Most Americans seem to think that efficient, relatively-low-cost telephone service is a national tradition, akin to fireworks on the Fourth of July, hamburgers and Charlie's Angels.
It simply is taken for granted in the everyday worlds of business, politics and common chit-chat that the use of the telephone is a service that American ingenuity has provided for each and every one of us.
But beneath the surface lies a massive industry, which is led, in size at least, by American Telephone & Telegraph Co. In fact, AT&T's annual revenues are about 2 percent of the nation's gross national product, and the phone company is the nation's largest private employer.
And the most significant tinkering ever undertaken with that system is under way, a process involving a supportive, but cautious Carter administration, the Federal Communications Commission, AT&T, about 1,500 other "independent," or non-Bell, telephone companies, an array of lobbyists and a Congress that is largely enthralled with the deregulatory fervor of the times.
After four years of attempting to redo the Communications Act of 1934, the basic law governing the telecommunications industry, the House Commerce Communications subcommittee, passed a bill by a 13-1 vote last week that all believe if enacted would alter the fact of the nation's telephone and related industries.
Rep. Lionel Van Deerlin (D-Calif.), chairman of the subcommittee, has tried in past years to gather support for a broader measure that also would have deregulated some broadcasting markets.
But under massive opposition from labor unions, consumer groups, the educational lobby and some factions of the broadcasting industry, the television and radio issues have been axed, on the House side at least, by Van Deerlin. It is unclear whether broadcasting regulatory issues will be addressed in a legislative package set to emerge soon from a Senate coalition that includes Van Deerlin's counterpart, Ernest Hollings (D-S.C.), chairman of the Senate Commerce communications subcommittee.
What are Van Deerlin and his colleagues actually up to? The problem with trying to analyze the communications effort is that few persons understand the working of the industry in question. In addition, most of the general public cannot even define a "common carrier," the legalistic phrase that in communications vocabulary means the members of the telephone industry and its spinoffs.
Just as important a factor in the movement to deregulate the telcommunications industry is the widely held notion that few people can describe the shape of the industry whether or not the legislation is put into place. Unlike the debate about airline deregulation, for example, the body of sophisticated economic analyses of the telecommunications regulatory framework is limited at best.
So that while the legislative debate continues in a virtual public and academic vacuum, the parties in the communications rewrite controversy are depending on each other for their arguments. Yet the importance of the debate cannot be denied.
"The importance of communications is obvious to anyone who watches local news or listens to the car radio," Van Deerlin said in a recent speech. "Less well known is the fact that our telecommunications industry has grown, developed and continues to function under a law based on an almost-century-old policy for regulating railroads.
"Given the generally superb performance of American communicatins, I suppose one could argue that for once Congress did something right -- even if it was almost 100 years ago. Nonetheless, I think we'd all have to agree that it's a long way from the golden spike that completed the transcontinental railroad to Satcom III."
Van Deerlin's point about the changes in the industry are indisputable. Increasingly the industry is less of a simple monopoly. Techonological development and competition spurred by that technology and an easing of some regulatory restrictions by the FCC have created a new industry, one in which computers and other complex devices speed worldwide communications across the globe in seconds.
These changes have left the FCC creeping toward less regulation within an outdated legal framework. The question, however, is what does this tinkering actually mean for government policy and, more significantly, for the future of the public's telephone service? Equally murky and just as much in the balance could be the fate of the Justice Deparment's massive antitrust case against AT&T, which is scheduled to come to trial in seven months. If successful, that case could result in a breakup of AT&T and its Bell System network. "There are problems the bill could cause for the case -- big problem," said one antitrust expert.
The nation's telephone network is made up primarily of what Bell calls its "core system," interconnecting hook-ups with which the non-Bell companies must link to provide their customers with long-distance service.
The crux of the House legislation, now headed to the full Commerce Committee for consideration, is the assertion that competition is to guide the nation's telecommunications policy. In addition, the bill removes legal barriers to AT&T entering the unregulated communications markets and provides a partial restructuring of the Bell System, which under FCC supervision will permit the telephone giant to enter other fields. Offered that freedom, AT&T could be expected to offer new data- and voice-transmission services.
The manufacture and sale of telephone receivers, and switchboards, interchange telephone services, data processing and other joint communications-computer services would be deregulated, although most basic telephone services would remain under the FCC aegis. A federal-state joint board would be set up to ensure that all telephone users do not suffer from more expensive or limited service. That panel would be replaced 45 months after the bill became law.
But according to the bill's critics -- who include Congress Watch, Consumers Union, and some telecommunications firms and lobbying organizations for large and small companies such as the Ad Hoc Committee for Competitive Telecommunications -- the safeguards for keeping track of AT&T's competitive practices are inadequate. Says Howard Symons of Ralph Nader's Congress Watch: "The bill may actually make the market less competitive."
Symons maintains that provisions of the bill that revise Bell's structure ultimately may not serve the public."Our problem is that the separate subsidiaries are not separate enough" and "the accounting checks used to scrutinize Bell are not tough enough," he said. Further, Symons charges that the bill's beneficiaries will not be the private citizen, but large businesses that use their telephones in considerable volume. "The bill ignores the residential users," he said. Likewise, Herbert N. Jasper, vice president of the ACCT, expressed doubt in a letter to Van Deerlin that the legislation will match its supporters' claims.
"Unfortunately, the bill would accomplish little meaningful reform in the structure and practices of AT&T," Jasper wrote. "It would hardly, if at all, reduce AT&T's incentives to behave anticompetitively. By allowing the mixture of services and equipment in the deregulated entity, the bill would give AT&T new opportunities to post predatory prices."
But on the other hand, Henry Geller, assistant secretary of Commerce for communications and administration, said in a recent interview that the benefits of revising telecommunications law will touch everyone's pocketbooks. "The consumer is the one who will benefit from this," Geller said.
Geller argues that businesses hoping to introduce new telephone products into the marketplace are burdened by the lag created by lengthy FCC regulatory procedures. "By the time you get done with the hearings, the service is obsolete," he said. "That is a very poor way to proceed."
Surprisingly, to many observers, Rev. Everett C. Parker, director of the United Church of Christ Office Communication, and a long-time communications activist, has warmly endorsed the House legislation, calling it "excellent" and saying it "strikes reasonable balances between federal and state regulation and between congressional policy-making and administrative authority."
Meanwhile, AT&T, which drew vast criticism as a result of its own efforts to funnel legislative language to members of Congress during the mid-Seventies, has taken a very low profile on this bill, although the company's vice chairman, James E. Olson, admitted in remarks to Bell System managers that characterizing the legislation as a "Bell bill" could "very well be the kiss of death for any legislation." But Olson also called the measure "probably the best piece of legislation to be produced thus far by Congress," and said the bill "moves us in the direction of a bill we can live with."
Also supporting the bill is the Communications Workers of America, the primary union for the industry's work force, representing some 480,000 Bell System employes, who make up about 80 percent of the union's membership.
Yet there is one largely silent and important player in the debate about the telecommunications changes. That player is the Justice Department, which has said little publicly about the bill's impact on its case against AT&T.
According to knowledgeable observers, Geller and Justice Department officials essentially hope the safeguards in the bill -- particularly a clause that bars the legislation from altering ongoing judicial proceedings -- will prevent AT&T from using the legislation or its supporting language in suggesting that any divestiture remedies resulting from the suit are not the intent of Congress.
But Symons and other active opponents of the bill suggest otherwise. Sharon Nelson of Consumers Union wrote in a letter that the bill could be "read as congressional sanctification of the present vertical integration of the Bell System and thus as precluding the divestiture remedy the Department of Justice seeks in the current litigation."