Ambush along the information highway

C. Edwin Baker

October 27, 1993|By C. Edwin Baker

IN promoting the proposed $33 billion merger between his company and Tele-Communications Inc., Ray Smith, the chairman of Bell Atlantic, said that consumers of information technology are now living a world of strict railroad schedules.

The merger, he said, would give us "the flexibility of the automobile."

But the proposed merger is actually less a matter of commuter flexibility than of who owns the roadway, the tollbooths and most of the cars.

If the government allows the merger, it would give a single, massive company the power to decide who can ride on the so-called information superhighway of the future.

Consumers should hope that when the Senate antitrust subcommittee begins hearings on the matter this week, it can be quickly persuaded to squash the merger.

The major suggested benefits of a joint company -- enhanced flexibility in delivering cable's products -- can be realized without the merger.

Telephone companies can already supply a highway down which any transmissions, including cable systems, can travel. That is why telephone systems have always been classified as "common carriers."

As such, they should be required to provide space on their networks to anyone, including cable companies, that produce or sell media products. The tolls that can be charged for use should be enough to induce them to provide the highway.

True, the merged company, with its vast capital base, might develop new technology more quickly than its smaller competitors. But this slight advantage in speed should be balanced against the merger's threat to democratic values.

What the companies would really gain is a potentially monopolistic power to control an increasing portion of the country's mass communications. This is why we have a federal law that, with a few exceptions, prohibits telephone companies from owning cable systems in any region where they provide telephone service.

Nevertheless, Bell Atlantic successfully convinced a district court in August that the law violated its First Amendment rights.

Although the court agreed on the importance of maintaining a diversity of media producers and suppliers, it rejected the government's argument that the telephone company might use a monopoly in the transport market to achieve power over programming.

The district court may be right to this extent: The day the proposed merger was announced, TCI's president, John C. Malone (who has a reputation as a ruthless monopolist), claimed he had no plans to refuse his competitors access to the pipeline.

But his actions show that he clearly craves the power to refuse access. His cable companies are now arguing to the Supreme Court that federal legislation requiring them to give access to local broadcast stations violates the First Amendment.

(Likewise, despite their description as common carriers, several telephone companies have already convinced a U.S. appeals court that they have a right to deny access to some communications.)

If the Supreme Court accepts TCI's claim that a media company cannot be compelled to allow access to competitors, it would give a Bell Atlantic-TCI conglomerate an open path to monopolization.

Even if the Supreme Court properly rejects TCI's argument, it is unlikely that government regulation can reliably protect consumers from any telephone company that supplies programming.

The best solution is to keep the two businesses separate.

Fair and open access is possible only if the corporation owning the highway does not have a tremendous economic incentive to favor one user -- itself.

C. Edwin Baker, a professor of law at the University of Pennsylvania, is author of the forthcoming "Advertising and a Democratic Press."

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