Rewiring telecommunications.

• Author: O'Tierney, Daniel Patrick
• Position: Column

After last session's unsuccessful attempt, it appears that Congressional legislation deregulating the nation's $1 trillion communications industry will land on President Clinton's desk this year. The U.S. House and Senate each passed landmark bills before the August recess to overhaul the 1934-vintage laws governing the telephone, cable and broadcasting industries. No small feat, particularly amidst the intense lobbying.

At this writing, House and Senate conferees are expected to reconcile differences in their respective bills and come up with a compromise package of reforms. At stake is the future of the communications industry; one in which many historical, command and control regulatory barriers to broadband competition will come tumbling down.

Reining in Restrictions

The challenge for Washington lawmakers is to craft a balanced deregulatory scheme that reconfigures the monopolistic playing field for near-term competitive entry and long-term market discipline. No small order.

Advances in technology (such as digitization and broadband capacity) have been driving the provision of services in a competitive direction for some time now. Declining costs have been an ongoing trend of the industry. Since the anti-trust divestiture of AT&T in 1984, long-distance telephone competition has proven a robust success. New and innovative services have appeared and price competition has been fierce. But this is only the tip of the telecom market iceberg.

Broader competition in the telecom industry is currently restricted by overlapping layers of federal, state and local statutes and regulations, as well as by judicial oversight in the wake of the AT&T breakup. Congressional legislation would break the logjam and eliminate numerous barriers that currently prevent local telephone companies, long-distance carriers and cable and broadcast television companies from offering similar services and competing for one another's customers. Proponents anticipate an explosion of new investment, services and products in a modern land rush to compete.

Anticipation of the economic impact of Congressional deregulation is partly driving the wave of multi-billion dollar mergers, acquisitions and alliances rippling through the industry, most recently in the celebrated Disney purchase of Capital Cities/ABC. AT&T previously purchased McCaw Cellular. In Alaska, AT&T's acquisition of Alascom received final regulatory approval last August to close that deal. Most of the regional...