Senators wrestle with telecommunications bill

August 11, 1994|By Bloomberg Business News

WASHINGTON -- A key Senate committee will try today to finish writing a bill to reshape U.S. telecommunications policy while a divided industry continues to argue over what the measure should contain.

The infighting threatens to push final approval of the legislation into 1995 or later.

"We're going to have some fireworks tomorrow. We're going to be bringing up a lot of issues," Ward White, vice president of federal relations at the U.S. Telephone Association, said yesterday. The association represents local telephone companies.

The goal is deregulation that would allow wide-open competition for local and long-distance telephone service and cable television service. Supporters of the effort say more competition would mean lower prices for customers, better equipment and access to a host of new information technologies.

The problem is that the industry remains divided over the wishes of the Bell regional telephone companies, on one hand, and AT&T, other long-distance carriers and cable companies on the other. They disagree on how and when they would be allowed to compete on each other's turf.

On Tuesday, after five weeks of negotiations, the Bell companies balked on a tentative compromise with AT&T and other long-distance carriers.

The measure "is still seriously flawed," and local phone companies "cannot support the bill as currently written," wrote Roy Neel, president of the U.S. Telephone Association, in a letter yesterday to Ernest F. Hollings, the South Carolina Democrat who is the Senate Commerce Committee chairman.

With their rebuff, the Bell companies essentially threw the legislation back to the committee. And there are wildly varying opinions there about what should be done.

"We throw our hands up on this one," said one Democratic senator who serves on the Commerce Committee, which will hear the bill. "Anything could happen now."

Senator Hollings wrote the bill that will be the basis for today's hearing. His bill, which has the backing of the long-distance carriers, would require the Bells to jump through several regulatory hoops before they could enter long-distance markets. Hollings already has extended the olive branch once on that score, dropping an even harder test at the Bells' insistence.

His revised bill retains what AT&T has always sought: a Justice Department review before allowing the Bell companies into the long-distance business.

The Federal Communications Commission also would evaluate whether the Bells' entry into long-distance is in the public interest.

Though it endorses the bill, AT&T complains that the bill gives the Bell companies too much latitude to control how and when long-distance companies could compete in the Bell-controlled local phone markets.

FTC The Bell companies object that the Hollings bill still would hinder overall competition by adding dozens of new regulatory burdens on phone and cable companies.

Mickey McGuire, chairman of a Bell-backed task force, contends the Senate proposal would require existing telephone companies shoulder the burden of ensuring universal access to phone services for all consumers.

They would be required to pay into a fund that would subsidize phone service to rural and other high-cost areas, while new entrants into the telephone market would be exempt, he said.

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