With the threat of the little guy losing out, consumer advocates fear the deregulation of TV, cable and phone companies may be a case of . . . Faulty Wiring

Does anyone remember asking for this?

With the air of bestowing a generous gift on the American public, Congress last month passed the telecommunications law with such bipartisan superlatives as “landmark” and “sweeping.” President Clinton hailed it as a “boon to consumers,” and Vice President Al Gore said it was “a technological revolution that will empower American families.”

Not everyone is so thrilled.

The first communications overhaul since 1934 frees up telephone companies, broadcasters and cable TV operators to enter each other’s markets for the first time. The promise from Washington is that consumers will enjoy lower prices and more choices as cable, television and telephone services are bundled together by competing companies.

But many consumer advocates who have been monitoring the long struggle, while agreeing that the antiquated legislation needed to be updated, are holding their applause. “Congress is embarking on an entirely new path with this deregulation,” said Gene Kimmelman, co-director of Consumers Union’s Washington office. “This is not a self-executing law where it’s obvious that consumers will have more choices for phone service and cable service.”

Like other activists, he worries that everyday customers may be lost in the free-for-all as competing companies scramble for big accounts; that marketing costs and the duplication of facilities will drive rates up, not down; and that shopping for home services may become a consumer nightmare. It’s too soon to offer detailed consumer advice, but these advocates sketch some areas that savvy consumers should be watching in coming months.

They foresee a world of winners and losers. “We have some real concerns about the effect of this bill on the working poor,” said Ken McEldowney, executive director of San Francisco-based Consumer Action, which focuses on information technology. “With a regulated utility, the basic idea was to keep monthly service affordable. In the new environment that is all going to change.”

In the face of all this, their advice to consumers is, “Get involved now.”

There is still time, Kimmelman said. Over the next year, each state will hold hearings for implementation of the new law. Although these are regulatory proceedings that consumers usually ignore, he said, “This time they’d better get involved.”

The public had little input in the Washington debates, which were dominated by giant media and communications firms that are also major campaign contributors, Kimmelman said. Now, he said, it’s up to consumers to demand that the industry fulfill its promises, that the states really open the door to competition and that the new companies serve the small end of the market as well as the large.

Down the road, the new unregulated marketplace will certainly force consumers to sharpen their shopping skills. “Traditionally, in the world most people know, if you wanted to get local telephone service there was only one company offering it,” Kimmelman said. “And if you wanted to get cable service there was only one company. Rates were regulated fairly effectively, and people were generally satisfied.”

But that’s the regulated-utility model of yesterday. For a peek at the free-market future, he suggests the world of cellular phone service with its frenzy of companies offering cellular phone service, bargains, deals and packages.

We’ve been getting a taste of the new competition since the breakup of AT & T more than a decade ago, noted Consumer Action’s McEldowney. After concentrating on large business accounts, the major long-distance companies turned their marketing guns on small business and residential customers.

“That’s when the confusion started,” he said. “About five years ago, MCI, AT & T and Sprint started battling for customers and now consumers are being bombarded.”

In print, television and direct mail, the claims of money-saving volume discounts, friends and family discounts, extra-hours discount or maximum discounts bundled into calling card charges and cellular phone charges are “all over the lot,” McEldowney said. “There is no way to compare them, because they are so different.”

This thicket of choices is just the prelude, McEldowney fears. Down the line, the phone service may be cheaper from one company, but the cable package better from another. Maybe if you become a “frequent user” of your long-distance service, you will get six hours of free movies from the Disney Channel or a year’s worth of pay-per-view specials. “There is nothing about competition that is necessarily going to reduce the costs of providing phone service,” McEldowney said.

He foresees that the eventual winners will be the busy customers who rack up heavy long-distance bills, use a calling card, and have cable TV with all the options and a cellular phone or two.

In short, if you use lots of products, the new marketplace with its “bundles” of services will probably offer attractive bargains, McEldowney said. “But for the person who just wants basic cable and a telephone, there will be less guarantee of the sort of consumer protection that people take for granted with any regulated utility.”

McEldowney is worried that all the competitors will be fighting over a relatively small group of consumers. “Just last week, independent of the new law, you have AT & T offering customers five hours of free Internet access per month, at the same time they are raising the rates for traditional long-distance customers. This is an ominous sign for the future.”

Kimmelman suggests an even worse scenario: The tele-competition might not develop at all. If the freed-up cable and phone companies decided to nestle down together in a partnership, you might end up with your telephone company offering a little package with some cable services, but not what you were getting in the old days, and the prices could keep inching up or even take a big leap. “No one knows how it will unfold,” Kimmelman said.