Dialing for Dollars : Communications: The Baby Bells are pursuing an agenda for total monopoly.

Ingeniously invoking the name of competition, the Baby Bells are really seeking a total monopoly on the distribution of all local telecommunication, from telephony to television.

The Baby Bells seem to have entered their rebellious teen years and have become unregulatable. Their quest to be free from strong regulation has been successful; in exchange for the lack of control, they have promised that local rates will not increase any more than the rate of inflation and they promise lower long-distance rates if they are allowed into that market. They also promise a cornucopia of new services, including holographic videophones, automatic language translation and video-on-demand.

It’s a case of having too much money and searching for ways to invest it. Last year’s profit margins ranged from 10% to 13%, with pretax profit margins for some Baby Bells as high as 18%. These profit margins have been stable during the 10 years since divestiture. Given the Baby Bells’ monopoly on providing telephone service and protection from competition, such high profit margins are unwarranted.

The profits of the Baby Bells should be subject to regulation, and local rates should be reduced. In the 10 years since divestiture, interstate long-distance rates have decreased dramatically by 50% to 80%. During these same 10 years, the total charges for local service have increased about 60%.

Yet for all their technological advances, the Baby Bells have failed to provide universal telephone service. Last year, more than 10% of the households in three states had no telephone service. Touchtone service, though more than three decades old, has market penetration of only about 75% and still costs extra in many areas. The Baby Bells charge so much for services such as call-waiting and voice mail that most people do not have them.

The Baby Bells accuse AT&T; of being an oligopoly, yet AT&T;’s long-distance market share was just 60% last year, while the Baby Bells have nearly 100% control of local service.

The Baby Bells publicly embrace competition and lobby Congress to free them to enter new businesses. Yet their actions show their real monopolistic intent. After promising competition with CATV, the Baby Bells attempted to buy up existing CATV companies to extend the monopoly of local telephone service. More recently, the Baby Bells announced plans to combine many of their cellular-telephone operations into super cellular companies, again reducing competition. In some ways, these mergers imply that the old Bell system is beginning to come back together.

The Baby Bells have been protected from the real world for so long that other than mouthing the word competition, they seem to have little understanding of consumers, markets, finance, science or any of the factors affecting competition. The former Ma Bell, AT&T;, however, has had to learn all about the real world and faces stiff competition in its long-distance and manufacturing businesses. The only thing that the Baby Bells seem to understand is the lobbying of legislators and governors.

The recent lobbying campaigns of the Baby Bells at the state and federal levels demonstrate far too much influence that is counter to public interests. The Baby Bells have duped many legislators and are ignoring their responsibilities to the public as utility providers of an essential service. However, their anti-competitive actions ultimately risk the attention of the Justice Department. One solution? Break them up into a number of smaller local companies, each serving a small geographic area. Another solution? Re-create the old Bell system under the central control of an AT&T; with strong regulation. Given today’s chaos and greed, perhaps the old Bell system wasn’t so bad after all.