Sweeping Reform of Communications Laws Clears Senate : Deregulation: Bill passes, 81-18, and would likely have wide impact on consumers. It would let regional Bells, long-distance, cable firms compete in each other's markets.


The Senate on Thursday broke a decade-long impasse over telecommunications reform and approved a sweeping measure that lawmakers said will spur competition and profoundly affect every American who watches TV, accesses a computer on-line service or talks on the telephone.

After a week of emotional debate that touched on everything from curbing indecency in cyberspace to preventing possible rate gouging by cable operators, the Senate voted, 81 to 18, for a heavily amended bill that would let local phone companies, long-distance companies and cable-TV companies compete in one another's markets.

The plan, the first major rewrite of the communications laws since the passage of the Communications Act of 1934, would also allow large broadcasters to buy more radio and TV properties, strip away the cable rate regulations imposed three years ago and allow electric utility companies to offer telephone service.

The measure also addresses what has suddenly become one of the hottest issues in Washington: sex and violence in the media and in cyberspace. The bill imposes severe restrictions on the transmission of indecent material over the Internet, and would require the television industry to develop a ratings system and an electronic blocking scheme to enable parents to prevent their children from viewing objectionable TV programs.

"This is a good bill," said Sen. Larry Pressler (R-S.D.), author of the legislation. "America's telephone customers and television viewers are the big winners."

Critics of the legislation, however, say the big winners are the media and communications companies that have since 1985 spent nearly $40 million lobbying on communications issues. Television broadcasters, cable-TV companies and local telephone companies were all delighted with Thursday's vote, while many consumer advocates denounced the bill.

The Senate measure must still be reconciled with a companion bill that is expected to pass in the House next month. While the broad lines of the two bills are similar, the House measure contains nothing on obscenity or media ownership, and it handles some key phone regulation issues differently.

Reform of the $400-billion telecommunications industry has sparked little public debate through more than 10 years of gestation. Although the legislation promises to have a profound impact on the way Americans work and communicate, the effects are mostly indirect and long term, and many of the issues involved are very arcane.

Industry lobbyists, however, have been aggressively following--and shaping--the legislation for years. Winter and spring hearings on telecommunications reform on Capitol Hill played to SRO audiences of lobbyists and industry executives who paid companies up to $1,000 a day to hire people to stand in line to secure them a seat in hearing rooms.

This full court press was all-too-effective, some lawmakers say.

"Rather than being a contract with America, this legislation looks like a contract with corporations," said Sen. Bob Kerrey (D-Neb.). "We worried too much about liberating businesses and not enough about liberating people."


Supporters of the bill say it constitutes a long-overdue overhaul of a hodgepodge of laws and regulations that are hamstringing one of the nation's most dynamic industries. By overthrowing the legal agreement governing the breakup of the old Bell System, which bars the regional Bell telephone companies from offering long-distance service and manufacturing equipment, lawmakers say they are creating strong new competitors in key markets--and that will in turn assure more innovation and lower prices.

Overriding local laws and allowing new competitors into the local phone and cable-TV businesses, the legislation's supporters say, will accomplish the same thing. A local phone company such as Pacific Bell, for example, would now be allowed to offer long-distance service throughout the country in competition with AT&T; Corp. as well as cable TV service in competition with companies such as Time Warner Inc.

And stripping away cable rate regulations, rather than costing consumers money, will assure that cable companies have the wherewithal to invest in new programming, the Senate bill's supporters say. The restrictions on indecency in cyberspace, in turn, are simply a way to ensure that the information superhighway does not become a playground of pornographers and pedophiles, say the bill's advocates.

Tom Tauke, executive vice president for government affairs for Nynex, a Bell operating company, dismissed the objections by consumer advocates, saying: "The consumer groups are locked into the mind-set that the only way consumers can be protected is by heavy government regulation. But the monopoly model no longer fits the technology or the marketplace.

"We are very happy," he added.

Decker Anstrom, president of the National Cable Television Assn., said: "We are very pleased the Senate has taken this important step toward bringing competition to telecommunications; cable companies are ready to compete."

But consumer groups were not the only dissenters. AT&T;, unhappy that the Bell companies will be allowed into long distance relatively quickly and easily, also denounced the Senate legislation.

Unlike a House measure that requires that the Baby Bells face actual "facilities-based competition" for local phone service before they are allowed into the long-distance business, the Senate bill only requires that local phone companies meet a less stringent 12-point checklist showing that they have moved to open up their local phone networks to competition.

If that provision is allowed to stand, some experts fear the Baby Bells will have more incentive to cash in on the $60-billion-a-year long-distance market than deploy the expensive fiber optic network that will be required for them to offer fancy new services, such as higher speed data networks and video programming.

The Clinton Administration on Thursday voiced concerns about deregulating the telephone and cable industries before adequate competition can develop to keep prices low and provide incentives for new services. The White House also said it wants stronger universal access protections and opposes opening up U.S. telecommunications markets to investment by foreign corporations because of national security concerns.

Although Administration officials didn't threaten a veto, speculation was rampant among consumers groups that President Clinton might take that step if no improvements are made to the measure.

"There is a strong prospect of a veto of this bill in light of the concentration and anti-competitive problems created by this legislation," said Andrew Schwartzman, executive director of Media Access Project, a nonprofit advocacy group active on telecommunications issues. "Right now the only thing that will certainly happen as a result of this bill is that cable rates will go up. Everything else in the legislation is premised on the development of competition that does not yet exist, and may never come to pass."

But Administration officials said Thursday they were taking a wait-and-see attitude.

"You can take the best provision of the House bill and the best provisions of the Senate bill and you would have a good telecom bill; or you can take the worst provisions of both bills and have a nightmare," explained Larry Irving, an assistant commerce secretary who helps direct the Administration's telecommunications policy.

Declining to speculate on whether the President would veto a bad bill, Irving added: "We are trying to promote a good bill. We have not been threatening or saber rattling."

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