MCI Communications Corp. is expected to announce soon that it is entering the local phone business in most major American cities, according to a report published Thursday.

Such an action by the nation's second largest long-distance company could give many consumers their first real choice beyond the regional Bell company for local phone service.It also could start the competition that regulators believe is necessary to allow the regional Bells to break out of the restrictions prohibiting them from certain telecommunications oppor-tu-ni-ties, including the long-distance market.

A formal announcement by MCI could come next week, the Wall Street Journal said, quoting unidentified people close to MCI.

MCI spokesman Kevin Inda told The Associated Press the company had no comment.

Under the plan described by the Journal, MCI would spend more than $1 billion to construct its local network. The money would come from the $4.3 billion sale to British Telecommunications of a 20 percent share in MCI, said the newspaper.

MCI has said it has been talking with cable companies such as Tele-Communications Inc. and Time Warner Inc. about having the cable TV companies carry its long-distance traffic to the final destination instead of using local phone lines, according to the Journal.

In November, MCI announced it would do a trial in Alexandria, Va., of telephone delivery by cable TV hook-up with Jones Lightwave Inc., a subsidiary of Jones Intercable. The test in the homes of 50 employees of Jones and MCI would start next March and be followed by a broader experiment involving Chicago area residents.

The coaxial TV cable that runs to almost every community in America has greater capacity than the twisted copper lines that deliver most local phone service. It could easily deliver audio, fax and computer data in addition to video.

Furthermore, no federal regulations prohibit MCI from entering the local phone business. State and local rules governing phone service vary.

The long-distance companies have long chafed under the weight of the access fees they must pay the regional Bells to complete long-distance calls.

They have sometimes found a road around them through independent contractors such as Teleport Communications Group based in on Staten Island, N.Y., which customizes local service for many business clients in Manhattan to avoid NYNEX, the local Bell system.

Access to customers through companies like Teleport costs significantly less than the 45 cents on the dollar paid by the long-distance companies to regional Bells for completing calls.

The regional Bells say the access charges are necessary to cover the cost of providing phone service to virtually everyone in America, including those in remote, under-populated areas where costs of service exceed returns.

"We welcome competition, we believe it is inevitable," said Ronald Stowe, a vice president of Pacific Telesis, the Bell company serving California and Nevada.

But he said the local Bells should be allowed to compete against the long-distance companies, too. Otherwise, "long-distance carriers will come into most economically desirable local markets, leave the rest behind, and destroy the existing system the provides for low-cost residential service for all Americans."

BellSouth said it would compete against MCI's efforts with superior products and service, but also pressed to be allowed into long-distance.

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"Ultimately, consumers will benefit from this free and open competition," said William McCoy, BellSouth vice chairman.

When Ameritech, the regional company serving the Midwest, asked the Justice Department earlier this month for permission to get into the long-distance business, it met immediate opposition from American Telephone & Telegraph and MCI.

The long-distance companies demand that the monopoly held by the local Bells be broken by competition before they are allowed into long-distance.

AT&T has said the standard for "demonstrable" competition should be 75 percent of all customers having access to a company other than the local Bell and 30 percent actually using that other service.

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