
                         THE VIRGINIAN-PILOT
                 Copyright (c) 1994, Landmark Communications, Inc.

DATE: WEDNESDAY, June 15, 1994                    TAG: 9406150010 
SECTION: FRONT                     PAGE: A16    EDITION: FINAL  
SOURCE: Medium 
DATELINE: 940615                                 LENGTH:

DEREGULATING TELECOMMUNICATIONS\

{LEAD} Congress will likely vote in the next few weeks on several bills designed to ease federal regulations standing in the way of the expansion of the information superhighway. For the most part, the various bills are headed in the right direction, but there are too many potential speed bumps along the way.

The three major bills, two in the House and one in the Senate, would be the most extensive rewrite of the telecommunications laws since the 1934 act that created the Federal Communications Commission. Driving this legislation are the massive changes that have taken place in communications technology during the last decade and the realization that the 12-year old consent decree breaking up AT&T simply doesn't apply anymore.

{REST} The bright lines that once separated long-distance from local telephone service, cable television and computer technology have now blurred almost beyond recognition. The various visual, audio and data-communications systems now emerging are what has collectively been dubbed the ``information superhighway.''

The most important element of the various bills is the elimination of the so-called ``cable-telco'' ban, which prohibits any telephone company from delivering video and data services over its network. The regional Bell companies (``Baby Bells'') would no longer be restricted to providing local phone service and could provide long-distance service as well as engage in the manufacturing of equipment.

Unfortunately, the bills have also been loaded up with various restrictions that will slow this deregulation's benefits to the average consumer. For instance, before one Baby Bell could offer service in another Baby Bell's market, it would have to prove the market it will be entering is already ``competitive.'' This is Catch-22: How is a market to become competitive if competition is prohibited?

The proposed legislation would also require telephone companies wishing to provide cable television services to do so through affiliated subsidiaries rather than directly to subscribers. This is intended to prevent regulated phone companies from using profits to subsidize an unregulated business. But there are already prohibitions against that, and forcing the creation of new subsidiaries will only increase costs for consumers. Besides, competitive local phone service should make rate regulation unnecessary anyway.

Also harmful is a requirement that any equipment manufacturing that a Baby Bell engages in must be done in the United States with American-made components. Protectionism of this sort doesn't create jobs; it generally destroys them by increasing production costs, and requiring job cuts elsewhere.

Some elements that are not in either of these bills ought to be. The disastrous 1992 cable rate-regulation law should be repealed. Restrictions on mergers and acquisitions by cable and telephone companies should be eased, so that mergers such as the abortive one between AT&T and McCaw Cellular can go through, providing the customer better service and lower rates.

Deregulation is clearly what the telecommunications industry needs most from government, not a new ``industrial policy'' or subsidies. There are welcome features contained in the bills under consideration in Congress, but if they are improved in the ways outlined above, the result will be a better deal, both for the industry and the consumer.

by CNB