services.

That's because no company is as plugged in at the Legislature as Southwestern Bell. With more than 100 lobbyists trolling the Capitol halls on Bell's behalf, with a well-earned reputation as a company committed to community philanthropy and with 25,000 laborers across Texas wearing a union label, Bell enjoys advantages like no other special interest that asks the Legislature for favors.

The more candid of legislators admit they have a hard time saying no to Bell.

"Bell is aggressive, and it's just a matter of an individual legislator being able to accept that aggressiveness," says Representative Robert Puente, a San Antonio Democrat and one of the few legislators tough enough to stand up to Bell. "If you can accept it and hear their point of view and still stand your ground, well then I think that's what the voters want of you. And if you can't stand up to them, well then I think the voters need to know that, too."

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