A year ago today, the United States enacted a sweeping
telecommunications law that was supposed to unleash the forces of
competition, reduce prices for consumers in everything from cable
television to local telephone service, and take a wrecking ball to
the thick walls of industry monopolies.
One year later, consumers are scratching their heads, wondering
what happened to that wrecking ball.
Most Americans still have no choice in who provides their local
telephone service. Cable TV companies have raised rates, not
lowered them, and have backed off plans to enter the telephone
business. Telephone companies have also avoided head-on battles.
The little competition that has emerged has come in sectors largely
ignored by the telecommunications reform bill.
Consumer groups are discouraged by the lack of progress. "There
is no certainty that competition will come," says Gene Kimmelman of
Consumers Union's Washington office. "The more you allow monopolies
to consolidate their power ... the less likely that others will be
able to enter their business."
Telecommunications companies have an answer for all this: Be
patient. Although little has happened that's visible to the
consumer, much action is taking place behind the scenes, they say.
This year will see more market-opening moves, and consumers should
be able to take advantage of more choices and lower prices.
"We like to think of 1996 as establishing the rules and 1997 as
implementing the rules," says Gerry Selemme, vice president of
governmental affairs at AT&T. On Tuesday, the long-distance giant
called on regulators to cut onerous access fees that it pays to
local phone companies to interconnect with their systems. If
regulators did that, AT&T pledged it would pass along the savings
to consumers and would offer local phone service at or below
Here and there, competitors have managed to bore little holes in
monopoly walls. But overall, the initial results of the year-old
law are not encouraging:
* Prices for telecommunications services have gone up. The
average cable TV rate jumped 7.8 percent last year, more than twice
the rate of inflation, according to the federal Bureau of Labor
Statistics. Prices for long-distance phone calls between states
rose 3.7 percent, and toll calls within states rose 6.1 percent.
Pay-phone rates, which are to be deregulated this year, are
expected to go up 40 percent, says Mr. Kimmelman. These price
increases reverse the historical trend of declining real prices.
* Consolidation is accelerating. In the telephone industry, four
of the seven regional Bell companies are merging: Bell Atlantic
with Nynex, and SBC Communications with Pacific Telesis. British
Telecommunications wants to buy No. 2 long-distance carrier MCI.
The same trends hold true in cable and broadcast television.
Cable giant Time Warner has bought Turner Broadcasting.
Westinghouse Electric, already a player in local television and
radio, bought CBS. In all, sales of television and radio stations
nearly doubled in 1996 over the year-earlier figure, according to
one market-research firm.
* Monopolies, fighting hard to guard their turf, remain
virtually intact. …