Judge Greene Studies Opening Huge 'Gateway' for Regional Phone Firms

From The Washington Post

Once again, Judge Harold Greene is poring over reams of technical data and conflicting advice to make decisions that will shape a multibillion-dollar sector of the American telecommunications system.

His subject of scrutiny this time is "information services," an industry term that covers just about every use for a telephone network beyond ordinary conversations: the electronic transfer of data and graphics; shopping, banking and library browsing by means of the home computer; electronic mail; recording and automatic transmission of voice messages, and simultaneous translation of the electronic languages in which computers talk to one another.

Such services are already available in varied forms in the United States. But now the federal judge is devising details on how to open the door to the business a bit for the seven titans of the telephone industry, the regional operating companies that were born of the 1984 breakup of American Telephone & Telegraph Co. They own most of the country's local networks.

His key idea is to let them operate "gateways," electronic points of entry through which users in home and offices would, with a single local call, be able to reach any service in the country easily and freely.

The regional companies are pressing Greene to go far beyond that, allowing them to operate a recorded voice system. Millions of American homes and business now have answering machines, but technology exists to build the same capability into the networks themselves. Using a touch-tone phones, a person stepping out would punch in a command to the network to intercept incoming calls with a recorded greeting from the person, take messages and play the messages back when the person returned.

Concern Over Monopoly

Other applications are possible for voice. An executive trying to reach a busy number could dictate a message to the network and instruct it to deliver it to the number when it was finally free. Or a Cub Scout leader might record a message about where the weekend picnic was going to be and order it forwarded to the phones of each of the 10 members of the den. Or a deep sleeper could request an automated wake-up call. Services like these are already available over the network in some foreign countries, including Japan.

The information business is now totally closed to the regional companies, with the exception of passive transmission of other people's data over their lines. The logic is that if they could provide data, they would have an incentive to try to monopolize the business because they own the local phone lines over which it must pass. The ban is part of the consent decree that broke up AT&T; and is supervised by Greene, a judge at U.S. District Court for the District of Columbia.

Addressing delegates at an international telecommunications conference in Switzerland in October, Greene explained why he had decided to loosen the reins: "I believe that the American people can derive great benefits from modern, varied services of this type," he said. "And I hope that this action will provide the impetus for a broad advance in this field."

It is a key element to the information age, the much-heralded era when everyone will have a computer that can link up with any other in the country, or even the world, to draw out or put in all manner of things. Futurologists brim with predictions for heady social and economic changes this could wreak: fewer commuters on the highways as more people work at home; better education due to students' instant access to the best libraries in the world; a progressive withering away of paper mail and newspapers; a shift of retailing from shops to the computer screen.

Few Subscribers Now

Home hardware has indeed been proliferating at a rapid pace, with an estimated 25 million personal computers scattered across the country. There is a wide variety of information services available, by which users send electronic mail to each other and get stock quotes, video games, advanced computer software, health tips and myriad other services.

But usage is still considered small--perhaps only a one-eighth of the country's computers are involved and just one-hundredth of its households. CompuServe Corp., the largest of the U.S. data service firms, has only about 375,000 subscribers.

Is this due to lack of demand, as some consumer groups say, or to the divestiture agreement restraining the industry's natural development, as the regional companies contend? To a degree, Greene has come to agree that the problem lies with the decree.

The way things now work, users must subscribe to services separately, submitting credit information. Bills are paid one by one. Users must hang up and redial to get from one service to another. For people who live outside the country's major cities, getting into a system at all may involve the extra charge of long-distance calls.

The regional companies, the Justice Department and the Federal Communications Commission have long advocated clearing away all legal restrictions on information services for the regional companies, saying their participation is the key to mass marketing. Under their plan, safeguards would be put in place to guard against monopolistic abuses.

"This is one issue where our interest and the public interest coincide," said Sidney Boren, corporate vice president for planning and budget at BellSouth Corp., the regional company based in Atlanta.

They were waiting anxiously last September, when Greene issued a 223-page opinion as part of a review of the breakup three years after it took place.

