Senate Panel, Phone Firms Tentatively Reach Accord : Telecommunications: The compromise could break the legislative logjam that has stalled efforts to spur competition.
In a breakthrough that could salvage stalled Senate negotiations over telecommunications reform, the Baby Bell telephone companies and the Senate Commerce Committee on Monday reached a tentative agreement on a bill aimed at spurring competition among cable television operators, local telephone companies and long-distance carriers.
Committee Chairman Sen. Ernest F. Hollings (D-S.C.), who has been engaged in a bitter battle with the Baby Bells--or regional Bell operating companies--over the bill, has scheduled a committee vote on the legislation for Thursday morning.
The House last month passed its own telecommunications reform bill by an overwhelming margin, but the powerful regional Bell companies strongly objected to the original Senate version of the legislation. If the Commerce Committee and the full Senate pass a bill based on Monday’s compromise, the stage would be set for a potentially difficult House-Senate conference to resolve the differences, followed by new votes in both houses of Congress.
Monday’s breakthrough came after Commerce Committee staff members and representatives of the seven Baby Bell firms reached a handshake agreement on the highly contentious issue of allowing the regional companies into the long-distance telephone business. They are currently barred from that business by the 1982 consent decree governing the breakup of the old Bell system.
An industry source close to the negotiations said lawmakers agreed to allow the Baby Bells to offer long-distance service as long as they first provided telephone interconnection and “essential facilities” to alternative local-service providers that compete with the Bells. Once they had met those conditions, they would be required to seek permission from state regulators, the Federal Communications Commission and the Justice Department before they could offer long-distance service.
In addition, the Baby Bells would have to agree to permit long-distance rivals to compete on an equal footing for so-called local long-distance calls--from Los Angeles to Riverside, for example--that are now a local phone company monopoly in California and some other states.
The Bells would have to offer the long-distance carriers so-called dialing parity--meaning no special access codes would be required--for local long-distance calls.
Under the original Hollings bill, the Bells would not have been allowed to offer long-distance service until they could show there was genuine competition in the local phone business and no possibility that they could abuse their monopoly power to gain an advantage in long-distance.
In exchange for being allowed to offer long-distance services soon with only modest preconditions, the Bells agreed to form separate subsidiaries to market their long-distance services. It was unclear late Monday how the parties decided to resolve issues of telephone rate regulation and competition with the cable industry.
It was also not known whether the Bells would be permitted to use their own trade names in marketing their long-distance services through separate subsidiaries.
The accord sets the stage for stepped-up convergence of television, computer and telephone technologies. The marriage of those services is fueling a burgeoning multibillion-dollar telecommunications industry that promises to transform the way Americans live, work and communicate, according to a recent briefing paper prepared by the White House Council of Economic Advisers.
