THE TELECOM REFORM BILL : A New Agreement in Principle

After intense negotiations and changes, the telecommunications bill tentatively agreed upon Wednesday would eliminate many long-standing communications regulations. It is designed to spur competition among local and long distance telephone companies, cable operators, and other providers of communications services. In principle, such competition will lead to new services and lower prices, though many public interest groups fear it would lead to higher prices in the short run. Here are the main provisions of the agreement, which could be further modified and still require approval of the full Congress:

Phone Competition

This has been at the heart of heated disagreements on all sides. Under the latest accord, regional Bell operating companies will be permitted to offer long-distance telephone service for the first time since they were created by the 1984 breakup of AT&T.; But they would be allowed into long-distance only when they faced competition in their local phone markets. The bill includes tests for determining when such local competition exists, and the Federal Communications Commission would have the authority to determine when such competition is in the public interest. Long distance companies such as AT&T; and MCI are expected to move aggressively into the local phone business as the Baby Bells move into long-distance.

Cable and Video Services

Phone companies would be able to offer video services in their own markets but would not be able to buy cable companies in the same market. Cable companies are also expected to seize new opportunities in providing local phone service. Cable rate regulations would remain in place for three more years, although some rural cable operators would be able to increase prices immediately.

Media Concentration

Another big sticking point has been ownership rules for TV and radio stations. Broadcasters would be allowed to own TV stations that reach 35% of all viewers, up from 25% under current rules. Limits on ownership of radio stations would be loosened dramatically.

Controls on Sex and Violence

New rules would ban the transmission of “indecent” material over computer networks unless controls are in place to keep it out of the hands of children, although the legality of such controls remains in question. Television manufacturers would be required to include a special chip in new TV sets that would allow consumers to block out violent or sexually explicit programming. Cable and broadcast TV representatives have one year to come up with voluntary rules for rating programs. Failure to develop guidelines would result in creation of a federal rating system.

Consumer Impact

For residential telephone consumers, deregulation would produce more choices for local and long distance service over the next several years. Local phone prices would probably rise modestly in the short term while long-distance prices would fall. Big companies would begin offering service packages that include local, long-distance and possibly wireless services. In television, consumers would eventually enjoy more alternatives to the local cable company although they also might face higher cable prices. In the long run, the bill is supposed to spur development of a host of new services such as interactive television and video-on-demand. Critics of the bill say increased media concentration could eventually reduce diversity in radio and television.