Communications Law for Today : Opportunities, adjustments and possible federal revenue

In the parlance of Washington, last week’s overhaul of communications law is a “revolution.” To others the sweeping reform points to the information superhighway. Beyond the rhetoric lies the reality we will experience in our homes and offices. As telephone companies, broadcasters and cable TV operators are allowed to enter each others’ markets, there will be changes in how we work, play and live.

Clearly the Communications Act of 1934 was outdated, increasingly so as technology obsoleted some traditional divisions among the phone, broadcasting and cable businesses. In allowing them to compete against each other, Congress is unshackling the $500-billion telecommunications industry. The competition spurred by the change should lead to greater choices and lower consumer prices for phone, entertainment and new media services.

But there will be painful adjustments. Eventually, there may be more jobs, but initially there may be fewer. Deregulation raises the specter of concentration of ownership and thus higher consumer prices. Some companies will reconfigure to compete better, which may cost jobs. Even before Congress passed the new legislation on Thursday, some big companies began to reposition themselves for the onslaught of competition. American Telephone & Telegraph, for example, is splitting into three companies and cutting 40,000 jobs.

The massive new legislation goes awry in some areas, and dead wrong in the possible giveaway of $70 billion worth of spectrum rights to television broadcasters. The new frequencies would enable broadcasters to transmit a program through digital signals that provide a better picture and sound than the current analog technology. Using digital compression, broadcasters would be able to expand from the one channel they now send into homes to as many as five or six. The frequencies could also be used for other purposes, such as phones.

Senate Majority Leader Bob Dole, who called the frequency giveaway “corporate welfare,” delayed the bill to demand that an auction be held for the spectrum rights, with proceeds going to the federal government. He dropped his objections after he secured assurances that the Federal Communications Commission would not issue licenses until Congress took up the issue in a separate bill.

Vice President Al Gore, the technology guru of the Clinton administration, also wants an auction. President Clinton needs to press the proposal in a coming meeting with broadcast executives. A myriad of other issues has yet to be worked out to implement the new legislation. Consumers must closely watch the FCC hearings that are planned. Decisions made in those hearings will affect their lives and pocketbooks into the next century.