Plan to Shift Authority Over Bell Firms Debated

An Administration-backed proposal that would shift authority over seven regional Bell operating companies from a federal judge to the Federal Communications Commission could help spur the entry of the companies into new businesses, including long-distance service.

But consumer groups say they fear that such a change could result in higher local telephone rates, and long-distance phone companies and equipment manufacturers worry that they might face unfair competition from the Bell companies.

The controversial legislation was introduced Wednesday by Senate Majority Leader Bob Dole (R-Kan.), who said the time had come to restore the authority to make telecommunications policy to Congress and the FCC. U.S. District Judge Harold H. Greene, who ordered the AT&T; divestiture of the regional companies in 1984, has retained responsibility for deciding which new businesses the companies could enter.

While Greene has permitted the regional Bell companies to enter businesses ranging from real estate to publishing, he has fenced them off from other areas, including computerized information services, long-distance service and equipment manufacturing.

Dole’s bill was promptly and heartily endorsed by the Justice Department, the FCC and the Commerce Department’s National Telecommunications and Information Agency, as well as by the regional telephone companies.

“We see these restrictions as limiting us in providing services to the public that everyone else will provide,” said David J. Markey, vice president of federal regulatory affairs for Bell South.

Shifting authority from the court to the deregulation-minded FCC will probably increase the possibilities that the Bell companies would be unleashed to compete in new areas. FCC Chairman Mark S. Fowler and Commissioner Dennis R. Patrick have publicly supported easing the restrictions.

Allowing the Bell companies to enter the long-distance business would put them in direct competition with AT&T;, MCI and other long-distance carriers. Opponents argue that this would be unfair because the regional companies could lure business by offering one-stop shopping for local and long-distance service.

“The problem for us is having the Bell operating companies turned loose this early with their monopoly power,” said one opponent.

Gene Kimmelman of the Consumer Federation of America added: “We think the court has bent over backwards to protect the rate payer and keep basic phone service affordable.”

AT&T; spokesman Herb Linnen warned of further confusion for consumers who are just now beginning to assimilate the traumatic changes from the AT&T; breakup.

Trade groups ranging from the Electronic Industries Assn. to the American Newspaper Publishers Assn. have raised concerns. The newspaper publishers are worried that the lifting of restrictions could allow the Bell companies into electronic publishing, where they could compete with newspapers for advertising.

Division ‘Pestered’

Several sources said it was Douglas H. Ginsburg, chief of the Justice Department’s antitrust division, who initiated the proposal to restore authority to the FCC. As long as the court retains responsibility, the antitrust division has had to devote considerable resources to reviewing requests by the regional phone companies to enter new businesses.

“They (the antitrust division) have been pestered for eight or nine months by the Bell operating companies,” said one source. “Everybody knows the courts can’t do this forever.”

A number of former Reagan Adminstration officials now are associated with the regional phone companies. Former Atty. Gen. William French Smith and former Interior Secretary William P. Clark serve on the board of directors of San Francisco-based Pacific Telesis. Markey, of Bell South, previously headed the National Telecommunications and Information Agency.

And Atty. Gen. Edwin Meese III’s brother, Clifford Meese, is director of executive compensation and benefits at Pacific Telesis.

Last October, Clark sent a “Dear Ed” letter to Meese in which he criticized the antitrust division’s enforcement policy as cumbersome and in conflict with the Administration’s commitment to deregulation.

“Ed, the department’s enforcement of the line-of-business restrictions is sufficiently controversial and important to warrant your personal attention,” Clark wrote.

Justice Department spokesman Patrick Korten said Meese’s only involvement in the new legislation “was reviewing the recommendation made by the antitrust division and approving it rather routinely.”

Korten said Meese has never discussed the matter with his brother or with Smith. As for Clark’s letters, Korten added, Meese “could hardly even remember getting the first letter and couldn’t remember what it was about.”