NEWS ANALYSIS : Measure Will Reach Out and Touch Everyone

It was decades in the making. It’s a dauntingly complicated piece of legislation, some of whose finer points escape even the hundreds of lobbyists and congressional aides who have been working on it full time during the final, painful lurch to the finish.

Even now that it’s about to become law, it is the kind of bill that makes the most devout policy wonk wince. But its passage is indisputably a milepost, signaling the ascendance of telecommunications as a powerful force in America’s economy and in the lives of its citizens.

As it morphs from the rarefied language of law into the monthly telephone bill and the prime-time TV lineup, the landmark telecommunications legislation is expected to radically alter how communications and media services are delivered and consumed.

Telephone customers will have new choices of carriers, and perhaps eventually lower monthly rates. New three-way competition between cable firms, local telephone operations and long-distance phone companies is expected to spur the evolution of new businesses and a wave of mergers, which in turn could create new jobs.

“It’s good for our company, and it’s good for the country,” said Phil Quigley, chairman of Pacific Telesis Corp., which plans to offer long-distance service to California customers as early as next year.

Meanwhile, parents will gain new ways to block violent and sexually explicit television programs, while Internet denizens could lose access to adult material--though civil liberties groups promise to wage legal challenges.

The impact of the legislation, which passed both the House and Senate on Thursday, is already being felt. Anticipating a relaxation of regulation and intensified competition, giant AT&T; has announced plans to split itself into three pieces, and media companies including Capital Cities/ABC Inc. and Walt Disney Co., and Turner Broadcasting System and Time Warner Inc. have declared their intention to merge.

And the business world is awash with rumors every day of new alliances and partnerships, including one that could create a new colossus linking regional Bell phone companies Pacific Telesis, NYNEX and Bell Atlantic.

Among communications customers, cellular-telephone users living in Los Angeles and other cities could be among the first to feel the impact of the new legislation. As soon as the bill is signed by President Clinton, Cellular One operator BellSouth and its partner, AT&T;, for example, would be free to begin bundling local and long-distance cellular service in Los Angeles and other markets--a combination that had been previously prohibited.

The new legislation promises to alter the balance of power in the telecommunications industry. Clear winners are television broadcasters, such as Capital Cities/ABC Inc. and Fox Broadcasting, which will be free to buy more stations and consolidate their holdings in targeted markets. The Baby Bells, who gain access to the $70-billion long-distance market, will likely come out ahead too.

Long-distance phone carriers, such as AT&T;, could be among the losers--though they too will be gaining some new opportunities.

Despite years of controversy surrounding telecommunications reform, everyone in the business seemed upbeat Thursday, probably as much out of relief as any clear sense of how the legislation actually will change the world.

Even AT&T;, which fought hard against the bill’s many previous incarnations, had an optimistic take Thursday.

“This will allow us to move the battle from one of policy debate to the marketplace, where customers choose winners and losers,” the long-distance giant said in a statement. “We’re confident we can succeed in this arena.”

The reason the 104th Congress succeeded where the 103rd, 102nd, 99th and several others dating back to the 1970s have failed is that new technology is expanding the telecommunications business so quickly that it threatened to burst out of the law unless the law changed first.

“Historically this has not been an area where people felt if we don’t address this, the country is in trouble,” said Fred H. Kates, a senior fellow at the Annenberg Washington Program, which studies communications policy. “But issues relating to information content and transmission are very near the top of the national agenda now.”

The opening line of Clinton’s State of the Union address last month, Kates noted, alluded to the importance of competition in the information industry. New outlets created by technologies such as high-powered satellites and the ability to squeeze movies and TV shows over phone lines have made the concentration of ownership of television and radio stations less ominous.

At the same time, the availability of technology such as high-speed digital phone service, paging, and wireless and cellular services has spurred consumer demand and the desire of communications companies to compete to fill it.

“What’s made it essential to do this now is the technology,” said Jeff Cole, director of the UCLA Center for Communications Policy. “There’s a recognition that all sides need this. And monopolies are just not as much of a threat, so the underlying premise of strong government regulation has begun to disappear.”

What took it so long?

The first major overhaul of the nation’s communications policy since 1934, the bill represents a major shift in public policy from regulatory to laissez faire.

AT&T; has been chafing under government regulation since 1913, when the Justice Department first insisted that it allow small independent carriers to connect to its massive network. The Baby Bells have been battling to be allowed back into the long-distance business since they were created in 1984 by the breakup of the old Bell System. And media firms have for years sought more freedom to expand in the markets of their choice.

But the legislation also embodies countless delicate compromises among fiercely competing interests, all of which seemed prone to fall apart at crucial moments.

Rep. John D. Dingell (D-Mich.), who has been trying to piece together telecommunications reform since 1974, said the tortured process of political compromise on myriad issues made final passage difficult.

“There were dozens of agreements that had to be made and at any given time failure to resolve any one of them prolonged the discussions,” Dingell recalled Wednesday.

The Federal Election Commission said that the telecommunications industry as a whole has contributed more than $40 million over five years to congressional candidates in the battle for more favorable federal regulation.