Baby Bells hope to sell information Court ruling frees phone companies

January 26, 1992|By Leslie Cauley

Parents who want to keep tabs on their kids' homework schedules are getting an assist these days from an unlikely teacher's helper: Bell Atlantic Corp.

By dialing into a special Homework Hotline, part of a new "Message Board" service sold by Bell Atlantic, parents can obtain a variety of daily updates from schools. That would include information on homework assignments and deadlines, cafeteria menus and details on upcoming school events.

Southwestern Bell, meanwhile, is using its high-tech muscle to try to steer Chicagoans clear of afternoon traffic tie-ups.

The Baby Bell has established a toll-free number people may call to find out about the latest traffic conditions, including up-to-the-minute reports on accidents, tie-ups and other highway problems. Southwestern Bell's traffic bureau, which is staffed by live operators, can offer alternate routes to callers who want to get home in a hurry.

In telephone industry lingo, both services are considered "information services," and both would have been illegal for the Bells to provide before July 1991.

That's when a federal judge ruled that the Bells may offer information services, reversing an eight-year ban that had kept the companies at bay. Prior to that order, the Bells could store and forward existing information electronically, but they couldn't create or manipulate the data or consult with other companies about how best to package or sell services.

The July decision has been appealed. Meanwhile, a federal bill designed to limit what the Bells may do with their new-found freedom is slowly working its way through Congress. Should the Bells lose out on both counts, they would be forced to considerably curtail their entry into the information services market.

But if the Bells are worried, they aren't showing it. Emboldened by court and legislative victories, the Bells are moving ahead quickly with plans to deploy new information services across their regions.

The Baby Bells' first steps can best be described as tentative -- the companies are proceeding judiciously to avoid costly

missteps -- but their intention is clearly to become major players in the $100 million-a-year information services market.

That's been a prime worry for some opponents of the Bells' entry into the market, such as the American Newspaper Publishers Association and the Consumer Federation of America. They fear the Bells will use their monopoly status to choke out competition. Opponents also fear the Bells will use funds from basic rates to bankroll their push into the market, thereby driving up phone rates over the long term.

"The kinds of services the Bells are talking about doing a lot of other people in the marketplace can already do," said Gene Kimmelman of the Consumer Federation of America. "With the Bells, there's the danger of poor investment decisions, inflated phone rates and less competition. . . . We view the risks as vastly outweighing the potential benefits."

The Bells brush aside naysayers, contending their entry will help ignite a love affair between America and the personal computer, a feat that not even the collective financial might of Sears & Roebuck Co. and International Business Machines Corp., the joint owners of Prodigy, the on-line shopping and information service, has been able to accomplish.

"It's hard to say what the Bells can do that a billion dollars in Sears and IBM money couldn't do," observed Gary Arlen, publisher of The Interactivity Report, a Bethesda newsletter that tracks the electronic services market.

Talk like that makes Abid Butt, manager of information services for Bell Atlantic Corp., fume. He likens the Bells' entry into the market to a new college graduate in search of a first job, contending long-term success won't come without growing pains.

"Think of the Bells as being fresh graduates in the marketplace. We're looking for jobs and we need lots of on-the-job training," Mr. Butt said. "Eventually we'll move on to become chief executive officers, but we can't be expected to become CEOs the day we graduate."

Philadelphia-based Bell Atlantic is putting the finishing touches on its long-term plan for deploying new services, a process that began almost before the ink was dry on the July court ruling. Mr. Butt said the blueprint should be complete by March.

According to Mr. Butt, the company's strategy calls for Bell Atlantic to examine all opportunities, no matter how small or seemingly insignificant. Toward that end, Bell Atlantic is sifting through more than 70 unsolicited inquiries from prospective partners, from garage entrepreneurs to large publishing houses and multinational conglomerates.

A number of those inquiries have touched on areas Bell Atlantic considers particularly ripe for development, including: electronic yellow pages, improved voice mail services and directory services, and home security and maintenance systems that could use the phone network for remote control.

"If there is a demand, we will get into it," Mr. Butt predicted.

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