With Communications Revolution in Offing, Lines Are Crossed at FCC : Infrastructure: Bill Clinton promised a nationwide system of information superhighways, but the rewiring alone is a daunting task.

Throughout the campaign, Bill Clinton and Al Gore spoke of “rebuilding America’s infrastructure,” as though it was a a modern version of Mani fest Destiny.

Since the election, there has been much talk about what that promise entails. Telecommunications, an afterthought in the early stages of the debate, has surfaced as a key part of the new Administration’s infrastructure agenda. Main Street is learning what Wall Street has long known--future economic growth will come not just from consumer goods and products that travel over bridges and rail lines, but from information services transmitted digitally over fiber optics and the airwaves.

In telecommunications, all roads lead to the Federal Communications Commission. But, right now, the FCC is in a pickle. Alfred C. Sikes, chairman for the last four years, resigned last month. The term of Sherrie P. Marshall, another Bush appointee, expired last year. Marshall, anticipating new work outside government, has recused herself from cable and broadcast matters. And last week, James H. Quello, a 78-year-old Democrat first appointed under Richard M. Nixon, was named the agency’s interim chairman.

These signals are all wrong. For an Administration committed to youth and energy, the Quello appointment is a an incongruous stopgap. The FCC’s agenda is overflowing. This month, a technical committee will recommend a new standard for high-definition television. By April, the agency has been charged by Congress to devise a set of mathematical formulas to help regulate cable rates and service. The clock is also ticking on a court-imposed deadline to revise or discard the financial interest and syndication rules governing the relationship between Hollywood and network TV, which have proved so thorny in the past.

Any one of these issues could preoccupy the agency for the better part of a year. Yet none of them, except perhaps high-definition television, involves infrastructure in any real sense. As congressional testimony has shown, the telecommunications-infrastructure debate revolves around the building of “electronic superhighways.” The main question is when and how the nation’s telephone system will be upgraded to 21st-Century standards.

The FCC has done several important things to speed this process along. It has adopted a rule known as “video dial tone,” permitting local telephone companies to offer entertainment and information services--provided they do not own the programming. Bell Atlantic has demonstrated the technical feasibility of transmitting movies over ordinary copper wires using digital compression and other advanced technology. The Baby Bells will soon be competing with local cable operators over this lucrative portion of the information-services industry.

The policy rationale, from the FCC’s point of view, is that competition is good for consumers, and that the new-business territory opened up by video dial tone will allow telephone companies to modernize more quickly in a way that supports electronic services. In the race for revenues, TCI, Time-Warner and other cable companies are staking out claims for telephone service, too.

In this vein, the FCC has proposed opening up the local telephone exchanges through its “open network architecture” rule, forcing local Baby Bell monopolies to compete. This will do for local telephone companies what MCI and Sprint did on a national level. A related FCC rule for 1-800 service that takes effect in March has already led to the recapitalization of two little-known carriers. The new competition in long distance will probably force AT&T;, MCI and Sprint to lower their prices and is a harbinger of change at the local level.

Most observers credit Sikes with steering a clear deregulatory course with these initiatives during the last four years. But the revolution in telecommunications is just beginning. The long-term policy issues have yet to be addressed. It has been assumed, for example, that development of a “nationwide network of information superhighways,” in Gore’s words, depends on replacing all the copper wires in the telephone system with state-of-the-art fiber-optic lines. “A broadband wire in every home” is the 21st-Century equivalent of “a chicken in every pot.”

The problem is, doing this is inordinately time-consuming and expensive. The national phone system is like the coast of Maine--only 250 miles long in a straight line but a million miles following the shore. The system’s main arteries, the lines running between central switching stations, have mostly been upgraded. It’s the capillaries--the last 100 feet from the curb to the home--that are difficult.

Sometime between 2015 and 2030, analysts predict, the job of rewiring America will be done. The cost will be $200 billion, and could run as high as $500 billion or more. For an Administration committed to modernizing infrastructure, but uncertain whether it can afford a $31-billion short-term stimulus package, there has to be a better way.

One such option, though not within the FCC’s power to mandate directly, is called Integrated Services Digital Network. ISDN uses advanced switches to upgrade existing copper wires to digital standards. By 1994, ISDN will be installed in 56% of all U.S. telephone lines. Proponents of this off-the-shelf technology are pushing for it to become universally available as soon as possible.

Personal Communications Service--like car telephones, only better--is another option. In PCS, microwave frequencies are allocated for roaming telephone numbers that follow customers wherever they go. Cellular technology allows for economical use of the spectrum, a limited resource. Because PCS is digital, it will sound as clear as a compact disc. While the likely “first users” of this service are doctors, stockbrokers and other high-end customers who require its special mobile features, PCS has the potential to become a low-cost, flexible alternative to wired telephones generally. It represents a major step forward in the development of a “mixed” phone system, where digital service can be wired or wireless.

Most important, PCS would upgrade the system at its weakest point--the last 100 feet from the curb. In a world where the boundaries between computers, televisions and phones are blurring, PCS can provide the vital digital link. Apple Computer, AT&T; and other leading U.S. and foreign manufacturers are waiting on this market. It will be interesting to see what tack the Administration takes.

Yet right now, the overriding issue at the FCC is personnel, not policy. Quello’s appointment as interim chairman is obviously designed to give the Administration some breathing room. If the permanent chairman comes from within the commission, the Administration may look at Ervin S. Duggan, a Democrat who favors the same “industrial policy” goals as Gore. The list of candidates should also include top economists and spectrum engineers instead of the generalists appointed to the post in the past.

Whoever is nominated, a languorous confirmation timetable is not possible. No other independent agency is so central to the Clinton Administration’s goals. A number of pressing issues have to be dealt with now. The vision of a “nationwide network of information superhighways” beckons. A good telecommunications policy is like a high-octane fuel for the economy. As a cog in the Administration policy of “rebuilding America’s infrastructure,” the FCC should rank high.