Rewiring America

December 12, 1993|By Michael Dresser | Michael Dresser,Staff Writer

An article in Sunday's Business section incorrectly identified the chairman of the House telecommunications subcommittee.

The chairman is Rep. Edward Markey, D-Mass. Rep. Jack Fields of Texas is the ranking Republican on the panel.

The Sun regrets the errors.

When Congress passed its last comprehensive law to govern the nation's telephone system, Franklin D. Roosevelt was president, 35 percent of American homes had phones and you couldn't place a call from Baltimore to Washington without an operator's help.

The Communications Act of 1934 served the nation well for decades, promoting the concept of universal service so effectively that more than 94 percent of the nation's households now have phones. But since federal Judge Harold Greene ordered the breakup of AT&T in 1982, Congress has been deluged with calls telling it the venerable law is obsolete.


After a decade of putting those calls on hold and letting the courts dictate telecommunications policy, Congress appears ready to act in 1994. Roused to a sense of urgency by mega-mergers and technological revolution, an institution that often seems grounded in the 19th century is poised to rewrite the industry rule book just in time for the 21st.

The stakes are enormous. What Congress decides, or fails to decide, could affect the telecommunications choices Americans will have -- and at what cost -- for decades. Some consumer advocates worry that critical decisions will be made with little public attention.

"We are entering into the 21st-century information age blindfolded," said Jeffrey A. Chester, executive director of the Center for Media Education in Washington. "This is the electronic legacy we are leaving our children and grandchildren."

For many members of Congress, the 2-by-4 across the head was the October announcement that Bell Atlantic Corp. would acquire Tele-Communications Inc., the nation's largest cable-television company. That deal, valued at about $30 billion, illustrated the convergence of the telephone and the television and showed how much the world had changed while Congress has remained disconnected.

Bills before Congress

When Congress returns from its holiday recess in January, it will face at least four major bills to break down legal and regulatory barriers to competition in the local telephone, long-distance telephone and cable-television industries. By February, the Clinton administration is expected to introduce its own comprehensive bill.

For consumers and businesses, the proposed legislation is intended to lower prices and to speed the introduction of a wider array of choices. For the regional Bell companies, it could mean liberation from the shackles imposed by Judge Greene's "MFJ," the modified final judgment in the American Telephone & Telegraph Co. antitrust case, which spells out what the Bells can and cannot do. For cable and long-distance companies, it could mean new competition and new opportunities.

Congressional and industry sources say the chances for action next year are the best they have ever seen. There is an emerging bipartisan consensus that greater competition, rather than stricter regulation, is the best way to ensure that the march of technology isn't impeded and that consumers aren't taken to the cleaners.

Washington veterans warn that any bill must weave a perilous path among competing interest groups. At every turn, industries that profess to want a level playing field will be trying to sneak in a comma to tilt the law in their direction. A bow in one industry's direction could bring fierce opposition from another. If not for health care, this would be the lobbyist's dream bill of 1994.

For now, though, members of Congress are emphasizing comity over conflict.

Rep. Rick Boucher, a Virginia Democrat who is one of the House's experts on telecommunications policy, says a consensus has emerged in Congress around a few broad principles. According to Mr. Boucher, any comprehensive bill should:

* Create competition in the cable business by repealing the section of the 1984 Cable Act that prevents phone companies from providing video programming. The restriction already has been eroded by a federal court ruling in August that the curb violated Bell Atlantic's First Amendment rights.

* Eliminate the regional Bell companies' monopoly on local phone service by opening the field to competitors.

* Require that all participants in a local phone market pay their share of the cost of providing universal service to the least profitable segments of residential markets.

* Once there is competition for local telephone service, eliminate provisions of Judge Greene's order that bar the regional Bells from offering long-distance service or making telecommunications equipment.

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