Share this story
Close X
Switch to Desktop Site

Changes in the Phone Company Landscape Continue

TO many a householder, the breakup of American Telephone & Telegraph Company has been a nuisance. It has meant not one but two telephone bills - one from the regional Bell company, another from a long-distance company of your choice. It often has meant shopping for your own telephone equipment and getting that equipment repaired. Telephone paternalism is past.

To others, the new telephone freedom is great. They can choose between a stylish European-made phone, a telephone with its innards illuminated, or any of dozens of other telephone variations that run from the ridiculous to the high tech.

About these ads

For the telephone companies, the breakup, now more than five years old, has meant fresh competition and a battle over regulation.

Virtually all of the regulation of the 1970s remains. The states continue to regulate intrastate services. The Federal Communications Commission (FCC) still oversees interstate communications.

The only area deregulated is terminal equipment - telephones, etc.

Even here, the seven regional Bell companies are prohibited from manufacturing such equipment under the 1982 divestiture decree worked out by Federal District Judge Harold Greene. Judge Greene still rules on such issues as the types of services and products the regional telecommunications companies can provide.

That bothers Rocco Marano, president of Bellcore, the $1.2 billion research company owned and largely funded by the regional companies. Greene's rulings, he contends, are slowing technological progress and thus impeding the ability of the regionals to compete.

Mr. Marano wants regulatory authority removed from the judiciary and returned to the FCC. Thus he supports legislation proposed in the House by Rep. Al Swift (D) of Washington and Rep. Tom Tauke (R) of Iowa which would return jurisdiction to the FCC and allow the regional Bells to manufacture equipment and provide information services.

(AT&T was allowed to get into information services only earlier this month.)

About these ads

Apparently the regional Bells figure their chances of getting more powers from the FCC are greater than from Judge Green. The Senate earlier this month confirmed Alfred Sikes, head of the Commerce Department's National Telecommunications and Information Administration, as the new chairman of the FCC. He is expected to carry on with the goal of his predecessor, Dennis Patrick, of introducing freer markets into the telecommunications business.

The House telecommunications and finance subcommittee, under Edward Markey (D) of Massachusetts, held a set of hearings on telecommunications regulation in May and June. They also have received 85 written submissions from corporate participants in the multibillion industry, from trade unions, and from citizens' groups.

Members of the subcommittee got together a few weeks ago and reached a consensus that they should go forward with some kind of legislation. But they did not get specific.

Staff of the subcommittee is boiling down the stacks of submissions into a working paper for the consideration of the 26 subcommittee members when they return from their summer break.

All this is evidence of a considerable concern in Congress about national telecommunications policy. But the area is so complex with so many conflicting interests that it likely will take some months if not years for any decisive action.

Meanwhile, the effects of the 1982 divestiture and subsequent regulation continues. Robert Crandall, a Brookings Institution senior fellow, recently spelled out some of these in the area of telephone service:

Rural phone rates remain below those of urban areas, though rural service costs the telephone companies more than city service. That's because of the political clout of rural residents in state legislatures. But rural rates are rising faster than urban rates.

Business rates are kept above residential rates. Yet the costs of business service are not appreciably above those of residential service. This economic distortion also reflects popular political pressures.

Interstate call prices have come down rapidly. Local phone service has become more expensive. Intrastate call prices haven't changed much. To Mr. Crandall, these changes represent progress in imposing charges according to costs.

Large central office telephone switches have been falling in price in real terms by 11 or 12 percent a year, more rapidly than the 7 to 8 percent before divestiture.

The congressional task of sorting out a new policy for telecommunications is formidable. But in the ``information age'' it may be one difficult to avoid.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.