On May 20 last year, representatives of Southwestern Bell Telephone Co., the American Telephone & Telegraph Co. subsidiary serving most of Texas and three other states, filed a proposed tariff with the Texas Utilities Commission.
Little was made of the request at the time. In fact, approval of the request was stamped almost routinely by the commission staff June 2.
All the telephone company was actually asking for was approval to begin a 14-month test on June 1, 1981 in Austin of a new information system, one that did not even involve charges for the 740 business and residential customers that would use the new service.
The test would have been AT&T's fourth in an effort to develop a system providing customers a computer terminal with access to a variety of data banks. The Austin test, however, was considered pivotal by the phone company in its effort to provide consumers with access to important data, including conventional white and yellow page listings, advertisements, "consumer information," and access to "other data bases."
Users would also be able to order goods and services from merchants and enter personal information such as personal schedules, expanding the concept of the yellow pages to include changing commercial information, such as grocery store specials. The system automatically could dial phone numbers displayed on the home screen.
Since that routine approval, however, the newspaper industry, through its leading trade association, has made the Austin experiment a crusade, successfully blocking the project's start-up date and reportedly costing AT&T $6 million in the process.
Even more importantly, the scuffle has taken on national importance as part of the continuing debate involving government, media and Bell System officials. At stake, at least in the view of some newspaper officials, is nothing less than the future of the information industry.
The issue clearly involves much more than just a Texas-style fight between two industries. Other major companies in the information businesses, such as CBS Inc., the conglomerate with massive broadcasting and publishing holdings, have been actively talking to AT&T about participating in these tests.
AT&T Assistant Vice President Dennis Sullivan noted recently that there are "a lot of players on this stage. AT&T and the newspapers are just two of them. If consumers want to have access to information electronically, they're going to get it," Sullivan said. "It's our hope that the Bell System will be a participant, but we have no illusions of doing it all."
John Murphy, executive vice president of the Texas Daily Newspaper Association, said he can't fault AT&T "for trying to further their interests," but he said his association's concern is that if AT&T-Southwestern Bell is permitted to get into the business of providing this information it will pretty well freeze out anybody getting into the field."
As of the moment, the experiment is very much in limbo. An aggressive legal and public relations challenge by the Texas newspaper group, the American Newspaper Publishers Association and the intervention of computer concerns has effectively overturned that routine approval. The ANPA is headed by Katharine Graham, chairman of The Washington Post Co.
The Texas newspaper group, with the help of the ANPA, convinced the Texas utility commission last month that the test is more than routine and requires a potentially lengthy formal hearing and certification process. Southwestern Bell won a temporary restraining order against the commission, but on March 20, that order was overturned. An ATT spokesman said Friday that decision is being appealed to a Texas appeals court.
Further complicating the issue is the fact that the Association of Data Processing Service Organizations, a trade group, has filed an informal complaint with the Federal Communications Commission charging that AT&T's Austin plan flouts the FCC's regulations regarding Bell's obligations to offer such services through a separate entity, apart from its structure for offering regulated telephone service.
For the newspaper industry, the Austin experiment and the ruckus it started has become a watershed in the emerging debate about who will operate and control home information systems.Further, it has galvanized the newspaper industry in perhaps an unprecedented fashion as an opponent to AT&T plans to evolve from a provider of simple telephone service to much more.
The emergence of the newspaper industry as a key Bell System antagonist has also brought the industry to a possible confrontation with AT&T before a New Jersey court, where AT&T is seeking an interpretation of a 1956 consent decree with the Justice Department. The action there combined with the deregulation initiative of the FCC in its landmark "Computer II" decision, opens the door to a new era in national telecommunications policy, freeing AT&T -- by some standards the world's largest company -- to provide unregulated services, such as information to the home.
Nowhere is the fear of the newspaper industry more clearly expressed than in its filing in New Jersey, where the ANPA is seeking to become an intervenor in the proceeding.
"AT&T could establish immense national data banks and sell information to the public using its transmission facilities and home terminals," said Jerry Friedheim, executive vice president and general manager of the ANPA, in an affidavit attached to the filing.
"The information available on the system could be selected, edited, even censored by AT&T. Because of AT&T's vast corporate resources, exclusive control over telephone lines and manifold other advantages, competing information systems could be squeezed out or be relegated to minor roles.
"As a practical matter, AT&T could become the sole source to the public of much information of a general nature . . . The result of an AT&T market takeover would be the creation of a nationwide monolithic information network, whose contents would be determined by a single corporation. Such a development would be a serious threat to the free and independent press, which is so fundamental to our democratic form of government," Friedheim said.
Although Friedheim's assertions directly deal with the question before the New Jersey court, the statement reflects a measure of the depth of the industry's concern about the Texas plan. AT&T, on the other hand, says the true concern is more parochial and revolves around advertising dollars.
"Advertising is the real issue," Sullivan said. "But advertising is a function of circulation. If circulation is undermined, that's when advertising revenues would fall. The notion of somebody sitting down and reading the Sunday paper on a TV screen is hard to imagine."
Newspaper representatives deny that a potential threat to advertising revenues is at the heart of the fight. "That's ridiculous on the face of it," Murphy said. "I don't know anybody with more competition than newspapers. We've got plenty of competition from radio and television."
The ANPA also is challenging AT&T in Massachusetts, where New England Bell has asked a state regulatory panel to permit introduction there of a "Dial It" service that would offer information including local news. "When you take all the pieces of the puzzle, it is actually a little awesome, in our view," said Robert Marbut, president of Harte-Hanks Communications Inc. and chairman of ANPA's telecommunications committee. "We don't think that's an environment that promotes diversity and competition."
On the other hand, Bell spokesman point out that many segments of the industry are actively involved with home information trials. Knight-Ridder Newspapers Inc. is providing a part of the data base for one of the AT&T experiments in Coral Gables, Fla.
Several well-connected Wall Street analysts believe the fight could cut short the emergence of the home information industry, still in its formative stages.The cable television industry, too, sees a dramatic expansion into offering home data services as vital to its continuing growth.
AT&T officials steadfastly deny that they are interested in controlling the news and information their systems could distribute. In a policy statement sent to Sen. Barry Goldwater (R-Ariz.), chairman of the Senate Communications subcommittee, AT&T Assistant Vice President R. L. Mickey McGuire said the company is not interested in "creating or controlling" either radio or television programming or "news and editorial features ordinarily found in a newspaper or magazine."
Sullivan said that AT&T "does not have the wherewithal to go out and get an editing and news gathering function. There are other people who are very good at that," he said.
But an ANPA statement of principle, adopted by the organization's board of directors, suggests that even government-imposed safeguards do not solve the problem, even if they are designed to provide access to the Bell telephone network to other companies. Further, the FCC's "Computer II" decision forces AT&T to offer these unregulated services through a "separate subsidiary." Such a set-up also is likely to be the centerpiece of a legislative effort later this year to change the industry's ground rules.
"We have grave doubts that it is possible to construct structural safeguards between parent and subsidiary, or to the affiliated entity, sufficient to guarantee that full and fair competition be perpetuated," the ANPA board said.
"For this reason, ANPA is persuaded that entities holding a government-granted telephone monopoly should not be permitted to provide, control or have proprietary interest in any information [commercial or non-commercial] transmitted over their own facilities."