Communications Law Overhaul Is OKd by Congress

Sweeping aside partisan differences, Congress on Thursday overwhelmingly approved an overhaul of the nation’s communications laws, freeing telephone companies, broadcasters and cable-TV operators to enter each other’s markets with the aim of bringing consumers lower prices and more advanced services.

President Clinton hailed the legislation Thursday as a boon to consumers. The president will sign the bill “probably within a week,” Vice President Al Gore said in a telephone interview.

The congressional votes--414 to 16 in the House and 91 to 5 in the Senate--represented a big victory for the president. The administration has actively championed telecommunications overhaul since January 1994, when Gore gave a speech in Los Angeles urging deregulation of the industry to help boost the U.S. economy and bring the nation into the Information Age.

“This bill will unleash enormous quantities of investment in every aspect of communications and computing,” Gore said. “It’s a bipartisan victory . . . [that will lead to] a technological revolution that will empower American families.”

The outcome was not so favorable for Senate Majority Leader Bob Dole (R-Kan.), who acknowledged on the Senate floor that he “got rolled” in attempting to overturn a provision that could allow broadcasters to acquire new digital television channels for free.

“Here we are trying to balance the budget . . . cutting welfare . . . and we hand this out to the rich and the powerful,” Dole complained. “It’s the biggest giveaway of the century.”

Dole agreed to support the bill on the condition that the issue be revisited later.

Clinton, in a statement issued after the congressional action, said: “Consumers will receive the benefits of lower prices, better quality and greater choices in their telephone and cable services, and they will continue to benefit from a diversity of voices and viewpoints in radio, television and the print media.”

The measure could speed the modernization of the nation’s aging phone system, which is heavily dependent on copper wires laid more than a half century ago. But critics fear it could also increase prices for cable TV and telephone service, encourage a dangerous level of concentration in the media industry and damage the burgeoning Internet computer network with an unworkable censorship scheme.

A sweeping overhaul of the antiquated Communications Act of 1934, the new legislation is designed to unshackle a $500-billion telecommunications industry that has long been divided into highly regulated fiefdoms. The regional Bell telephone companies, which have enjoyed monopoly control over local telephone service ever since they were created by the 1984 break-up of AT&T;, will now face competition in that business.

But they will also be free to enter the long-distance telephone market once local competition develops, and they’re expected to move aggressively into the cable-TV business as well. Cable operators and long-distance carriers, in many cases allied with one another, will jump into local phone service. Large broadcasters will be allowed to buy even more television stations.

The bill adds new regulations on some knotty social issues, however. It outlaws the transmission of “indecent” material over computer networks unless steps are taken to keep it out of the hands of children--a provision that civil libertarians vow to challenge in court. And it requires that new television sets be equipped with “V-chips” that allow viewers to block out programs heavy on violence.

Although some critics argue that the legislation won’t produce big changes because the federal courts and the Justice Department have already opened up large parts of the telecommunications industry to greater competition, many Wall Street investors, lawmakers and industry experts disagree.

Already on Thursday the share prices of many telecommunications equipment companies were rising in anticipation of a boom in network construction. A flurry of mergers and acquisitions are expected as companies seek quick entry into newly opened markets.

“We think it’s generally a watershed bill that will spark an information technology revolution,” said Harris Miller, president of the 6,700-member Information Technology Assn. of America, a Washington trade group. Lawmakers say the impact will be profound enough to give the overall economy a boost and create tens of thousands of new jobs.

Impact to Ease In

The long-term impact of the telecommunications bill will likely be slow to unfold. Even though telecom reform has been under consideration in one form or another for more than a decade and came close to being enacted two years ago, telecommunications companies are still grappling with the implications of the changes as the new technologies continually alter the communications landscape.

Only a few years ago, telephone and cable-TV companies talked grandly of making alliances so they could undertake a costly rewiring of the nation’s communications networks to deliver interactive services, such as movies on demand and multiplayer video games. But following several experiments that showed lackluster consumer demand as well as technical glitches, a number of telephone companies--including Pacific Bell--have pulled the plug on their multibillion-dollar efforts to launch interactive systems.

In addition, many key details of the telecommunications legislation will have to be worked out by federal and state regulators, and they will often have wide latitude in developing policies that will affect tens of billions of dollars in telecommunications commerce.

For instance, the bill authorizes a joint federal-state board that will determine the procedures for setting up a fund to ensure that all Americans have access to basic communications services. The federal government now oversees a fund of about $20 billion to subsidize telephone service in high-cost areas of the United States. But under the new legislation, the board would have a broader charge to ensure that “quality services should be available at just, reasonable and affordable rates.”

Bill Freeza, president of Wireless Computing Associates, a Philadelphia consulting firm, thinks the language is a prescription for political nefariousness.

“They could decide that a cellular phone is necessary for democratic discourse; then we all will find ourselves subsidizing cellular phones for the poor,” Freeza said.

Rules Needed

Indeed, despite the claims the new telecommunications law is deregulatory in nature, the FCC will be required to hold hearings on nearly 100 different issues to draw up rules to implement parts of the legislation, according to Jeff Chester, executive director of the Center for Media Education, a Washington advocacy group that is unhappy with the bill.

“Congress has staked a lot of hope that America will prosper by letting all of these companies compete, but there are no guarantees they will compete with . . . all of these FCC rule-making” decisions still unresolved,” he said. “I think the bottom line for consumers is higher cable and telephone bills and far more media concentration.”

Some provisions may not even go into effect as a result of legal challenges. The American Civil Liberties Union said it would file suit declaring that the pornography provisions are unconstitutional.

Dole said he will pursue follow-up legislation on the digital television issue, and other aspects of the bill are also likely to be revisited in the months and years ahead.

* THE CHANGES: A breakdown of the legislation’s main provisions. D1.

* WHAT IT MEANS: A Q&A; on the controversial measure and its impact. D1.