High court leaves door open for Bell data banks

October 10, 1990|By Lyle Denniston | Lyle Denniston,Washington Bureau of The Sun

WASHINGTON -- The seven "Baby Bells" -- regional telephone companies -- moved a step closer to entering the electronic publishing business yesterday after the Supreme Court turned down a challenge by potential competitors.

In a brief order without explanation, the justices left intact a federal appeals court ruling lowering the legal barrier the Bell companies, including Bell Atlantic, must get over before they can start operating information data banks on their own.

Electronic publishing, as the regional telephone companies want to offer it, involves generating, storing, altering, processing and retrieving information -- all via telephone access.

The Baby Bells, which were created by the court order that broke up the Bell System almost seven years ago, have been barred since then from offering "information services." They were free legally only to provide telephone lines for others to use in getting access to information data banks.

U.S. District Judge Harold H. Greene, who approved the order breaking up American Telephone & Telegraph Corp. and creating the seven regional telephone companies, refused two years ago to lift the ban on electronic publishing for those companies.

Judge Greene said the Baby Bells had not proved to him that they could no longer use their local telephone monopolies to harm competition in electronic publishing.

The U.S. Circuit Court of Appeals here, however, ruled in April that Judge Greene had set too strict a standard for relaxing the ban on electronic publishing. Instead, the appeals court said, the judge must weigh whether it would be in the "public interest" to let the Baby Bells offer that kind of service.

The key, the court said, was flexibility -- a strong indication that the regional companies would now be able to show that there was no remaining need to keep them out of electronic publishing.

Since that ruling in April, the issue has returned to Judge Greene's court, but no new ruling has emerged there because the regional telephone companies' potential competitors in the information-services industry had taken their challenge on to the Supreme Court.

In their appeal, those companies contended that the ruling by the appeals court threatened the continued growth of products and services, and competition, in the information-services industry. Leading the challengers was MCI Communications Corp.

The companies said the relaxed standard adopted by the appeals court also might pose a threat to other bans on Baby Bell operations -- including a ban on offering long-distance telephone service and on manufacturing telephone devices.

The Supreme Court simply turned aside the challenge. There was no indication that any of the justices wanted to hear it.

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