To their dismay, he reaffirmed the old principle that the phone companies could transport other people's information but not provide their own. But he offered some consolation prizes: They could put their white pages on computer and, more importantly, they could proceed with plans to offer to their customers electronic gateways through which all information services would be reached.

Fully implemented, gateways would mean that any user anywhere in the United States could dial a single local number and link up a computer to a phone company computer, which would generate a welcoming message on the user's screen and a "menu." This would list information services and explain billing. With a few strokes on the keyboard, the user would have ready access to any data base listed there, and the idea is that they would include most all that the country has. Services such as CompuServe and the Source currently provide gateways, but their selection is much smaller than is envisioned for the regionals.

Greene also agreed that billing could be consolidated, with charges for information services showing up on the monthly telephone bills. He cleared the way for the regional companies to engage in certain technical functions such as monitoring transmissions for errors and translating of the various electronic languages that computers use to talk to one another, so that users would not have to buy costly equipment to do that.

Greene points approvingly to the experience of France and its Minitel information system and suggests that it could be a model for what the United States could do.

That system began with the government-owned phone network distributing cheap, low-capability terminals as a substitute for phone books. Minitel has since blossomed into a busy marketplace with more than 2 million households using about 4,000 privately operated data bases, many of them garage-type operations based on simple personal computers. Today, the French can use Minitel to book a hotel room in Normandy, order pizza, look for a job, check up on local government announcements and send mail to friends. Many of them use it, to the government's chagrin, to arrange rendezvous with prostitutes.

It is the world's most widely used system, though by no means its most technically advanced. Greene notes that the telephone network's role, with the exception of the directory listings, is limited to transporting other people's data.

The regional companies, determined to have unrestricted rights, have since September filed appeals against Greene's ruling. They are also working with various Reagan Administration officials in an attempt to get federal legislation that would remove the telephones from Greene's jurisdiction altogether.

But in the meantime, recognizing that they will probably have to live with him and his decision, they have been filing thick briefs at the judge's chambers on Constitution Avenue, advising him on details to flesh out the ideas he announced in September. To no one's surprise, they are seeking the widest possible interpretation of his rulings on what a gateway could include and latitude in doing computer translations, which is a huge business. They want a "smart" network, not a clone of France's "dumb" one.

Their requests demonstrate the minutia that Greene routinely digests as he continues to chart the phone industry's future. For instance, Bell Atlantic Corp., the regional company that owns the Washington area's C&P; Cos., wants to program its gateway to allow the user to split the screen and view data from two different bases simultaneously. It would like to give parents means to block their children from too much access to, say, video games. And it wants to put in a "help" function for users who get lost. Would these open up the way to unfair competition? Greene must decide.

In addition, the regionals are taking the opportunity to press for rights to provide storage of data in their networks. This, they contend, would fire up competition because many information services cannot afford the start-up costs of buying their own hardware. The phone companies could instead lease them space in theirs. In this request, they have attracted the support of some small service providers.

Seek Voice Storage

The regional companies also want rights for voice "storage," which would greatly expand the range of services available in the recording and relaying of voice messages. In the United States, these are now available in the offices of big companies that have the money for fancy in-house switching equipment. The regionals say that letting them into the game would "democratize" such services and make them available to Americans in general.

Mobilizing against a big role for the regionals are information service companies, computer makers and many of the competitive telecommunications companies that have sprung up in the deregulated environment. Many say there is danger in the regionals getting too much leeway in the process of computer language translation, saying this will allow them to get into the electronic mail business.

"Unlimited storage and messaging present serious anti-competitive risks for electronic publishing as well as other information services," contended the American Newspaper Publishers Assn. Some critics want the companies limited to translation, which would link many residential computers but would not work for bigger business machines.

Critics say that by controlling technical standards by which networks operate, the regionals could have a leg up on everyone else in developing new products and services. "They could gain a tremendous advantage," said Charlotte LeGates of the Computer & Business Equipment Manufacturers Assn. (The rebuttal to that is that the FCC is requiring the companies to develop "open network architecture" so that everyone would be equally well-informed of technical standards.)

Greene's ruling is expected some time early this year. After that, the industry hopes, the new rules will be clear enough to get down to serious business.

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