NEWS ANALYSIS : Senate Panel OKs Bill on Telecom Reform, but Fight Isn’t Over : Communications: Senate panel OKs bill opening competition. But a compromise among industry factions is shaky at best.

For the many businesses and individuals hoping to build and travel on the information superhighway, there was progress of a sort on Thursday when a Senate panel as expected approved a sweeping overhaul of the nation’s outdated communications laws.

The legislation would allow cable TV operators, local phone providers and long-distance carriers to compete in one another’s markets--steps many believe are crucial to both the development of new communications services and decreasing prices for current ones. It also includes a highly controversial amendment that aims to stamp out on-line harassment and pornography--one that civil libertarians say amounts to censorship.

Yet telecommunications reform remains embroiled in a furious battle among competing industry factions, and the compromise those factions accepted late Wednesday appears tentative at best. Last year’s effort at telecom reform fell apart at the 11th hour amid bitter recriminations about commitments betrayed, and this year’s effort clearly has a long way to go before it becomes law.

The Senate Commerce Committee on Thursday voted 17 to 2 in favor of the bill after a furious all-night scramble by Capitol Hill aides to accommodate Democrats who opposed Republican-led efforts to deregulate cable rates. But no sooner had the vote been taken than the amendment proposals started flying. And even those senators who withdrew their amendments for the moment promised to press the fight on the Senate floor.

“We have created a package that nobody likes,” grumbled Sen. John B. Breaux (D-La.).

“We will put up a very strong fight” on the Senate floor, vowed Sen. Conrad Burns (R-Mont.).

For the most part, the battle over telecom reform is about competing industry interests: The regional Bell companies want into the long-distance business; the long-distance companies want to keep them out. The cable companies want into the local phone business; the local phone companies want to keep them out.

And on and on, with everyone from burglar alarm operators to electric utilities getting in his two cents’ worth on a bill that will govern industries with hundreds of billions of dollars in revenues annually.

This year, with the Republicans assuming control of Congress, partisan politics is playing a big role too.

Senate Majority Leader Bob Dole (R-Kan.), who has his eye on the White House, has taken a keen interest in telecommunications legislation in the hope of burnishing his political career, Capitol Hill observers say.

With powerful House Speaker Newt Gingrich (R-Ga.) using the GOP’s “contract with America” to put himself on the political map, Dole has seized on telecom reform--which promises to create hundreds of thousands of jobs--to boost his political fortunes.

Dole telegraphed his interest earlier this month, when he attacked the Clinton Administration’s stand on the subject. The White House, Dole said, “talks about competition and then regulates an industry to death. It talks about the information superhighway and then throws up roadblocks.”

Dole’s shadow over telecom reform looms so large that after Thursday’s vote, Commerce Committee Chairman Larry Pressler (R-S.D.)--who is new to the extraordinarily complex issue--abruptly excused himself from an impromptu session with reporters to huddle with the Senate majority leader.

“Dole is very concerned about this bill because he wants to get something that’s his and that is not ‘contract related,’ ” said a former Capitol Hill aide. “So he has been very much involved in the process.”

By allowing the opening of the telecommunications marketplace to greater competition, lawmakers hope consumers will enjoy lower prices and see more rapid deployment of an advanced network that could offer interactive TV, home shopping and home automation and electronic security.

A stumbling block has been how to let the local telephone companies enter other communications businesses. Consumer groups, long-distance companies and some others fear the Baby Bells will use their monopoly power to stifle competition unless federal regulators first ensure that local phone markets are fully competitive.

But with federal courts increasingly handing down decisions freeing the Baby Bells to enter new markets, Congress--which has been considering some form of telecom reform for more than a decade--is under immense pressure to establish more certain legislative guidelines.

The race to the finish line will be a tough one.

“The best thing you can say is that they moved a bill out quickly,” said Brian Moir, a veteran industry lobbyist.

“But this particular bill and this particular debate has been the most partisan in the history of my 20 years following telecommunications policy.”