NEWS ANALYSIS : Telecommunications Free-for-All Will Need Tough Cop : Regulators: The state PUC must make sure the coming new Information Age will benefit both consumers and providers.

As California digests the Public Utilities Commission’s proposal for a brave, new world of digital information, one thing is clear: The Golden State will be the Wild West of the telecommunications business, and the PUC will have to be one tough sheriff to make sure the transition goes smoothly.

If the PUC has its way, by 1997 the state’s telecommunications markets will be opened to unbridled competition, and all residents will have access to digital services such as interactive entertainment, long-distance learning and video telephones. To make that happen, in 1994 the agency plans to radically reduce its regulation of the industry, in hopes of fostering new services and making California more competitive.

The PUC’s plans in all likelihood mean that businesses and consumers will have a choice of where to buy phone service, and that at least one choice will be what we now call cable television companies. Indeed, the California Cable Television Assn. on Thursday welcomed the call for increased competition.

The PUC’s announcement will also probably mean a host of new opportunities for Pacific Bell, the state’s biggest phone company, which has already announced an ambitious effort to expand its offerings.

If all goes according to plan, in other words, the PUC’s proposal should mean more services for less money. But what role the PUC can create for itself in this fast-changing future remains to be seen. As things stand, a welter of federal and state laws and regulations govern telecommunications, and the industry is barging ahead with ambitious plans involving fiber-optic wiring, satellites, wireless networks and other advanced systems.

It all reminds Michael Shames, a consumer advocate, of the diminutive person who says she’s taking her three German shepherds out for a walk, when in fact they’re taking her. In other words, the PUC is simply being swept up in an inexorable tide of change--driven mostly by the private sector--that will force the agency to drastically alter its approach.

As the competitive environment shifts, the PUC’s role will move from regulator to traffic cop and referee. It will be up to the PUC to keep information providers in line, to champion the cause of consumers and to ensure that California does not develop a chasm between information haves and have-nots, both telecommunications companies and consumer advocates say.

“The commission has to be willing to show its holster and draw when some of the industry participants inevitably get out of line,” said Shames, executive director of Utility Consumers Action Network in San Diego.

For consumers, the key issues as the marketplace metamorphoses will be affordability and accessibility of services.

Companies, meanwhile, will be pursuing the legislative and regulatory changes necessary to ensure a level playing field. For all this to happen, for example, Congress will have to change laws to make it possible for phone and cable companies to enter each other’s respective businesses. And the Legislature will have to rework laws to allow changes in the way service for the poor and residents of remote areas is funded.

Cable companies want to make sure phone companies can’t subsidize telecommunications infrastructure with ratepayers’ money. Phone companies want to ensure that other competitors pay their fair share of providing universal service.

With those provisos, the PUC’s proposal to overhaul the way universal service is funded in California drew praise from cable and telephone companies. As it is, customers of the local telephone monopoly companies--notably Pacific Bell and GTE--must subsidize service for the poor. That would almost certainly change once the market is opened to rivals.

But skeptics also note that many of the new technologies now being discussed have been touted before. Having the capability to develop new services and actually getting the equipment in place and in widespread use are two different things.

“Twenty years ago, we talked about a wired nation, with linked classrooms, medical care for people in remote clinics, video phones,” said A. Michael Noll, dean of the Annenberg School for Communication at USC. “Here we are--all the same stuff again.”

Bank-at-home experiments have mostly failed, he noted. Telemedicine is far from commonplace. And video phones are still a joke.