WASHINGTON, July 10, 2000 -- The nation's local telephone companies are supposed to be gearing up for a new era of competition in all segments of telecommunications but evidence is mounting that the huge monopolies are calling the wrong number.

The Federal Communications Commission reports that complaints about local telephone service rose 82% for the first half of 1999, compared with a year earlier. Anecdotal evidence suggests the situation may be even worse in 2000.

Around the country, state regulators are levying big fines on the Baby Bells and other entrenched local phone companies for failing to meet state service requirements. The four largest Bell companies have paid $85 million in fines over the past three years and face nearly $300 million more in cases that are still pending.

In Florida, for example, the Public Service Commission says complaints against BellSouth rose 162% from 1997 to 1999 and the company is facing fines of up to $82 million for such violations as failing to install phone lines on schedule and failing to fix service problems in a timely manner.

In Ohio, Ameritech faces up to $200 million in fines for more than 400,000 violations, including fail to keep service appointments, failing to pay rebates and failing to fix outages quickly. The company says it's spending $3 million a day to install new fiber optic lines that it says will help fix the problems.

But in state after state, regulators say the Bell companies are spending money on installing new services -- including high-speed Internet lines -- instead of maintaining basic service.

The quality of service issues may come back to haunt the Bells. Competition is already fierce in the business market and, as cable companies and other new entrants complete their system upgrades, competition for residential customers will mount.

Each entrant will be striving to be a one-stop service offering local and long-distance telephone, cable and digital television, high-speed Internet connections and wireless service. The Bells' clumsy DSL entry into high-speed Interent and their mounting inability to maintain basic local service may come back to haunt them as new choices open up for residential customers.

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