Ratifying a Winner in the Phone Vote

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For more than 18 months the campaign has raged amid a blizzard of contending hype, hoopla and hard sell. Tons of campaign literature have been mailed, endless hours of television commercials broadcast, hundreds of millions of dollars of campaign funds spent. Accusations of lying, ballot stealing and electoral tampering have abounded. But already last week, well before the Sept. 1 deadline when the vast majority of some 95 million eligible telephone subscribers are to choose a supplier of long-distance telephone services, the outcome of the Great Long-Distance Telephone Election was already clear. The most elaborate competitive exercise in U.S. regulatory history was bound to entrench giant AT&T almost as powerfully as ever atop the $50 billion long- distance industry that the company has always dominated.

Never before has there been anything quite like the exhaustive commercial referendum, known as "equal access" balloting, in which consumers select the company to carry their long-distance phone calls whenever they dial 1 plus an area code. In sheer numbers, the vote that was drawing near an end may mark the largest election in U.S. history. Yet the selection was being carried on in such higgledy-piggledy fashion that many consumers were probably unaware that any contest was taking place at all.

Some customers may discover the outcome of the telephone balloting only when their regular long-distance service is suddenly reassigned to a different supplier on the basis of the voting outcome in their designated area. Dozens of such reassignment possibilities now exist across the U.S. as a result of the 1984 breakup of the Bell System. The main focus of the telephone balloting battle, though, was on AT&T (1985 long-distance revenues: $17.3 billion) and its two remaining major national rivals, upstarts MCI ($2.5 billion) and US Sprint ($1.4 billion). Last week experts projected that AT&T would claim 80% of the final vote. MCI will probably trail with 10%, and Sprint will follow with 4%.

The election rules were another outgrowth of the 1984 Bell breakup. At that time, the Justice Department ruled that AT&T would stay in the long-distance business, where it had previously controlled more than 95% of the market, while the seven regional companies, dubbed Baby Bells, managed local telephone service. To whittle down AT&T's market share, the Justice Department determined that consumers should be able to choose their long-distance carrier.

The result has been a widespread competition -- of sorts (see chart). There are now some 450 long-distance carriers in the U.S., in contrast to about 150 before the AT&T breakup. Along with the Big Three national carriers, there are many medium-size regional concerns, like Republic Telecom of Minnesota, which has about 35,000 customers and enjoyed 1985 revenues of $100 million. But a considerable number of the retailers are much smaller operations. What most of them shared was a handicap: to make a long-distance call on their services, customers have had to dial as many as 24 digits on their phones. AT& T alone retained command of the 1-plus-area-code system.