Illinois Dials D For Deregulation, Cheaper Local Calls

THANKS to a bold initiative in Illinois, telephones across America might someday ring with a sound as sweet as a jingling pocketful of spare change.

The Illinois Commerce Commission plans to break up a near-monopoly in local phone service in a trend gaining momentum that could bring big savings to phone users nationwide, say industry experts.

Next month, the commission will begin deliberating how companies may compete on a large scale with Ameritech Corporation, the lone provider of local phone service in Illinois except for parts of Wheaton and Chicago. The commission will probably hand down a decision by April, experts say.

Deregulation in Illinois would eventually encourage competition in the nation's $100 billion market for local phone service. And, the new regulations are likely to help set a national standard.

``Illinois will obviously be the model for the country to see how competition will work in local phone service elsewhere,'' says Connie Luecke, telecommunications analyst at Duff & Phelps Corp. in Chicago.

If several companies were to offer local phone service, callers could see significantly smaller bills, Ms. Luecke says. The cost of toll calls would probably decline the most, perhaps from 15 percent to 20 percent, she says.

Among other states at the vanguard of deregulation - including Maryland, Oregon, and Washington - New York has carried market opening measures especially far. The state last October laid out a comprehensive framework for competition in local phone service in the Rochester metropolitan area.

Also, Nynex Corporation last month agreed to greater competition in local service in New York. Nationally, the United States Congress aims to guide deregulation in local phone service as part of a sweeping revision of telecommunication laws.

State regulators support efforts by Congress to promote competition as long as it doesn't infringe on state regulatory authority, says Lisa Rosenblum of the National Association of Regulatory Utility Commissioners. ``States are much more attuned [than the federal government] to what their ratepayers need, the economics of the marketplace, and service quality of the companies they regulate,'' says Ms. Rosenblum, deputy chairwoman at the Public Service Commission of New York.

In Illinois, deregulation is the result of recent sparring between the commission and Ameritech. For several months, the company had said it would not open up local lines unless the federal government authorizes its entry into the $70 billion market for long distance service. (A 1984 court order prohibits Ameritech and other ``Baby Bells'' from offering such service.)

But on Jan. 24, examiners for the commission called Ameritech's condition an ``unreasonable intrusion upon the commission's authority to establish policies in the public interest.''

The examiners believe ``if it's a good idea to open up [local distance phone service to competition], Ameritech should open it up whether or not it gets access to long distance service,'' says Beth Bosch, a commission spokeswoman.

Then on Feb. 8, the commission found that Ameritech had thwarted efforts by MFS Intelenet of Illinois Inc. to offer local phone service in the Chicago area.

On the same day as the commission finding, Ameritech completely reversed itself. It dropped its insistence that it first gain federal approval to provide long distance service and announced it will allow rivals to compete for local service to its 3.7 million customers in Illinois. Ameritech has a total of 13 million customers in Illinois, Indiana, Michigan, Ohio, and Wisconsin.