Telecom reform on verge of becoming law

By Juan Antonio Osuna
CRA Staff

After months of crawling through committee hearings and markups, separate bills finally passed the House and Senate over the summer that would completely redefine the telecommunications industry and the nation's information infrastructure.

With the August 4 passage of HR 1555 in the House (305-117), the local Bell operating companies were gleeful at the prospect of entering long-distance and electronic-publishing markets.

Although the Senate bill, S 652, contains more rigorous restrictions designed to thwart Bell monopolies and prevent premature entry into the long-distance market, similar restrictions were relaxed in HR 1555.

Differences between these bills will be resolved in a conference committee that will meet after Congress reconvenes September 7.

The legislation not only deregulates local telephone companies but also cable, media and long-distance companies.

Deregulation of the local telephone and cable companies, however, dismayed many consumer advocacy groups. Ralph Nader, head of the Taxpayer Assets Project, called the bill "a major blow to consumers" and warned against telephone companies enjoying greater monopoly status by buying up smaller cable companies.

Many conservative members of Congress see deregulation of telephone and cable companies as a surefire formula for spurring competition and the development of new technologies. However, others see these technology developments happening a long way into the future and fear that consumers will end up paying dearly to subsidize this technological growth.

"The hoopla many of us heard as recently as a few months ago about a video world with over 500 channels being offered to millions of consumers by the end of the year is pure fantasy," said Rep. Edward Markey (D-MA). "The high-tech hype has confronted engineering reality. The phone companies are still figuring out how to make the technology work."

Without real competition from telephone companies, "many cable operators will use their newfound freedom to charge exorbitant rates," Markey said.

Also, media groups will be allowed to join forces in greater numbers and merge with cable companies to forge vast media conglomerates, Nader warned. The bill eliminates restrictions on the number of broadcast television stations owned by a single entity and raises the national "audience cap" from 25% to 35%â indicating the proportion of the national audience that any single media entity can reach.

A provision of HR 1555 drawing substantial press coverage was a provision mandating a new rating system for television programming and a device called the "V-chip," which would be built into most televisions to allow parents to block programs with a certain rating.

On the Senate side, the Telecommunications Competition and Deregulation Act passed June 15 (81-18) after a flood of amendments were considered and adopted on the floor.

Among those adopted was an amendment to "provide to elementary schools, secondary schools and libraries universal services for educational purposes at rates less than the amounts charged for similar services to other parties."

However, the bill excludes for-profit schools with an endowment of more than $50 million.

The American Library Association was relieved to get the amendment included, although it would have preferred earlier language, which defined rates more precisely, as based on the incremental cost of providing the service.

Also adopted in the Senate bill was an amendment proposed by Sen. John Kerry (D-MA) prohibiting red-lining in rural or low-income areas.

Among Internet and online users, the most controversial provision, added to both bills, was an amendment to censor "indecent" communications on computer networks.