Baby Bells vs. Ma Bell: Round One

July 16, 1994

Ten years is a century in the telecommunications world. When the nationwide Bell telephone monopoly was broken up by U.S. trustbusters in 1984, the industry was emerging from what now looks like its horse and buggy era. Ma Bell, more formally known as AT&T, was forcibly separated from her children, the local telephone companies. They were merged into seven regional monopolies familiarly known as the Baby Bells, including this area's Bell Atlantic. Ten years later, Ma doesn't much resemble her old self, the babies have grown up and the world they function in has changed drastically.

When a federal judge divested AT&T of the local companies, he barred each from poaching on the other's turf. AT&T had to stay away from local telephone service, and the regional companies were barred from offering long-distance service or manufacturing equipment. That way, the trustbusters reasoned, competition would be enhanced and consumers would benefit. For a while, it worked.

Then the swift pace of technological change, eagerly exploited by new entrepreneurs, altered the telecommunications environment dramatically. AT&T was challenged by competitors in the long-distance market, while others began nibbling away at the most lucrative kinds of local phone service. Cable companies pondered offering local phone service on their lines while telephone companies talked of providing movies over theirs. The distinctions that were so clear in 1984 were further blurred by mergers and alliances among phone companies and their erstwhile competitors.

Against that background, four of the Baby Bells have petitioned to get the old anti-trust restrictions on their operations revoked. Competition is no longer served by keeping them out of other markets, they argue. Only if they can offer long-distance service can they keep up with the other behemoths speeding down the new information superhighway. AT&T and its fellow long-distance providers insist the regional companies be kept under the restrictions until their stranglehold on local access to homes and offices is relaxed.

This new move in the courts mirrors a battle under way in Congress. The House has already passed, and the Senate is working on, bills to bring communications regulation into the 21st century. The issues are very complicated, probably more so than can be treated by the cudgel of anti-trust proceedings. The public interest would best be served by shifting control over telecommunications policy from the courts back to Congress, which is better equipped to keep pace with the contemporary race along the information superhighway.

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