February 2, 1996 in Nation/World

A Telecommunications Revolution In One Big Bill Clinton Expected To Sign Sweeping Deregulation

Mike Mills Washington Post
 

Congress Thursday overwhelmingly passed the largest overhaul of telecommunications laws in 62 years, clearing the way for President Clinton to sign into law a measure that promises to change the way Americans receive telephone, television and computer services.

By removing long-standing monopoly protections, the bill would allow people to get long-distance service from their local phone company, for example, or local phone service from their long-distance or cable company. Or they might get it all, with TV and cellular service thrown in, from one company, on one bill.

But in some areas it imposes new regulations. It would require that television makers put a “v-chip” in many sets that would allow parents to block out violent programs. More controversially, it would establish criminal penalties for people who make material deemed “indecent” available to minors on-line.

Clinton hailed the bill’s final passage, saying in a statement that “consumers will receive the benefits of lower prices, better quality and greater choices in their telephone and cable services, and they will continue to benefit from a diversity of voices and viewpoints in radio, television and the print media.”

But many consumer groups oppose the measure. They say it will deregulate industries that continue to wield monopoly power before competition arrives. Cable rates are likely to rise, they say, as federal rate controls are lifted.

“This bill is bad for consumers,” said Bradley Stillman of the Consumer Federation of America. “For every provision in the bill that encourages competition, there are other provisions that undermine it.”

In essence, the bill would sweep away regulatory barriers that prevent telephone, cable, broadcast and other communications companies from entering each other’s markets.

It would loosen limits on how many TV and radio stations a single company can own. It also would allow broadcasters to offer new money-making interactive services over their airwaves.

“It’s the industry’s equivalent of the Berlin Wall being broken down,” said Robert Mayer, senior manager at the Deloitte and Touche Consulting Group. “We’re going to see major industry groups with enormous resources begin to penetrate each others’ markets.”

Republican and Democratic sponsors also have touted the legislation as a job creation measure - despite recent major layoff announcements by entrenched companies such as AT&T; Corp. Trumpeting that theme were chief sponsors Sen. Larry Pressler, R-S.D., and Rep. Thomas J. Bliley Jr., R-Va., both of whom repeatedly called the bill “the greatest jobs bill of the decade.”

The legislation breezed through both chambers after Senate Majority Leader Bob Dole, R-Kan., won assurance from Federal Communications Commission Chairman Reed E. Hundt Thursday that the agency would award no free licenses this year to broadcasters for new digital television service, allowing Congress to revisit the issue later. Dole had stalled the bill for weeks, complaining about what he called a “giveaway” of lucrative airwaves to the broadcasters.

The Senate passed the measure by a 91-5 vote, less than an hour after the House approved it 414 to 16. Clinton will sign the bill next week, Vice President Gore said in an interview.

Under the legislation, the nation’s local telephone carriers, dominated by the seven regional Bell companies, must allow all competitors to set up for business and connect to the Bells’ traditionally monopolized telephone wires, switches and facilities. Once that happens, the $94 billion-a-year local residential telephone market will face its first real competition ever.

The nation’s Big Three long-distance carriers, AT&T;, MCI Communications Corp. and Sprint Corp., are about to get seven new, equally formidable competitors in the Bells. Once a Bell company faces at least one competitor in a state, it could seek permission to offer its customers long-distance service under its own brand name. The long-distance field has been off limits to the Bells since they were spun off from the old AT&T; monopoly in 1984.

The FCC, with advice from the Justice Department, would then decide whether such a move is in the “public interest”

Cable television operators, who will face growing competition from telephone companies and satellite services, will be free within three years to set their own rates for most programs without federal government limits. Small operators would get immediate rate-setting freedom.

For those industries, the new buzzwords will be “one-stop shopping,” analysts said.

“Consumers will get introduced to ways of combining services that they haven’t seen before,” said Sharon Armbrust, senior analyst with Paul Kagan Associates Inc. in Carmel, Calif. “People want one bill.”

AT&T; and MCI, for example, within a year will be able to “bundle” local residential phone service with their long-distance, cellular, paging and Internet services - all on one monthly bill. Those companies and Sprint have plans to deliver video entertainment as well.

For the telephone industry, analysts also expect a flurry of joint ventures and mergers between long-distance carriers and Bell companies, and perhaps even between Bill companies themselves. Bell Atlantic and Nynex Corp. have been exploring the idea of combining at least their long-distance operations.

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