Information Services Fight Pits Two Powerful Blocs

The seven regional Bell telephone companies contend that their entry into the information services business, authorized by a court decision last month, will bring new services to consumers and spur the growth of the entire market.

But newspaper publishers, consumer groups, independent electronic information vendors and many others remain vehemently opposed to allowing the powerful phone companies into this arena. And they’re now lobbying for congressional legislation that would impose restraints on how the Baby Bells can participate.

Because of the possibility of unfair competition, the Baby Bells were banned from owning information services as part of the consent decree governing the 1984 break-up of the Bell System. While the phone companies could provide the facilities for others to offer services such as electronic yellow pages, electronic classified advertising, alarm monitoring or even time and weather information, they could not own the information databases.

The prohibition was based on the fear that the Baby Bells’ monopoly on local telephone service would allow them to discriminate against competing information vendors in the provision of phone network connections, and would also enable them to subsidize their information services businesses with revenue from basic telephone service.

U.S. District Judge Harold H. Greene, who oversees the consent decree, has consistently supported the ban. But a federal Court of Appeals this summer overruled Greene, forcing him to lift the prohibition, then refused last month to grant a stay while the decision is appealed.

The Bells’ antagonists, led by the American Newspaper Publishers Assn., have now taken their case to Congress and the public, urging passage of a bill that lays out strict conditions for Baby Bell entry into information services. Times Mirror Co., publisher of The Los Angeles Times, is among the newspaper companies lobbying against the Baby Bells.

Cathleen Black, president of the ANPA, says the Bells have “a strong and current record of anti-competitive behavior. They have every incentive in the world not to treat (information services competitors) fairly.” Requiring independent information providers to compete with the companies that provide the essential local phone lines, she says, would be like requiring Domino’s Pizza to have their pies delivered by Pizza Hut.

The ANPA, whose members fear that phone company services such as electronic yellow pages will drain advertising revenues from newspapers, has been running advertisements warning that the Baby Bells would soon begin using individuals’ telephone records to target them with sales pitches. Publishers have been buttonholing congressmen, using their considerable clout to urge them to support the legislation.

The phone companies have returned the fire with gusto, infuriating some congressional sponsors of the legislation with radio ads attacking their position.

Independent observers agree that Congress, caught in the cross-fire between two of the most powerful lobbies in America, will more than likely forgo any action this year. And the Baby Bells stand a good chance of blocking future efforts to trim back their newly won freedom to offer information services.