Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 16, 1994 TAG: 9401140376
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: By DIANE DUSTON ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Long
Now, the independent regional Bell companies are cable TV owners, cellular service providers, international data transmission companies and more. And what happens to them in 1994 could revolutionize the way Americans communicate, shop and entertain into the next century.
What was once the American Telephone & Telegraph Co. became, on Jan. 1, 1984, NYNEX, Bell Atlantic, BellSouth, Ameritech, Southwestern Bell Corp., US West, Pacific Telesis and a giant long-distance company called AT&T.
The idea behind the federal court agreement negotiated between the Justice Department and AT&T was to separate the competitive side of the business from the monopoly.
AT&T got long-distance and manufacturing rights where competition existed. The Baby Bells were given chunks of the country where they were the sole providers of local phone connections but were prevented from making telephone equipment or originating information that moved on wires they controlled.
Congress further impeded Bell expansion with a 1984 law that prohibited the companies from owning cable television operations in their regions.
But as the years have passed, the Bells have pushed hard in the courts and in Congress for removal of those restrictions and in the meantime have invested in other companies and expanded into other countries.
As a result of their business dealings, the Bells have changed from Siamese septuplets to distinctly different corporations competing head-to-head for cellular services, international contracts and more.
Their distinct corporate identities are illustrated in part by the way they've approached the video industry.
Bell Atlantic, the Philadelphia-based parent of Chesapeake & Potomac Telephone Co. considered by financial analysts to be the best run of the seven Bells, proved its deal-making skills recently by gobbling up Tele-Communications Inc., the nation's largest cable TV company. Combined revenues would total more than $16 billion a year and give the company access to 22 million customers, about twice as many as any other Bell.
The $26 billion TCI deal in October called attention to the phone company and helped the public visualize how interactive television one day might become an integral part of life.
The Bell Atlantic-TCI partnership was not the only venture by a Baby Bell into cable:
Southwestern Bell agreed last February to buy two Hauser Cable systems in the suburbs of Washington, D.C., for $650 million.
US West negotiated a $2.5 billion agreement in May for a 25.5 percent share of Time Warner Entertainment.
BellSouth contributed $1.5 billion to QVC's effort to buy Paramount Communications and bought a 22.5 percent share of Prime Management, a cable company in Las Vegas, Houston and Chicago.
NYNEX invested $1.2 billion in Viacom Inc.'s effort to buy Paramount.
Ameritech and Pacific Telesis haven't pursued cable properties as aggressively.
Pacific Telesis, which serves California, is trying to protect itself from competition with a $16 billion, 20-year plan to upgrade its entire network with high-capacity fiber-optic wiring. This system would accommodate the most advanced video or computer transmissions.
Ameritech also is concentrating on its regional market with a $1 billion upgrade project over the next two years.
The Bells' interest in cable, the increased popularity of wireless telephones, plans by cable TV companies to enter phone service and government interest in developing electronic highways ensure continued dramatic changes in the face of America's telephone industry.
Soon after Congress reconvenes, it will take up legislation that lawmakers feel will give the Bells much of the freedom that the companies say they need to be competitive.
One House bill, sponsored by Reps. Jack Brooks, D-Texas, and John Dingell, D-Mich., would phase out restrictions on manufacturing and long-distance operations. It also would allow the Bells to create information for transmission on their wires, giving them greater freedom in the information-service business.
Another House bill, pushed by Reps. Edward Markey, D-Mass., and Jack Fields, R-Texas, would allow the Bells to provide cable programming in their service areas.
\ THE BABY BELLS\ HERE ARE THE STATES SERVED BY EACH OF THE REGIONAL BELL COMPANIES:\ \ Ameritech: Illinois, Indiana, Michigan, Ohio and Wisconsin.
\ Bell Atlantic: Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Virginia and West Virginia.
\ BellSouth: Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.
\ NYNEX: Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.
\ Pacific Telesis: California and Nevada.
\ Southwestern Bell: Arkansas, Kansas, Missouri, Oklahoma and Texas.
\ US West: Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming.
\ THE BELL SYSTEM: A DECADE OF CHANGE\ \ HIGHLIGHTS OF LEGAL AND CONGRESSIONAL ACTION RELATED TO THE REGIONAL BELL COMPANIES
\ 1984 - Court decree takes effect breaking up AT&T. In addition, a federal law is enacted prohibiting Bell companies from owning cable TV operations in their phone service areas.
\ 1985 - First bill introduced to ease restrictions on the Bells by allowing them to manufacture telecommunications equipment and originate information to transmit on their phone lines. Bill goes nowhere.
\ 1987 - Federal court eliminates ban on Bell entry into non-telecommunications businesses.
\ 1988 - Federal court permits Bell companies to offer customers information services such as voice and electronic mail, but continues to refuse to let the Bells originate any of the information they transmit.
Legislation introduced to ease that restriction on information services and allow the Bells to manufacture equipment. Bill goes nowhere.
\ 1989-1990 - Legislation reintroduced on information services and manufacturing issues. Passes Senate but dies when Congress adjourns.
\ 1991 - Senate again passes bill allowing Bells to manufacture equipment, but House fails to act.
Federal court lifts the restrictions on information services.
\ 1992 - Federal Communications Commission adopts regulations allowing Bells to deliver video programming over their lines.
Legislation to ease restrictions on the Bells dies with congressional adjournment.
1993 - Multiple mergers and partnerships between the Bells and other companies begin to change the telecommunications corporate landscape.
Legislation introduced to: repeal 1984 law against telephone companies operating cable TV companies in their own phone service areas; open competition for local phone service; eliminate ban on Bell companies to manufacture and provide long-distance service.
by CNB