For the first time in 46 years, a congressional subcommittee passed a measure in final form yesterday that would alter dramatically the structure of the telephone industry and as a result permit American Telephone and Telegraph Co. to enter fields beyond basic telephone service.
By a 10-to-2 vote, the House Communications subcommittee passed the bill, which its advocates say is necessary to insure the stability of the nation's phone system and permit the development of the so-called communications revolution.
Rep. Lionel Van Deerlin (D-Calif.), the subcommittee's chairman who began the effort three years ago, called enactment of the legislation "absolutely urgent" and said he hopes the full House Commerce Committee can take up the bill within the next two weeks. Other sources suggested this view is optimistic, but said the bill certainly will come up this summer.
A Senate version of the legislation attempts to reach the same ends in the telephone field but also take actions to revamp regulation of some aspects of broadcasting. The Senate Commerce Committee will consider this bill next Tuesday. Van Deerlin said that if the Senate passes such a package, "We'd be happy to take it (broadcasting measures) out in conference."
AT&T has urged Congress to define its future makeup, but has said little publicly about the subcommittee's direction. "While we haven't seen the exact language of the bill, the subcommittee's action represents a step toward passage of much needed legislation," an AT&T spokesman said yesterday.
Ultimately, the legislation's insistence on the use of competition rather than regulation to monitor the industry could result in a rise in the cost of local telephone service because long-distance and equipment markets, for instance, efectively subsidize the cost of the basic home service.
The subcommittee Tuesday passed by a 10-to-3 vote a restructuring of AT&T that would force the company over 10 years to split its manufacturing and research arms into separate subsidiaries in an effort to make sure that AT&T -- the nation's largest company -- does not use its historic telephone monopoly industry, for example.
The shape of those safeguards on AT&T operations was one of two key issues that had held the bill up from final approval since it originally was approved by the subcommittee on Jan. 29. The other key issue that had bottled up the bill inovlved the access charges that firms pay to hook up with the Bell System's local telephone network.
Opponents of the bill, such as Kenneth Cox, vice president of MCI Communications Corp., complained that despite months of public hearings on communications issues, the panel has "never subjected this legislation to the hearings process."
The legislation has been revised repeatedly, and key provisions of the bill were the subject of closed-door discussions by subcommittee leaders until the subcommittee deliberated on the bill yesterday morning.
Subcommittee officials attribute those complaints to communications lawyers being used to the slower more deliberative regulatory agency procedures, which generally permit 30-day comment periods when new rules are published.
The two dissenters, Reps. Edward Markey (D-Mass.) and Robert Matsui (D-Calif.) complained that several key provisions of the bill -- including the section involving the access charges that Bell System competitors will pay to utilize the AT&T local network -- have received inadequate analysis.
Nevertheless, the intent of the legislation is to provide congressional guidelines for adoption of deregulation mitiatives at the Federal Communications Commission.
Before approving the entire bill, the panel passed by voice vote a plan by Rep. Albert Gore Jr. (D-Tenn.) to set up a National Telecommunications Pool that would set up a system for distributing money to local telephone companies.
To administer the access charge question, the subcommittee established a Joint Transistion Board of state and federal officials to oversee for the first six years the complex process that involves billions of dollars in money paid to AT&T.
Herbert Jasper, executive vice president of the Ad Hoc Committee for Competitive Telecommunications and a long-time foe of the legislation, criticized the Gore amendment, complaining, for example, that the FCC should be directed to develop an access system over an 18-month period.