Why Americans miss out on valuable phone services
Let's pretend last week's earthquake happened in Tokyo instead of Los Angeles. The damage would probably have been as great. But the damage control would have been far greater.
After an earthquake in Japan, a person can pick up a phone, dial into a computer data base, and find out which hospitals have beds available, locations of treatment centers, ambulances, and fire stations, or where to get relief supplies. The information is provided through Japan's national telephone company.
That can't happen in the United States. Last month federal Judge Harold H. Greene, who is overseeing the deregulation of the telephone industry, decided that local telephone companies cannot provide such information.
Under the Sept. 10 ruling, a phone company like New England Telephone is allowed to transmit information between the information provider on one end of a phone line, like Dow Jones News Retrieval or Dun & Bradstreet, and the person (or his computer) on the other end. But the phone company cannot generate the actual information. That turns out to be a thin, some say arbitrary, line.
But that line is enough so that potential competitors - like Dow Jones and Telenet (which delivers the information in packets over the phone lines), as well as alarm companies and secretarial services - are breathing a sigh of relief. They worried that if the phone companies had their own information services, or had financial relationships with those that do, they could use their control of the phone lines to throw customer business in the most profitable direction (for the phone companies, that is). They might give competitors inferior line access, for example, or provide services so cheaply it would drive small companies out of business.
When the phone companies were still part of the pre-1984 regulated system, they ``participated widely in anticompetitive activities,'' Judge Greene wrote in his decision, the first full review since the breakup. ``Were they to be freed of the restrictions, they could be expected to resume anticompetitive practices in short order, to the detriment of both competitors and consumers,'' he concluded.
Critics of Mr. Greene's ruling say that the technologies and services are so important that they must be weighed against the anticompetitive risks. But Greene doesn't have that option: His job is to administer the antitrust laws. Consequently, there is ``overwhelming bipartisan consensus,'' says an aide on the House Committee on Energy and Commerce, to transfer authority from Greene to regulators at the Federal Communications Commission, who can make such trade-offs.
Until that happens - and concrete action probably won't be considered before next year at the earliest - some legislators and telecommunications experts say the public is being cheated out of valuable services. Moreover, they say, the US industry is being encouraged to give up its technological lead to other countries.
``The real tragedy of this decision is not that it's simply restricting a set of companies as to what they can do,'' says Robert G. Harris, a telecommunications expert at the University of California, Berkeley. ``The tragedy is that it's restricting the use of a very powerful technology.''
Greene has, in effect, determined what services the American consumer can expect in the next three years and what ones they will be denied. (The next review will come in 1990.) He also left open some loopholes about videotext services (printed information received on a television or computer screen), and asked for comments over the next few weeks. He's expected to make a ruling on these issues in early December.
The people who benefit from the ruling are confined mainly to that sliver of the population with computers and modems who want to call up and use information using videotext services. Those people may soon find the white pages on their systems, or even ``enhanced'' white pages, which would group different businesses (plumbers, accountants) together like the Yellow Pages.
Greene also ruled that phone companies could, in a limited way, act as collection agencies for the companies that provide information. For example, if you wanted to get into a scientific journal data base, the phone company would record how long you were on line, and the charge would appear on your phone bill. That would mean videotext entrepreneurs would not have to set up accounting and billing systems - a big hurdle for start-up companies - and the consumer may see a lot more of such services.
There's another benefit to the user, says Robert L. Smith, executive director of the Videotex Industry Association. If, say, Dow Jones entered into an agreement to pay Pacific Bell a fee to do the billing, the consumer would not have to pre-subscribe to the service. He could use any service he wanted, and pay only for what he used.
It appears that Americans have lost far more than they have gained, however. Here are some areas where the technology is available or close at hand, but cannot be used because of the ruling.
Controlling energy use. Say you get to work and realize that you forgot to turn the heat down in the apartment. Instead of driving home or running up the heating bill, you could make a call to the local utility, which turns down the heat. The heat, as well as home appliances, would be hooked up to the electric facility through your phone lines.
Utilities could also smooth out an area's electricity use and reduce overall consumption by, say, reducing the amount of energy used by home appliances during the day when fewer people are home, and leaving more energy for lights and air conditioning in offices.
