34 Senators Urge Changes to Telecom Bill : Congress: Bipartisan group presses for requirement that would erect barrier to Bells’ entry into long-distance market.

The powerful regional Bell telephone companies, which had seemed to be on their way to profiting from a telecommunications reform bill that would open the door for them to the lucrative long-distance business, are suddenly facing significant last-ditch opposition.

A bipartisan group of 34 senators has urged the chairman of the House-Senate conference committee on telecommunications legislation to include “a meaningful role for the Justice Department” in determining how soon the Baby Bells may enter the $60-billion-a-year long-distance market.

The Baby Bells have strongly opposed such a requirement, arguing that it would lead to unnecessary delays and regulatory uncertainty. But White House and consumer groups have sought such a provision, which earlier this year was considered but rejected by the Senate and spurned by the House Commerce subcommittee on telecommunications.

The 34 senators sent a letter Wednesday to Sen. Larry Pressler (R-S.D.), chairman of the conference committee that is trying to hash out the differences between the separate telecommunications bills passed by the House and Senate.

And hours later, Rep. Jack Fields (R-Texas), chairman of the House telecommunications subcommittee, mounted an even more surprising threat to the regional Bells. Fields, who had been championing the Bells’ rapid entry into long-distance, released a draft proposal to a small group of House and Senate leaders that called for the Bells to face “viable competition” in their local telephone markets before they could offer long-distance service. As passed last summer, the House version of the bill would require competition, but it made no reference to “viable competition.” The Senate bill would impose a similar requirement.

The new proposals touched off a quick and furious reaction from regional Bell executives. “We at Bell Atlantic would strongly oppose the language,” said Aubry Sarvis, the company’s head of federal relations in Washington.

Bell executives sent a letter Thursday to Sen. Ernest F. Hollings (D-S.C.), ranking minority member of the Senate Commerce Committee, voicing their concerns. They enlisted Senate Majority Leader Bob Dole (R-Kan.) to write a letter to House Speaker Newt Gingrich (R-Ga.) to urge him to quash the insurgents.

“I am concerned,” Dole wrote Gingrich. “Many gains could be compromised, if not lost, should the conference on telecommunications continue to consider regulatory solutions that are clearly outside the scope of either bill. Whether it’s moving backward on regulation of phone rates, expanding the House provisions of facilities based-competition or weakening my forbearance provision to gut useless regulation, it is all counterproductive.”

Some observers said Gingrich’s political woes were interfering with his ability to take a strong leadership role on the legislation, which is aimed at freeing long-distance, cable and local phone carriers to compete in one another’s markets. They said the push for telecommunications reform might slip because the speaker’s attention had been diverted by a House Ethics Committee allegation that he had misused official funds.

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On Wednesday morning, for instance, House conferees broke ranks with Gingrich and embraced a highly regulatory anti-cyberporn measure that the speaker had strongly opposed.

A few hours later, Fields, long considered one of Gingrich’s closest lieutenants on telecommunications reform, proposed his new long-distance test in a change that, sources said, reflected the wishes of House Commerce Committee Chairman Thomas J. Bliley Jr., whose Richmond, Va., district is home to a large AT&T; plant.

Brian Moir, a lobbyist for the long-distance telephone industry, said the regional Bell companies “are positioning Dole to take control of the process. It’s a totally different dynamic from Wednesday,” when the Baby Bells seemed to be on their way to an easy legislative victory.