The decision by the Bell System to put itself through the most drastic corporate metamorphosis in the history of American business should touch off a major public debate over the next decade.
That debate could involve all of us and affect how we live, work and play. Technological developments are ushering in a communications revolution that will touch every facet of life. But the government seems unprepared to deal with the issues these radical changes will raise.
Already, in pockets of this country, and in Japan and Western Europe, telephone and cable companies are experimenting with systems to transmit and receive in homes new types of information on television and computer terminal screens. These systems will enable us to shop, bank, and study at home, and bring us all our entertainment as well as provide video and audio links with our friends and families.
The approach of this communications revolution raises issues of enormous consequence about who should control the wire--or in the case of some new microwave systems, the signal--that will bring data, video, audio and other information services into homes and offices.
Most commentators on the landmark agreement that calls for the spinoff of 80 percent of the nation's telephones by American Telephone & Telegraph Co. have ignored its implications for these new, nontelephone services. If telephone lines are to be the conduit for information and entertainment into the home, who controls those facilities and the rules that govern their operation are vital questions that should be of great interest to the public at a time of rising cynicism about the broadcasting and print media.
The operator of that wire or service will have unprecedented access to our purchasing, entertainment, and banking activities. If the system is interactive--or two-way, like cable and telephone polling services--the information could even describe the users' political views. Such two-way networks will give communications companies the most detailed and intimate marketing information on our habits and beliefs ever assembled.
The AT&T settlement means that for now, one giant company, perhaps the most powerful in the world, will no longer control that wire, what goes over it, and who can use it. AT&T has agreed to spin off its 22 local operating companies and has proposed grouping them into seven separate regional companies (See map).
That outcome would seem to parallel the Reagan administration's emphasis on decentralizing government power; it will bring the public closer to those controlling the telephone lines to the nation's homes because the local phone company will no longer be part of AT&T.
But the settlement actually reveals how ill-prepared the federal government is to deal with these issues, for the result was achieved in a policy vacuum.
Congress, which has debated the future structure of AT&T since 1975, hasn't endorsed the settlement, and no one on Capitol Hill was notified of it until the evening before it was announced.
Only last fall, the Senate passed a bill by a 90 to 4 vote that left AT&T intact and freed it from the restrictions of a 1956 decree that prohibited it from engaging in unregulated activities.
Similar legislation was passed by the House Commerce Committee in 1980, but concerns from the House Judiciary Committee about the fate of the AT&T antitrust suit kept that bill bottled up.
Further examples exist of the government's patchwork approach on communications. The Commerce Department, in principle at least, has an expert agency, the National Telecommunications and Information Administration, that deals with policy issues. And the Federal Communications Commission regulates the phone company and has struggled to monitor AT&T's books, policies and prospects for decades. Neither agency had anything to do with the settlement. In fact, nobody outside the Justice Department in the three administrations that oversaw the case had either the political nerve or inclination to propose the kind of divestiture that ultimately came out of the case.
In effect, the outcome, generally praised by communications experts and antitrust scholars, resulted not from effective government policy making, but in spite of the government's inability to come to terms with the complex issues involved.
The void is likely to become even more pronounced. It is doubtful that Congress this session will deal with the rate and delivery issues raised by the divestiture. The Senate's leadership says it wants to await the final shape of the settlement, which a federal judge must still approve. That process will take months. House members involved in this issue want to act at once, but on a bill sharply different from the one adopted by the Senate last fall.
The FCC, under the chairmanship of Reagan appointee Mark Fowler, wants to shed as much of its broadcast and telephone regulatory functions as possible. Thus, leadership on these issues is unlikely to come from the FCC.
But how AT&T should be structured is only the first of the questions raised about the shape of the new telecommunications era.
The newspaper industry and its friends in Congress are concerned about building a communications system that provides equal access to the wire to the home. The industry raises First Amendment issues and fears an electronic Yellow Pages service will ultimately replace newspaper display and classified advertising.
The cable industry, which through mergers is moving toward telephone industry-like concentration, fears congressional or regulatory action that would give it the same "common carrier" obligation to serve all customers as the phone industry has. And communications industry observers have long debated whether the government should continue its laissez-faire policy toward cable television or require it to comply with the same strictures imposed on broadcasters.
On the international front, government efforts to coordinate national radio spectrum policy are in virtual disarray. The division of that spectrum and the organization of satellites that use radio bands is vital in developing communications technologies.
How to solve these spectrum management questions is increasingly dividing developed and underdeveloped countries; meanwhile, the U.S. government has no system for arriving at answers. Moreover, the nation is falling behind others--France and Great Britain, for example--in the development of text systems distributed over phone lines and television signals because of its failure to issue national technical standards for these vital technologies.
But perhaps the most important questions government will face deals with the simple delivery of service. The 1934 Communications Act gives the government an implicit mandate to assure telephone services. The splitting up of AT&T may well end the company's service orientation.
The public has taken that service ethic for granted. Phone service is by any measurement cheap and efficient in most of the country, certainly better than anywhere in the world.
But what if the local phone company doesn't care to serve rural residents and the urban poor, to cite two examples, and operates like the good free-market firm the administration would like it to be? Local telephone service is not nearly as lucrative as long-distance, computer, and information services. Does that mean rural Americans, already far removed from prospects of getting the diversity of cable television, may also lose access to telephone service?
Does it also mean the government will pay little attention when the urban and rural poor fall even farther behind the urban and suburban middle class because they will not have access to new information, banking, shopping and, most importantly, educational telecommunications services?
Who will set the rules for providing access to new telecommunications services, laying the groundwork for privacy rules? Warner-Amex Cable, in an obvious effort to beat regulators to the punch, has recently issued the first cable industry privacy guidelines.
With companies like Warner-Amex, an amalgamation of Warner Communications and American Express Co., knowing all about our viewing and buying habits, privacy is no minor concern. But if the government doesn't act, it forfeits to others the power to set the rules.
By convincing AT&T that it had no choice but to agree to divide up its empire, the government has started the process that could lead to answers to these questions. Whether this administration or its successors recognize that the settlement is merely the first item on a new national agenda is another question.