Bill Lifting Curbs on Bell Units Advances

The Senate Commerce Committee approved a bill Tuesday that would lift restrictions preventing the seven regional Bell telephone companies from manufacturing their own equipment.

The bill, introduced by committee Chairman Ernest F. Hollings, (D-S.C.) and advanced to the Senate floor on an 18-1 vote, would allow Ameritech, Bell Atlantic, Bellsouth, NYNEX, Southwestern Bell, Pacific Telesis and US West to make their own equipment as long as the manufacturing was done in the United States. The bill would also allow the companies to engage in research and development and joint venture activities.

The companies now must buy their telephone equipment from independent companies.

The bill has been supported by the Bush Administration, but the Administration opposes the limitation to domestic manufacture.

The restrictions against telephone equipment manufacturing were imposed on the companies when they were split from the American Telephone & Telegraph Co. in 1984.

Hollings said it was unfair to bar the Bell companies from making their equipment when foreign manufacturers were allowed to sell telephone equipment in the United States.

“Those foreign folks are coming in,” he said.

Hollings said there were safeguards in the bill to protect telephone customers from unfair competition.

The committee vote was welcomed by the regional Bells.

“It certainly is an important step and it shows that the issue is getting attention on Capitol Hill,” said Bill McCloskey, a Washington-based spokesman for BellSouth of Atlanta, the largest of the regionals.

However, the Consumer Federation of America said it opposed the bill because it feared that the Bell companies would overprice their equipment and favor their own manufacturing subsidiaries over other companies.

Gene Kimmelman, legislative director, said the proposal could allow the regional companies to increase profits at affiliated manufacturing companies by purchasing equipment from them at inflated prices, recovering the excess costs through local phone bills.

“The bill does nothing to keep the Bell companies from pulling off this kind of shenanigan,” he said.