Judge Loosens Grip on Baby Bells Just a Bit : Regional Phone Companies Get a Little More Freedom, but Restrictions Remain
A federal judge in Washington loosened his grip Thursday on Pacific Telesis and the six other regional phone companies--the so-called Baby Bells created in the 1984 breakup of the old Bell System--but only barely.
U.S. District Court Judge Harold H. Greene ruled that the regional phone companies are free now to provide hookups to companies providing electronic information services, but denied them the right to furnish the services themselves.
It was the first full review by Greene of the rules that have governed the regional phone companies since they were split off from their parent, American Telephone & Telegraph, to settle an antitrust lawsuit. The ruling left in place most of the 1984 restrictions governing the Bell breakup, at least until the next review in 1990.
Granted Companies 20 Days
The judge also refused the regional companies’ requests to lift restrictions against providing long-distance telephone service and to allow them to manufacture telephone equipment. But he did lift restrictions inhibiting their entry into fields unrelated to local telephone service. Until now, each company has had to petition Greene for permission to enter new fields.
In his 223-page decision, Greene defended his ruling on information services--letting the Baby Bells transmit but not generate them--saying that it would protect against possible anti-competitive behavior while allowing “the revolutionary changes that are possible if information . . . can be made available to vast numbers of consumers.” The judge did, however, grant the companies 20 days to provide information to help him define where transmission of services leaves off and the content of those services begins.
The regional companies reacted with cautious optimism to the decision, even though it stopped far short of what they sought and went against recommendations by the Justice Department and Federal Communications Commission.
AT&T; and other long-distance companies, which succeeded in keeping the Baby Bells out of the long-distance market, applauded the decision.
Consumers groups, too, welcomed the decision, chiefly because it changed so little. Consumers, under the ruling, “will still have a fighting chance to track where the money comes from” when the companies enter unregulated fields, said Gene Kimmelman, legislative director of the Consumer Federation of America.
But the idea of providing stability “shocked” Robert G. Harris, an economist at the UC Berkeley and former Interstate Commerce Commission official, who commented:
“We have grossly lost sight of what the stakes are here. Japan and France have leap-frogged over us in the telecommunications and information services fields, and we’re still looking back 10 years ago to some alleged monopoly abuses.”
Greater optimism was expressed by a communications specialist, Andrew B. Zimmerman of the national accounting firm of Coopers & Lybrand in New York. Zimmerman said the transmission of information services could open up a market that has expanded rapidly in France, where the government-run phone company’s Minitel makes available more than 4,400 electronic services furnished by private companies and shares in those revenues.
That was far from the assessment, however, of FCC Chairman Dennis R. Patrick, a strong advocate of deregulation, who said that he was “very disappointed.” He predicted that the American public will be denied the benefit of new telecommunications services.
The narrowness of Greene’s ruling rekindled the possibility that Congress may again seek to remove the court from the regulatory business. Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, said he hoped that the decision will “at last produce a consensus on the need for legislation.” He called Greene’s refusal to lift restrictions more broadly “arbitrary and unworkable.”
But Rep. Edward J. Markey (D-Mass.), who heads the committee’s telecommunications panel, praised the ruling as “carefully crafted” and reflective of the current state of competition in telecommunications.
