‘96 Telecomm Law Ushered In Period Of Relative Chaos

If things don’t start turning around soon with some aspects of the nation’s telecommunications industry, legislation signed into law by President Clinton 13 months ago could turn into one of the biggest fiascoes in this country’s history.

Right now, the much-ballyhooed law certainly is among the most contentious. And all of that telecommunications unhappiness that has welled up since Feb. 8 last year isn’t just coming from the cable and phone companies fighting each other for territorial business - without regard to cost.

The Telecommunications Act of 1996 was supposed to enrich the lives of American consumers with everything from attractive cable fees to low phone rates for local and long-distance service. The historic overhaul legislation also was supposed to generate more jobs through increased sales of radio and television stations, as well as stiffer competition among communications companies that would lead to better services and lower prices.

Eventually, all this may still happen. But right now it looks like an uphill battle, particularly among the local and long-distance companies that are vying strenuously to get into each other’s business. A total of $160 billion is at stake between the two industries.

True, the situation may be a bit more civil on the broadcasting side, where unlimited station ownership provisions in the telecomm law has brought smiles to some mega-media conglomerate faces.

But consumers on the other end of those fantasy telephone calls and premium cable channels seem to have again drawn the short end of the telecommunications straw.

That’s disturbing, especially when you consider the whopping $4 million in lobbying money that the phone companies - local and long-distance - pumped in a couple of years to cajole U.S. lawmakers to do things their way.

Granted, television’s V-chip and cable TV’s rate controls were enacted as part of the new telecomm law. But it will take at least another year before any kind of program-control mechanism on television sets can find its way to consumers. And it will take even longer for runaway cable rates to be whipped back in line.

Under the telecommunications cable provisions, franchises with 50,000 or fewer subscribers were given the green light by Congress to raise rates almost immediately, with the larger cable operators having to hold off on rates hikes - at least until 1999. Unfortunately, some larger cable operators have found a way around what Congress intended by cleverly disguising their improper raised fees under creative marketing packages.

Perhaps it was my bi-coastal commute for much of the past year - or maybe even my fiscal maintenance of two separate cable systems. Or, it could have been my hair-raising subsidization of two of the three largest U.S. long-distance phone company systems on both sides of the country. But if you’re like me, a few dollars here and a few dollars there in bills adds up to a sizable hit. This, from a telecommunications industry that President Clinton and the Republican-led Congress promised a year ago would improve for consumers.

Part of the telecommunications mess no doubt stems from the inability of the seven so-called Baby Bells to carve their way into the long-distance market. Local phone companies are required to have competition at their own level before getting the green light to enter the $70 billion long-distance market.

This FCC stipulation has proved to be a big hurdle for local phone service providers, as evidenced by Chicago-based Ameritech last month, when the Federal Communications Commission rejected its application to begin offering long-distance phone service to the Bell company’s Midwest and Great Lakes Region customers.

The radio industry seems to have fared better from Congress’ decision to change telecommunications as we know it. In just one month after the telecomm bill became law, about $1 billion was generated in the sale of radio stations alone. The money represented almost the entire amount generated by the burgeoning industry the previous year.

Things have tapered off since last year. Still, it was a record amount of sales involving stations changing hands - and the kind of resurgent business both Democrats and Republicans had hoped for when the telecommunications bill was being drawn up.

So, who in this period of telecommunications uncertainty - and disappointment - is zooming whom?

Stay tuned.

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The following fields overflowed: CREDIT = Fred Davis Washington State University