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News Release
 
Staff Report On Local Telco Competition:
Competitors Have 11.1% Of Business Lines; 0.6% Of Residential Lines

 
August 25, 1999 (1999-036)
 
Contacts: Ron Eachus, Chairman, 503 378-6611; Roger Hamilton, Commissioner 503 378-6611; Joan H. Smith, Commissioner, 503 378-6611; Ron Karten, Public Information Officer, 503 378-8962
 
Salem, OR – There may be more than 100 competitors for local exchange service but they have less than 4% of the market for business and residential lines in Oregon, according to an Oregon Public Utility Commission (OPUC) Staff report based on a November, 1998 survey.
 
Of the 101 competitors certified by the Commission to compete with the existing local exchange companies, only 40 indicated they were providing service at the time of the survey. According to the survey, competing providers served 11.1% of Oregon’s local business lines and only 0.6% of residential lines.
 
"There may be a lot of certified providers out there, but that doesn’t mean there’s effective competition yet," said Commission Chairman Ron Eachus. "The incumbent providers like U S WEST still pretty much have a monopoly on local service, especially in the residential sector."
 
The Commission ordered the study to determine the state of competition for local exchange services in Oregon. Ninety of the 101 competitive local exchange carriers responded as did all 33 incumbent local exchange carriers.
 
At the time of the survey, resale was the predominant form of competition. A pure reseller buys complete retail services from an incumbent, then resells those services under its own name to consumers. Twelve of 22 competitors were pure resellers. The other 10 owned and operated at least some telecommunications facilities, but even these carriers often used resale for part of their operation. Fifty eight percent of competitors’ 83,451 lines were supplied by means of resale.
 
Competitors provided local services in all parts of the state. In the Portland metropolitan region, 5.2 percent of the lines were served by competitors; in the central region including Bend, the share was 4.1 percent; in the Willamette Valley, competitors served 2.9 percent of the lines; in the southwest interior, 2 percent; in the eastern part of the state, 0.9 percent; and on the coast, 0.5 percent.
 
Of 2,138,229 local telephone lines in the state, competitors served 83,451. Incumbents served the remaining 2,054,778, or 96.1%.
 
Because competitors have focused on business customers that generally have more lines, their share of lines was greater than their share of customers. The average customer of competing local providers, for example, used 4.7 lines while the average customer for incumbents used 1.2 lines.
 
The ratio of revenue to lines was also greater for competitors because of the focus on the business sector. This follows because business rates are higher than residential rates.
 
However, business customers of competitors paid lower average monthly bills than the incumbents’ business customers. For competitors, the average bill was $44/line. For incumbents, the average bill was $56/line. This suggests that competitors increased business by undercutting the rates charged by incumbents.
 
"The Commission’s role is to encourage more competitive entries into the local market by developing rules for interconnection and speedily resolving disputes between the incumbents and the competitors," said Commissioner Roger Hamilton.
 
 
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