Telecommunications Bill Faces Extinction in Senate : Congress: Measure languishes due to bitter debate between Baby Bells and Sen. Ernest Hollings.

Telecommunications reform--which the Clinton Administration says can deliver 1.4 million new jobs and a $100-billion economic boost over the next decade--appears to be in jeopardy as time runs short on a measure aimed at spurring competition among cable operators, phone companies and long-distance carriers.

A sweeping telecommunications bill that supporters say would lower phone bills and bring advanced new Information Age services to consumers and businesses is languishing in the Senate due to a bitter clash between the seven regional Bell phone companies and Sen. Ernest F. Hollings (D-S.C.), the powerful chairman of the Senate Commerce Committee.

Although the House last month passed a similar bill by an overwhelming 423-5 vote, the Senate version faces extinction due to an impasse over the highly contentious issue of allowing the regional Bell telephone companies into the long-distance telephone business.

Lawmakers, lobbyists and consumer groups remain engaged in a furious scramble to broker a deal before Congress recesses this month. The Senate calendar dictates that a compromise must be reached by Tuesday at the latest, Senate sources said.

Some of those involved in the negotiations expressed optimism that a meeting scheduled for today could resolve the remaining issues. But BellSouth Corp. Vice President R.L. Mickey McGuire, in a draft memo circulated Thursday, said the sides remain at odds on the preconditions to the Bells providing long-distance service and whether they must form a separate unit to market such service, among other issues. McGuire also said in the memo that telephone rate regulation and issues concerning the terms of competition between telephone and cable companies have not been fully resolved.

“We are down to the final hours unless there is an agreement on new language,” Bill McCloskey, a spokesman for the Baby Bells’ task force, said before the Wednesday meeting.

The stakes are high for the nation as well as the Clinton Administration. In a recent briefing paper produced by the President’s Council of Economic Advisers, officials say legislative reform of the $300-billion telecommunications industry would boost America’s global competitiveness and produce 1.4 million jobs by 2003.

The rapid convergence of television, computers and telephones promises to transform the way Americans live, work and communicate, the council said. The high expectations for such an electronic network were dramatized last month in the federal government’s first auction of the airwaves, when investor enthusiasm drove bids to a startling total of $833 million for licenses to offer new wireless communications services.

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But on Capitol Hill, telecom reform has been eclipsed by the health care debate, and it lacks the high-profile White House support that the North American Free Trade Agreement enjoyed.

“It would be a significant setback if” reform legislation did not pass this year, acknowledged the White House’s chief telecommunications czar, Assistant Commerce Secretary Larry Irving. “We are still optimistic he (Hollings) is going to push a bill through.”

The stalemate over telecommunications reform dates to 1982, when the Justice Department broke up AT&T;’s telephone monopoly and created the seven regional Bell companies. The Baby Bells were barred from manufacturing telephone equipment or providing long-distance services--restrictions they’ve been battling ever since.

The Bells, which share a $100-billion local phone market, are especially eager to enter the burgeoning long-distance business. They say they can use the revenue to help them invest in the so-called information highway as well as offset the cost of providing residential phone service.

But many lawmakers worry that the Bells would use their monopoly control over local telephone service to gain unfair advantage in long-distance. The long-distance companies and other Bell opponents say the Bells must not be allowed to compete in long-distance until there is true competition in local markets.

The initial version of Hollings’ bill would have required “actual and demonstrable” competition in the local telephone exchange before the regional Bell companies could compete in long-distance. A competing bill by Sen. John Breaux (D-La.) and Sen. Bob Packwood (R-Ore.) would allow local phone companies into long-distance one year after the enactment of legislation.

Hollings recently abandoned the “actual and demonstrable” provision in his bill after several Republican Commerce Committee members urged him to reconsider. But the Baby Bells have resisted attempts to replace the language with some other precondition.

At the same time, they have mounted a no-holds-barred lobbying campaign--featuring full-page advertisements in major newspapers--in which they make the curious claim that there is actually no competition in the long-distance market, and thus only their entry into the business will bring rates down.

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The Bells’ tactics have infuriated Hollings, who has indicated he won’t be deterred by warnings that his refusal to give in to the Bells’ demands will doom legislation again this year.

“The American communications system is the envy of the world and I don’t want to mess it up,” Hollings wrote in a July 29 letter to Sen. George J. Mitchell (D-Me.).