Regional Bells enthusiastic about offering information services

July 27, 1991|By Michael Dresser

Federal Judge Harold H. Greene's ruling freeing the regional Bell companies to get into the information business could give the consumer a vast array of new electronic services -- each as close as the nearest telephone.

The question is: Will the benefits ever outweigh the costs?

If you listen to representatives of the seven "Baby Bells," spawned in the wake of the breakup of AT&T in Judge Greene's Washington courtroom after a 1982 consent decree, you will hear rapturous descriptions of high-tech conveniences for businesses and consumers, with little or no cost to ratepayers.

Turn your ear to opponents of the ruling, however, and you hear grim warnings that local telephone monopolies will stick the average ratepayer with the bill for upgrading their systems to accommodate gizmos that will mostly benefit big business.

Larry Plumb, manager of media relations for Bell Atlantic Corp., dismisses that argument as nonsense. Small- and medium-sized businesses will be the first beneficiaries of new services the ruling will allow his company to provide, he said, but individual consumers won't be far behind.

Thanks to the Bells' newfound freedom, he said, phone customers will eventually be able to enjoy such enhancements to their present phone service as these:

* Students will be able to tap into lectures being delivered hundreds of miles away.

* On hot days, workers will be able to call home before they leave the office and "tell" their air-conditioning systems to drop the temperature a few degrees.

* Doctors will be able to monitor the condition of homebound patients without leaving the office.

The possibilities are virtually limitless, he said. And, with th economies of scale provided by shared-network systems, he added, the Bells will be able to deliver services to subscribers sooner than otherwise would be possible -- and at a lower cost. Once the ruling is put into effect -- assuming it is not invalidated by a higher court or Congress -- Bell Atlantic customers could begin to see benefits within two years, he said.

Gene Kimmelman isn't buying it.

Mr. Kimmelman, legislative director for the Consumer Federation America, said that whatever benefits will result from the Bells' new freedom will go to the high-end corporate customer. "Joe Consumer is not going to see a lot of the nifty service that people have been saying will spring up overnight," he said.

He said that the Bells' local telephone monopolies give them an unfair advantage. The Bells will be able to pay for upgrades to their networksby pushing rate increases past regulators, he said, while possible competitors would have to go through the process of raising capital in the public markets.

Mr. Plumb disagrees, saying most of the expensive upgrades are in place and that software development is the only significant expense to offering new services. He said that consumers would not be called on to cover even that expense.

Still, Mr. Kimmelman's position is receiving powerful backing from a group that has a lot to lose -- the nation's newspaper publishers, who fear the Bells will offer "electronic Yellow Pages" services that will siphon off classified advertising revenue.

Terry Maguire, senior vice president of the American Newspaper Publishers Association, said that the worst effect of the ruling for consumers is that it removes a "tremendous incentive for development of competing local telephone operations." He said that his group would oppose the unshackling of the Bells "until there is competition in the provision of local telephone services."

Even as the Bells are celebrating their victory, some skeptics ar waiting to see whether the companies' new freedom translates into profits.

Joel Gross, a telecommunications analyst with Donaldson, Lufkin Jenrette Inc. in New York, doubts consumers will see much impact from the ruling before the mid-1990s.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.