AT&T Corp., the biggest U.S. long-distance carrier, said on Wednesday it would stop competing for local and long-distance residential customers in seven states after a court threw out regulations giving it cheap access to the dominant local telephone networks.
The company said it would no longer offer the services, as a bundle or individually, to new customers in Ohio, Missouri, Washington, Tennessee, Louisiana, Arkansas and New Hampshire, where almost 38 million Americans live.
"The ability to bundle local and long-distance services has become an essential aspect of competition in the long-distance market," said AT&T spokeswoman Claudia Jones. "AT&T and other competitors will not be able to effectively compete in the residential long-distance market without a viable local product."
She declined to detail how many customers the company had in those states but said the decision will not affect existing customers.
Nationwide, AT&T has about 4.3 million customers who subscribe to a bundled package of local and long-distance services and about 30 million long-distance customers.
A federal appeals court earlier this year eliminated rules that required the four dominant U.S. local telephone carriers, known as the Baby Bells, to lease access to competitors at government-set rates.
The Bells, Verizon Communications, SBC Communications Inc., BellSouth Corp. and Qwest Communications International Inc., had argued that the prices for access were below their costs.
The competitors, like AT&T and MCI Inc., have countered that they need those prices to compete. Since the Bells own most lines into U.S. homes, the rivals typically lease access to serve customers.