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Telecom Reform: The Call May Finally Go Through


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TELECOM REFORM: THE CALL MAY FINALLY GO THROUGH

Five times in the past decade, major rewrites of the nation's 60-year-old communications law have bit the dust in the waning days of Congress, victims of warfare between long-distance companies and the Baby Bells. So why should this year be any different? The answer lies in two words: Presidential ambition.

Senate Majority Leader Bob Dole (R-Kan.), front-runner for the GOP nomination in 1996, is eager to show that he has the stuff that national leaders are made of. In the wake of the embarrassing defeat of the balanced budget amendment, he needs to shepherd a major bill to passage, preferably taking the lead on an issue that hasn't already been claimed by House Speaker Newt Gingrich (R-Ga.) and his Contract With America. A victory on telecom reform "would permit him to look like a seasoned leader who can put together sound, reasonable policies on a complex issue," says a business lobbyist. So, even though Dole's objections last autumn stopped 1994's telecom bill dead in its tracks, this year he is showing a remarkable willingness to compromise.

The resulting law would have a profound impact on the $1 trillion industry, setting the stage for a competitive free-for-all in everything from TV to local and long-distance phone service. Under the GOP plan scheduled for a Senate Commerce Committee vote on Mar. 23, the Baby Bells could offer long-distance service; long-distance carriers could go local. Local carriers also could offer cable-TV service, while cable companies could provide local phone service. TV broadcasters could offer photograph-quality pictures, more channels, and new communications services such as paging.

But major legislative victories do not happen without some give and take. This time around, Dole is giving. Long known as a stalwart protector of the Baby Bells, he is pushing a Republican plan that is more favorable to the long-distance carriers than past measures he has backed. It requires local carriers to establish conditions that would allow competition in their markets before they can offer long-distance services, rather than allowing the Bells to enter deregulated markets on a fixed date.

One reason for the change might be found in New Hampshire, host to the nation's first Presidential primary. AT&T, the Bells' archrival on Capitol Hill and a vocal opponent of the fixed-date provision, is one of the largest employers of Granite State residents. But Dole might also recognize that he'll never get a bill through the Senate unless he abandons the concept, much opposed by Democrats, of a "date certain" for opening markets. "Dole is accepting political realities," says Timothy J. Regan, director of government affairs for Corning Inc. "There is a very fundamental change this year in the Republicans moving away from date certain."

BELOW RADAR. Dole also may back away from his insistence that a popular 1992 law regulating cable TV be repealed. Democrats threaten to torpedo the entire bill unless some cable consumer protections are retained. The cable industry is willing to go along so it can get into the local-calling business. "We're trying to fly below the political radar screen on this one if we can," says a cable lobbyist.

The pressure for a coherent national policy has been heightened by piecemeal judicial decisions allowing local phone carriers into new businesses. On Mar. 17, a federal judge made it easier for Bell Atlantic Corp. to offer video services in the Mid-Atlantic region. Such decisions irk potential rivals, who fear they will be at a disadvantage. "This is a fight that should be umpired by the legislative branch, not the judicial branch," says John C. Tuck, a long-distance lobbyist.

The telecom industry still isn't united on the sort of bill that should emerge. Long-distance companies and the Baby Bells continue to haggle over issues. And rural Bells such as BellSouth Corp., which have high business rates and thus would be most vulnerable to competition, could break ranks if they aren't satisfied. But their own desire to win regulatory relief is drawing the Bells together. "We're getting along better now than we were in the final months of the last Congress," says Thomas J. Tauke, head of government affairs for Nynex Corp.

Likewise, legislative differences seem resolvable. Democrats and Republicans bicker over whether foreign companies should be allowed big stakes in U.S. communications concerns, and Democrats want guarantees that interactive services will be available to schools and libraries. But Dole's strategic retreats have removed some of the biggest hurdles. By dropping the date-certain demand, Dole "makes it easier for Republicans to peel off Democratic votes than for Democrats to peel off Republican votes," says Andrew D. Lipman, a Washington communications lawyer.

The House is expected to adopt the Senate's approach when it comes out with its bill shortly. The White House, meanwhile, is taking a low-key approach. "The easiest way to get a bill is to look like we're not getting the credit," says one White House adviser. That leaves the door wide open for Bob Dole to grab the spotlight--and boast of his success when he hits the campaign trail.By Mark Lewyn in Washington, with Catherine Arnst in New York and bureau reports By Richard Brandt in Seattle, with Ronald Grover in Los Angeles


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