THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, December 8, 1995 TAG: 9512080011
SECTION: FRONT PAGE: A18 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 62 lines
A huge telecommunications bill is in conference and heading for a likely veto at the White House. Reform of regulations largely untouched since 1934 is long overdue, but for several reasons the bill likely to emerge from House-Senate conferees will probably deserve the veto.
Clearly, the world of telecommunications has undergone startling change. Long distance is now a competitive business. Local access should be. Cable now has competitors. There are wireless phones and direct TV dishes. The game has changed and a host of regulatory issues need to be revisited.
But addressing all these issues in one bill is a problem. The legislation would deregulate local and long-distance services and cable communications. Immense parts of the economy and the infrastructure are involved. Phone service alone is a $120 billion-a-year business.
Lumping so many crucial issues in one take-it-or-leave-it bill is a bad plan. The need for fundamental reform tempts legislators to ignore flaws in the legislation. That seems to have occurred.
An essential issue that affects everyone in the country is when and how to deregulate local phone service. Long distance is increasingly competitive. AT&T has gone from 90 percent market share to less than 60 percent.
But at each end of the long-distance call, local phone companies - generally regional Bell operating companies (RBOCs) - retain a virtual monopoly. They charge long-distance carriers like MCI for completing the first and last miles of the long-distance call, often as much as 50 cents of each dollar.
The long-distance companies want to compete with the locals on their own turf. The RBOCs want to start offering long-distance service. The pending bill is expected to propose dropping restrictions and permit a free-for-all.
But not all deregulation is good. The long-distance carriers argue persuasively that the RBOCs have a built-in advantage through their monopoly control of local markets and their role as gatekeepers. They preside over a crucial bottleneck and can charge potential competitors for access to their markets. That gives them an uncompetitive advantage.
The long-distance companies want a chance to get into local markets and become competitive, but they don't believe all controls should be lifted until competitive conditions prevail. They warn that a market deregulated imprudently could put the RBOCs in the position to re-establish on a regional basis the monopoly control Ma Bell once possessed.
Instead of increasing competition, too much deregulation too soon could squelch it. That would impede the development of the communications infrastructure the 21st-century economy will require and be bad for consumers.
Since long distance has become truly competitive, rates have dropped 70 percent. A long-distance call used to be a Sunday night extravagance. It's now a daily necessity.
Similar savings at the local level are possible, but not if reform stacks the deck. The conferees should adopt an earlier version of the bill that took care to deregulate only when competition is established. If they don't, President Clinton should veto the bill forcing Congress back to the drawing board. by CNB