Baby Bells vs. Ma Bell: Round 2

September 05, 1994

After weeks of intense lobbying, the Senate Commerce Committee appears to have broken a logjam over national telecommunications policy. But there are plenty of other snags before Congress succeeds in revising the 60-year-old law controlling electronic communication and a decade-old anti-trust decree restricting telephone operations.

Vast technological changes have rendered these regulations obsolete. But with billions of dollars of revenue at stake, the various arms of the telecommunications industry have waged a massive struggle to invade each others' turf while protecting their own from competition as long as possible.

Technologically the barriers between local and long-distance telephone service, cable TV operations and other means of communicating electronically are falling. It's possible to carry conversations over cable systems and to transmit movies into homes by telephone lines. Long-distance phone companies like AT&T or MCI are increasingly able to offer local phone service; the regional Bell companies, divested from AT&T 10 years ago, are capable of providing long-distance service. But they can't under the 1984 court decree.

Economically, the increasingly artificial barriers between the different communications methods make less sense than 10 years ago, let alone in 1934. Competition that offers consumers and businesses real choices can reduce costs and hasten innovations in service.

But competition means different things to different people. To many of the high-priced lobbyists, it means simply gaining a competitive advantage for their clients. In a bill that mushroomed from 109 pages to 191 pages in just a few weeks, there's no telling at first glance how well some of them succeeded. The history of complicated regulatory legislation -- remember last year's cable rates fiasco? -- is that they often harbor sneaky provisions whose real effect are not readily grasped.

One thing must be clear to all, however. The old Bell telephone monopoly and its regional successors paid for their exclusive control over local service by providing universal service, even to unprofitable places like inner cities and remote rural areas. If that monopoly is to be broken -- as plainly it should be -- universal service must be preserved. That probably means spreading the burden of paying for it more widely. Competition in local phone service should not let newcomers take the lucrative customers without sharing responsibility for economic and efficient residential service.

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