Magazine article Insight on the News

Telecommunications Bill Gets Its Signals Crossed

Magazine article Insight on the News

Telecommunications Bill Gets Its Signals Crossed

Article excerpt

On Sept. 23, the Senate abandoned efforts to pass legislation that would have radically changed the way Americans communicate. Nevertheless, the telecommunications industry continues to evolve.

It once was so simple. Until 1982, one telephone company handled most Americans' local and long-distance services. That company, of course, was American Telephone and Telegraph, or AT&T. But a federal court found this arrangement to be an illegal monopoly, and AT&T was broken up. Seven regional phone companies, nicknamed Baby Bells, took over local service while AT&T - still the largest long-distance company by far - began its marketplace battle against several upstart rivals.

More recently, members of Congress attempted to influence the course of telecommunications in the United States by introducting the Communications Act of 1994, sponsored by Senate Commerce, Science and Tranportation Committee Chairman Ernest Hollings, a Democrat from South Carolina. If enacted in the form that swept through the committee in August, the measure would have affected every American household. Backers said the Hollings bill would have modernized an antitrust consent decree that did not account for emerging technology or provide vision for an information superhighway. But critics complained the bill was filled with anticompetitive, overly regulatory language. The House had passed its version of the bill in June, but Hollings abandoned his effort to usher the legislation through the Senate on Sept. 23, two weeks before Congress's next scheduled recess.

"I reluctantly announce today that we will be unable to pass comprehensive telecommunications reform legislation in this congress," Hollings said, acknowledging strong resistence from a number of powerful colleagues, including Minority Leader Robert Dole. Clinton administration officials said the White House would try to salvage the bill.

The measure would have allowed telephone and cable companies to compete in each other's markets, effectively wiping out distinctions between local and long-distance carriers and cable television. "We're playing catch-up ball with technology, and consumers are paying the price," Hollings had said after his bill cleared the commerce committee. "While we have the best communications system in the world, this legislation creates more competition for the benefit of consumers. It will encourage technological innovation, new businesses and services that will mean jobs and educational opportunity for every American." Hollings also claimed his measure would have addressed the rapid changes that seem to revolutionize the telecommunications industry yearly and ensured that all Americans had continued access to universal service.

"This is not the right answer to our communications problems," countered Sen. John McCain, a Republican from Arizona who is a commerce committee member. McCain claimed the legislation would have resulted in excessive regulation and higher telephone bills for consumers, and would have cost taxpayers billions of dollars to implement while harming U.S. trade with other nations and jeopardizing thousands of American jobs.

The Hollings bill addressed several major areas of telecommunications policy, most of which are targets of fierce debate:

* Phone companies would have continued to provide "universal" affordable phone service for ever states would have exercised greater power through a board that would have advised the FCC on specific mandates for local and long-distance firms. The National League of Cities, which argued that this provision would have hindered a city's ability to raise income by collecting fees from local carriers, opposed this aspect of the bill.

* One year after the bill's enactment, local telephone companies would have been allowed to offer long-distance service, but generally they would be prohibited from using local-service revenues to subsidize long-distance operations. …

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