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Telecom Reform: The Call May Finally Go Through


Washington Outlook

TELECOM REFORM: THE CALL MAY FINALLY GO THROUGH

There are long, winding roads. And then there's the tortuous, obstacle-strewn path toward reform of the nation's communications laws. Five times in 10 years, Congress has tried--and failed--to modernize regulation of the rapidly evolving business. Each effort sank amid industry squabbles and partisan bickering.

So imagine the surprise of regional Bell company executives when they visited Capitol Hill recently for a chat with Senate Majority Leader Bob Dole (R-Kan.). Dole didn't just promise to bring telecom reform to the floor the week of June 5, he confidently predicted final passage of a bipartisan compromise. "The prevailing feeling was that this is the year it's going to happen," recalls Ameritech CEO Richard C. Notebaert.

COMPROMISE. Wishful thinking? Not really. Although a few boulders still block the way, lobbyists and congressional leaders are now betting that telecom reform will finally pass. And the consequences will be revolutionary for the industry and users.

While a final House-Senate deal still remains to be crafted, the contours of a compromise are taking shape. Simply put, it will have something for everyone and finesse issues that tanked past bills. For example, cable deregulation--long a deal-breaker--would be achieved by removing rate regulation on all but basic service. As an offset against abuses, the Federal Communications Commission would be allowed to clamp down if rates exceed a national average.

Cable and long-distance companies would be freed up to compete for local phone business, while the Bells would be able to offer long-distance service as soon as their local monopolies are opened to competition. And every TV station would get extra airwave space to offer up to six new channels--and for a fee could sell new services such as paging.

Timing is crucial. The industry sees the summer as its last chance before the 1996 campaign subsumes serious legislating. That's why a coalition representing cable, broadcasting, cellular providers, and the Bells are calling for speedy Senate action. "It just shows the broad support for reform," says Beverly McKittrick of Citizens for a Sound Economy.

Reform advocates are convinced that once the bill clears the Senate, it's an easy walk. The House version that is expected to pass handily by July deregulates the industry more than the Senate bill, but differences, such as how much to relax ownership limits on TV stations, appear too small to block passage. House Speaker Newt Gingrich (R-Ga.) is an avid backer who believes reform will trigger major job gains. And he's ready to deal, says spokesman Tony Blankley.

But first, Dole's stewardship is vital. He is caught between GOP deregulators and Democrats demanding more consumer protections. Senator Bob Packwood (R-Ore.), for example, wants to water down the FCC's oversight powers, while liberal Senator Paul D. Wellstone (D-Minn.) is complicating matters by tacking on lobbying reform. Dole, who has delayed a final vote until a compromise surfaced, thinks he has the votes. And the Bells, who scuttled a 1994 bill, are solidly with him. "Dole is as anxious as we are," says Phillip Quigley, CEO of Pacific Telesis Group.

The last roadblock is the White House, which wants more FCC powers to halt rate gouging and covets a bigger role for the Justice Dept. in deciding when the Bells can enter long distance. But President Clinton is unlikely to stall the legislation, aides say. "He might be willing to swallow hard if it's close to what we want," admits one. And for pilgrims on the path to telecom reform, therein lies the highway to heaven.EDITED BY OWEN ULLMANN By Mark Lewyn


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