FCC Chief Proposes to Eliminate Monopolies of Local Phone Firms

Declaring that the time has come “to move from the thinking of the past and advance to the future,” the head of the Federal Communications Commission called Wednesday for an end to local telephone company monopolies.

Mark S. Fowler, a fervent advocate of deregulation, called on public utility regulators to rethink the way they operate in light of rapid changes in the telecommunications industry and to allow more competition in local telephone markets.

“Unless we in government, including the courts, retard or kill its potential, telecommunications should become an almost completely competitive marketplace,” he said during a conference of communications network executives.

Trial Plan Sought

Espousing what he called an “open architecture” network, Fowler said that less control by state regulators would increase competition, reduce costs to consumers and make available new services without disrupting universal service. Fowler’s suggestions--which were met with mixed reaction--called for a trial plan of at least three years, to be implemented by the end of the decade.

“The time has come for a national debate, including the legislative and executive branches, over the introduction of this program,” he said.

The breakup of American Telephone & Telegraph Co. in January, 1984, and other FCC actions have restructured and deregulated much of the nation’s long-distance telephone market and spawned dozens of new competitors.

However, local telephone service and in-state calls, as well as local telephone rates, have remained the domain of individual state utility commissions.

Fowler said this outmoded public utility approach has limited private incentive to experiment with new technologies, discouraged price competition, impeded the ability of companies to respond quickly to changes in supply and demand and cost “billions of dollars and countless lost opportunities.”

“Let the discipline of competition replace the squeaks and roars of regulators,” he advised. He noted that the introduction of new technologies, ranging from cellular radio to “smart” buildings wired during construction for tenants’ telecommunications needs, already are affecting the “once-sacrosanct local telephone market.”

“Make no mistake,” Fowler warned, “as consumers replace the government as regulator, local telephone companies will inevitably lose their monopoly. Consumers will have a choice. And these local companies must now also have the choice of entering and operating in entirely new markets.”

In an effort to minimize confusion and costs to consumers, Fowler suggested that state and federal regulators and legislators, along with private industry, work together to fashion a national framework for deregulation.

Fowler’s comments received mixed reactions from a public utility official and consumer groups.

“Attempts to introduce competition have to be taken very carefully,” said Martin A. Mattes, an administrative law judge with the California Public Utilities Commission. “It would be disastrous for consumers if it were done in a drastic, across-the-board manner.”

Promotes Competition

Mattes said that, in an effort to protect basic local service, California in 1984 adopted a policy of promoting broad competition in the long-distance market but prohibiting competition in the local market, with a few exceptions. To date, those exceptions include mobile cellular service and high-speed private-line data service.

“The California Public Utilities Commission has recognized that there are some niches where competition is appropriate in local telecommunications,” he said, cautioning that it is vital to assure that new services are made available to residential customers and that rates for basic local rates are kept reasonable.

Sam Simon, head of the Telecommunications Research and Action Committee, a consumer-oriented group, agreed that, although increased competition can benefit consumers, any efforts to deregulate must ensure that consumers “have access to both service and technological choices at affordable rates.”