Baby Bell Wants In on Cable, Long Distance : Telecommunications: Chicago-based Ameritech proposes giving up its telephone monopoly in exchange for reforms allowing it to enter other businesses.
Ameritech Corp., one of the country’s seven Baby Bell phone companies, unveiled a bold proposal Tuesday that would throw the nation’s highly regulated telecommunications and cable television industries into a competitive free-for-all.
The Chicago-based company, in a filing with the Federal Communications Commission, asked federal regulators to open its local telephone monopoly in five Midwestern states to full competition. In exchange, Ameritech is seeking regulatory reforms allowing it to offer both cable television and long-distance telephone service.
Ameritech’s proposal, which faces certain opposition from potential competitors as well as stiff legal and regulatory hurdles, is one of numerous recent moves by the nation’s phone companies to eliminate the laws preventing them from entering what they consider the brave new world of telecommunications. In this world, movies, catalogue shopping and hundreds of other information and entertainment services would be brought into homes and businesses via the nation’s telephone networks.
“(This) is a workable plan to unshackle the forces of competition,” said Richard H. Brown, Ameritech’s vice chairman. “A fully competitive local exchange will benefit consumers.”
Brown said the company hopes its local phones businesses in Illinois, Indiana, Michigan, Ohio and Wisconsin will be opened to competition by 1996.
Ameritech’s plan ultimately would require a massive reordering of the regulatory framework that has guided the nation’s telecommunications industry since a federal judge ordered American Telephone & Telegraph to divest its regional Bell phone companies in 1984. Either Judge Harold Green, who wrote the final rules governing the breakup, must scrap his judgment or Congress must pass a new law superseding it.
“The local Bell phone companies are staking out what they want their new turf to be,” said Mark Plakius, an analyst with Strategic Telemedia in New York. “They all are looking to gain an equal footing with the cable companies, which are increasingly taking away their business.”
Ameritech said it hopes to gain support from the FCC before approaching Judge Green. One FCC commissioner, James Quello, already has endorsed the plan, calling it a “big step in improving customer choice, strengthening the economy and providing good communication.”
Other regional Bell companies, including Pacific Telesis, parent of Pacific Bell, have also endorsed Ameritech’s plan while pursuing their own separate efforts to escape existing regulations.
Predictably, the plan has drawn fire from long-distance companies and cable operators, who argue that the local phone companies cannot create competition in their home territories by simply willing it to be true. “Saying there is local competition does not make it a reality,” AT&T; said in a statement.
Although Ameritech stressed that its plan would give consumers more choices and lead to greater price competition, analysts noted that the proposal does far more for Ameritech’s business prospects by giving it access to the lucrative long-distance and cable television markets.