Home security. At present, many people have a security system that alerts a monitoring company, through the phone lines, when the alarm is triggered. The security guard then alerts the resident or the police.
If phone companies were allowed into the business, they could alert the resident or police. And since they could offer it to so many people, the price would fall dramatically - so much that alarm companies probably could not compete, says Dr. Harris at Berkeley. That anticompetitive threat raised red flags for Greene.
Voice messaging. Phone companies have the technology to turn every phone into an answering machine. If someone fails to answer his phone, the computer in the telephone switch could store the caller's message and deliver it when the person came home and punched a couple of buttons. (Japan did this about six months ago with a flick of the national switch.)
The system would be a downscaled version of the PBX systems used by many companies - but because of economies of scale, small companies and individuals could afford it.
This ``call, store, and forward'' function would run many secretarial services and probably answering machine manufacturers out of business. It also pushes phone companies dangerously close to the line that divides transmitting and providing information.
Another service people can't have is what Harris calls the ``CC [carbon copy] function'' - sending the same message to more than one place. Say you're having a dozen people over for a barbecue - weather permitting. The weather looks iffy, but you're going ahead anyway, and want to get the word out to your guests.
Using today's technology, you have to call everyone. Using technology that phone companies have developed but aren't allowed to use, you could record your message in the phone, punch a couple of buttons, and the message would automatically be delivered to the desired telephone numbers. (You'd have to enter the numbers in the data base first.)
News media would likely find that function useful in sending messages to far-flung correspondents, as would companies that frequently change, say, the prices of their products and want to keep salespeople informed.
On-line Yellow Pages. Electronic Yellow Pages could be updated every day, and, newspapers fear, eventually take the place of classified ads. More than any other service, on-line Yellow Pages would ``give consumers a compelling reason to access videotext,'' says Mr. Smith at the Videotex Industry Association, and ``the continued restrictions on Yellow Pages will undermine everything else.''
Banking and catalog ordering. Technology has been developed (by International Business Machines, for example) to turn one's voice into digital packets of information that computers can understand. If phone companies could use that technology (which they can't), you could call your bank's computer and say, ``Transfer $500 from my savings account, No. 54675, to my checking account, No. 66523, pronto, my checks are bouncing.'' No button-pushing. You could order via a computer at, say, L.L. Bean the same way.
Versatile telephone services - in other countries
The United States leads the world in telecommunications technology. But the average American can't use all the futuristic services the technology makes possible - unless he's traveling abroad. Here are some of the services the French, Japanese, and British are using.
France. By the end of 1986, there were 2.2 million videotext terminals in French homes and offices (vs. 20,000 in the United States). With 4,400 entrepreneurs offering their services on-line, France leads the world in videotext.
Using their phones and terminals, people can make loan requests at their banks - and find out if the requests are approved; scan the auto ads; get prices and quality testing comparisons of various products; read the newspaper (everything but the classifieds); learn about marches and protests coming up; and have an electronic conversation with a politician.
Using an electronic directory with 24 million phone numbers nationwide, people have found lost relatives, some of whom had fallen out of touch since World War II. They can also send and retrieve phone messages, which are stored in the phone company's computer.
Japan. By the end of this year, Japan expects 48 million people to subscribe to the telephone company's Information Network System. The most popular services include home shopping; home banking, including information on interest paid this month; and medical exams, in which doctors use videophones for simple exams and transmit diagnoses to hospitals.
There are services available to everyone with a telephone, including motor vehicle registration, money transfers from one bank to another, and, of course, answering service.
The 27,000 people subscribing to videotext services can read general news and weather, get the tax office to calculate taxes, receive practice tests for school entrance examinations, learn the results of the latest sumo match, and make plane and hotel reservations.
Britain. The 70,000-plus videotext subscribers can get free financial, legal, and tax advice; pay their bills; transfer money between accounts and order new checkbooks; make travel reservations; and buy tickets to the theater. People can send and receive messages. And at no cost to the user (only to the advertiser), people can search through Yellow Pages - not only the local directory, but the Yellow Pages from a remote town.