WASHINGTON -(Dow Jones)- The local telephone industry's financial woes have become a tool in an intense lobbying campaign for deregulation. The fix being sought by the industry: Elimination of rules that require companies like SBC Communications Inc. to lease elements of their networks at deep discounts to competitors that are entering the local telephone service market, like AT&T Corp. or WorldCom Inc. . But regulation isn't the sole cause of SBC's decline in net income last quarter, says David Loomis, an economist at Illinois State University who previously worked for Bell Atlantic, now Verizon. Regulation isn't the only reason...