Conflicting claims are nothing new in the aftermath of the breakup of AT&T. The "Baby Bells," former siblings in the telecommunications monopoly, have since the beginning argued for release from the restrictions U.S. District Judge Harold Greene wrote into his 10-year-old divestiture order: no long-distance service, equipment manufacturing or provision of information services.
Others (including this newspaper) involved in businesses threatened by these regional oligarchs' ability to overwhelm companies not guaranteed the profits of a regulated monopoly have pushed just as strongly to keep the restrictions. The biggest threat here is "electronic publishing" -- Yellow Pages by computer modem -- that could erode traditional advertising markets. There is nothing wrong with competition, but allowing Baby Bells to gouge ratepayers to fund the new ventures instead of investing their own money to build these new services is anti-competitive by definition.
A federal appeals court forced Judge Greene to drop the restrictions last year, to the cheers of the Baby Bells but drawing protests from even AT&T, their former parent. Now comes Texas Rep. Jack Brooks, chairman of the House Judiciary Committee, to put the issue into perspective:
"I, for one, will not condone an industry born in 19th century monoply to be reborn in a sleeker, 21st century version," Mr. Brooks said.
That parallels Judge Greene's reasoning in setting the limits in the first place. Thus, a bill just out of Mr. Brooks' subcommittee would restore the sense of the original 1982 antitrust order and provide a path for Baby Bells to enter new businesses. Mr. Brooks' bill would safeguard competition, phasing in the new services over a seven-year period and requiring Justice Department antitrust review of Baby Bell proposals.
These are companies which have clear records of anti-competitive behavior, not firms without a past. From Bell South's attempt to restrict entry to Georgia's competitive voice-mail market; to Nynex' equipment sales to its New England Telephone subsidiary at prices that inflated its rate base; to the trickery used by Bell Atlantic, Chesapeake & Potomac's parent, to get Pennsylvania customers to buy unwanted services -- all practices regulators caught and stopped -- the Baby Bells have shown a clear intent to throw their weight around.
Still, Mr. Brooks' bill would not totally bar Baby Bells from entering the equipment, long-distance and information services markets. Rather, it seeks a balance. If the Baby Bells can show that their entry does not put competing providers in unfair positions, forced to use Baby Bell services at higher prices to reach customers the Baby Bells want themselves, the bill would let them go forward. Without competing providers on the local loop, however, their record thus far does not inspire confidence in their intentions for fair dealing.