Regulators Need New Rules as TV and Telephone Merge New Technologies and Alliances Change the Playing Field

Article excerpt

THE simpler days of regulating the television and telephone industries are over. It is not just that issues are more complex. Regulators are going to have a tough time figuring out who the players are, let alone how to regulate them.

Technological improvements and a raft of business alliances are changing the rules of who does what.

"You'll see a flurry of activity both at the FCC {Federal Communications Commission} and the Congress and probably at the state level," says Edward Young III, vice president for federal regulatory matters for Bell Atlantic.

"There's a paradigm shift in how these industries will be treated," adds a congressional staffer.

These changes are taking place now because the telephone and television industries are converging. In part, it is technological. Both industries are beginning to use digital instead of analog technology to move information. Both are also showing increased interest in playing in each other's back yard (TV networks reinvent themselves, Page 2).

For example:

* Cable companies move into phones. The nation's largest cable operator, Tele-Communications Inc. (TCI), has teamed up with USWest, a regional phone company, and the British telecommunications firm Cable and Wireless to provide Britain with phone service and cable television on the same system. The company is looking to transplant elements of the system to the United States.

The cable industry's No. 2, Time Warner, has also joined forces with USWest to create an interactive television system by 1998. No. 3, Continental Cablevision Inc. plans next year to hook up directly with a huge computer network of networks, called Internet. The deal should give the system the capability of zapping high-speed text and, eventually, video data around the country.

* Long-distance carriers link up with TV and mobile-phones companies. AT&T, having just announced a complete takeover of McCaw Cellular, is now talking about hooking up with the nation's cable companies to create a huge new network of interactive TV. The alliance of the nation's largest long-distance carrier with McCaw, the largest cellular-telephone company, puts the long-distance giant into wireless telephone service.

Meanwhile, No. 2 MCI is building a nationwide network of a new-generation of wireless phone that, increasingly, will compete with local phone service.

No. 3 Sprint earlier this year took over Centel Corporation and United Telephone of Florida, extending into local and wireless mobile phone service.

* Local phone-service companies eye ex-pansion. Since so many other companies are pushing to provide local phone service or bypass it altogether, the so-called Baby Bells are expanding their horizons too.

Ameritech has proposed giving up its monopoly on local service in exchange for the right to get into other businesses, such as long-distance and cable TV. Pacific Telesis is thinking of spinning off its wireless business into a separate company, one that would be free to pursue other lines of business without regulatory entanglement. …