Trio of Measures Seek to Lay the Groundwork for Info Highway : Congress: Bills would allow the Baby Bells to provide cable and long-distance service. But huge obstacles remain.
Congress is poised this week to begin voting on measures aimed at boosting construction of the information superhighway. But if Congress is ready, the hard hats are not.
There are still huge technical and financial obstacles to modernizing and integrating wireless, telephone and cable networks into the kind of ubiquitous information web Congress seems to have in mind.
The idea is a universally accessible network that would provide access to government, industry and educational databanks, as well as features such as interactive TV, home shopping and electronic home security surveillance.
But engineers haven’t yet figured out how to cheaply and easily modify cable TV networks to carry two-way conversations or to accurately bill for phone calls.
Meanwhile, telephone companies have been installing fiber-optic cable mostly to lower maintenance costs, not to provide fancy new services. And the prospect of a cable version of the info highway at every doorstep was clouded a bit by cable behemoth Tele-Communications Inc.’s decision in January to delay for about nine months a huge order for a device that would provide hundreds more cable channels.
“Today, cable TV is probably best suited for television viewing and the delivery of large amounts of data,” said Walter Bear, a deputy vice president at Rand Corp. and former director of advanced technology at Times Mirror Co., parent of the Los Angeles Times. “It’s going to be awhile” before you can make a phone call through your TV set, he said.
Although the consensus is that the problems can be resolved over time, they loom large as the House and Senate are expected to take up three bills that would throw the $300-billion telecommunications business wide open to competition by sweeping away many of the restrictions preventing cable firms, phone companies and long-distance carriers from invading each others’ markets.
In the most comprehensive of the three measures, Sens. Ernest F. Hollings (D-S.C.), Daniel K. Inouye (D-Ha.) and John C. Danforth (R-Mo.) have proposed nearly an entire rewrite of federal communications laws.
The bill would require telecommunications carriers to subsidize universal telecommunications service. Once universal service was established, phone companies and cable operators could enter each others’ markets. The bill would also allow the seven regional Bell phone companies to manufacture telephone equipment, offer long-distance phone service under certain conditions and, after six years, provide electronic home security services.
A second measure, sponsored by Rep. Edward J. Markey (D-Mass.), chairman of the House Telecommunications and Finance Subcommittee, would also repeal federal laws that now prohibit the Bell companies from competing with cable operators.
But the bill would require them to open up their networks for use by competitors, provide public service video channels for nonprofit groups to broadcast programs and establish a government board to recommend ways to provide universal telecommunications services. The bill is scheduled to be voted on today.
The third bill, by Commerce Committee Chairman John D. Dingell (D-Mich.) and Jack Brooks (D-Tex.), chairman of the House Judiciary Committee, would permit the seven regional Bell phone companies to manufacture equipment and enter the lucrative long-distance market after five years.
The bills’ objectives, however, have been overshadowed somewhat in recent days by politics. Broadcasters, for example, have been lobbying for permission to use proposed high-definition TV service to provide up to six additional video channels to compete against cable and provide other profit-making communications services. And U.S. Trade Representative Mickey Kantor has warned that two of the bills, aimed at regulating local content in the manufacture of phone equipment, may violate U.S. trade agreements.
Congress is likely to adopt this legislation in one form or another, but it may be awhile before the legislative vision becomes reality.
Many blueprints for the superhighway, for example, call for the costly installation of intelligent switching capacity in telephone and cable networks and the replacement of copper wire with fiber-optic cable--strands of glass that use pulses of light to carry data at nearly the speed of light. But after two years of robust growth, most analysts expect the deployment of fiber-optic cable to level off this year.
Indeed, with one recent study estimating that it would take cable TV or wireless operators 11 to 15 years to earn a profit from offering telephone service, few telecommunications companies are gearing up.
Such ventures are “subject to a significant degree of risk,” concluded the study by the Boulder, Colo.-based consulting firm Hatfield Associates.
The collapse of the Bell Atlantic Corp. and Tele-Communications Inc. merger was just one indication of the new financial caution.
What the Bills Seek
The three information highway bills Congress is tackling aim to remove federal barriers to telecommunications competition and encourage companies to make their services broadly available at affordable rates. Their key provisions:
* Dingell Bill (House): Would allow the seven regional Bell telephone companies to offer long-distance service and make telecommunications equipment. A federal court decree has barred the Baby Bells from those markets since 1982.
* Markey Bill (House): Would let telephone companies and cable operators enter each others’ markets, but would require phone companies carrying video services to reserve up to 75% of their channels for the use of other video programmers. Also promotes an “open and accessible” interactive communications system.
* Hollings Bill (Senate): Would require telecommunications carriers to subsidize universal service. Would also allow the seven regional Bell phone companies to make phone equipment, offer long-distance service under certain conditions and, after six years, provide electronic home security services.
