Information Turf Fight


November 14, 1991|By TRB

WASHINGTON. — Washington -- Every now and then Washington newspaper readers are treated to a befuddling war of advertisements over some obscure piece of legislation. ''Without H.R. 278,'' one might say, ''America's rivers will run dry by 1997.'' Au contraire, rejoins another, ''Passage of H.R. 278 will mean certain death by cancer for every child under 12.''

The first rule in understanding these battles is that there is usually less at stake than meets the eye. The lobbyists, ad agencies and trade association executives on both sides share an interest in exaggerating its importance -- not just to the citizenry but to the companies paying their fees. The second rule, though, is that somebody is usually trying to get away with something.

One such dispute is going on now between the newspaper industry and the regional Bell phone companies. According to the Bells, the newspapers want to prohibit the American public from receiving valuable information services. According to the newspaper publishers, the phone companies want to invade your privacy. ''Call a marriage counselor and the next thing you know a divorce lawyer may contact you.''

This is one of those endless regulatory controversies that fester quietly for years then erupt periodically, like herpes. The issue is whether the phone companies should be allowed to sell nTC electronic ''information services'' -- stock quotes, news headlines, computerized yellow pages, etc. -- over their own phone lines. The answer has always been no, but in October an appeals court said yes.

According to the New York Times: ''Unless Congress intervenes, this decision will allow the Baby Bells to exploit their monopolistic stranglehold over residential phone lines and dictate what information reaches nearly every home.''

A third useful rule is that when an interest group asks for special legislation in the name of ''competition,'' competition is usually what it is trying to prevent. In this case, the newspapers want to keep potentially powerful rivals out of the information business.

Their case is twofold. First, they say, the Baby Bells will squeeze monopoly profits out of their phone customers and use the money to subsidize their entry into the information business. And second, the Bells will use their monopoly control over the phone lines to discriminate against competitors. Both arguments are 99-percent economic nonsense.

As monopolies, the phone companies will certainly charge customers as much as they can get away with. That is why their rates must be regulated. Whether they are allowed into the information business has nothing to do with how much they charge phone customers.

They will charge as much as they can in either event. And whether they put monopoly profits into information services depends entirely on whether they can make money at it. They have no reason to run this side business at a loss, just to keep rivals out.

Anyway, most newspapers are monopolies as well -- unregulated -- with rates of return on capital comparable to the Baby Bells.

In the decade since this controversy started, phone companies have been banned from the electronic information services business. And yet during that whole time the newspapers have done practically nothing to enter the business themselves, apart from a few primitive 900 numbers.

The newspapers are less interested in protecting the electronic revolution than in protecting themselves from it. In particular, they are protecting their classified advertising, a natural to go electronic.

Cathleen Black, head of the American Newspaper Publishers Association, says that allowing the phone companies to compete in information services would be ''like saying the Washington Post could only be delivered by the Wall Street Journal." Pursuing the analogy, what the publishers want is for the government to tell the Wall Street Journal that it can't publish a newspaper.

Ah, but what about those cold calls from divorce lawyers? The argument is that the phone company knows whom you call and could sell those records. If their sale is to be banned, that can be done without banning the Bells from selling information over their lines.

After a decade, I am a connoisseur of the arguments in this endless dispute, and I can't help feeling this latest one reeks of desperation. The end may be in sight.

TRB is a column in the New Republic by Michael Kinsley.

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