AT&T Dropped From Dow As It Fights RBOCs

Fighting regional phone companies with one hand and introducing VoIP on a nationwide basis with the other hand, AT&T took a hit Thursday when the firm was dropped from the Dow Jones Industrial Average.

While the deletion from the stock index was essentially symbolic, the move came as AT&T's continues to battle against the access fees charged by the former Regional Bell companies (RBOCs). Moreover, the recent decision by the U.S. Court of Appeals for the District of Columbia on access fees supports the RBOCs against AT&T and other long distance providers on the issue.

"The decision is a black cloud," said Pete Wilson, president of Telewares Communications, a telecom consulting firm based in Destin, Fla.. "If the decision stands, it has to give the carriers pause. The RBOCs are feeling good about it."

While the FCC and the RBOCs are urging AT&T and the other long distance providers to reach agreement on access charges, the issue is moving to some state jurisdictions. The issue is different from state-to-state, however. In Indiana, for instance, AT&T is challenging an effort by SBC Communications to raise some fees by 30 percent while in Illinois legislators and regulators are fighting to keep the wholesale access fees stable.

Wilson, whose telephony consultancy works with large business enterprises, said it's possible that state contracts "will trump the Washington court ruling."Wilson said the long distance carriers have also been hurt by the "do not call list" because they generated much business by cold calling potential subscribers. (The RBOCs aren't so constrained because they usually have local customers already and have a legitimate business reason to call potential customers.) MCI, for instance, recently laid off several hundred of its telemarketers. MCI is in the process of resolving bankruptcy proceedings, although its long distance business has continued while the firm has been in bankruptcy court.

At the same time the FCC and some of the RBOCs are urging the long distance firms to work out their differences over access fees, AT&T is moving aggressively into the VoIP residential markets, offering the Web phone service in New Jersey and Texas and promising to offer the service nationwide in 100 major markets by year's end.

While the VoIP announcement gave AT&T a bright spot earlier in the week, Ma Bell put on a brave face after it was announced that it would be removed from the index. "AT&T is a Fortune 40 company with $34.5 billion in revenue last year. The fact remains that AT&T is one of the world's leading communications companies," AT&T said in a statement.