Telephone companies could provide new high-technology services and manufacture equipment under legislation introduced yesterday if state regulators make sure their telephone customers do not subsidize the ventures.
Rep. Ron Wyden (D-Ore.) yesterday said his bill would allow the telephone companies to provide information services such as call answering as well as manufacture equipment, but that he especially wanted to protect current telephone customers from paying the price of new products or services.
Wyden, a member of the House Energy and Commerce Committee, said he is "all for" new "whiz-bang gadgetry" that helps businesses or local customers. "What I'm not for is having the elderly woman . . . who only needs standard telephone service . . . pay for the new high-tech service," he said.
The legislation would partially overturn a Justice Department decree barring the local phone companies from providing long-distance service, information services or manufacturing equipment. The bill would give state utility commissions the authority to allow local Bell operating companies to provide two of those three services starting Sept. 1.
The regional phone companies first must have completed connecting all long-distance companies to their networks to eliminate lengthy codes customers had to dial to reach competitors of American Telephone & Telegraph Co. Known as "equal access," this process was mandated under the breakup of the Bell system.
In exchange, the commissions first must set up regulations that prevent the phone companies from using any of the revenue derived from basic local telephone service or other regulated services to help pay the costs of these new services.
The bill has been drafted with a view toward making sure any revenue derived from new services also would help to keep down the cost of local service.
"This legislation says to the local phone companies: 'You can try your hand in new markets, but only if a fair share of the revenue derived from new services flows back to the rate base to defray network costs, and thereby prevent local rate increases,' " said Gene Kimmelman, legislative director for the Consumer Federation of America, a Washington-based advocacy group that supports the legislation.
The bill's introduction comes against the backdrop of another bill seeking to deregulate the phone companies that lacks specific consumer protections. Last month, the Republicans introduced an omnibus trade bill that included a provision allowing the regional companies to manufacture equipment as part of a solution for easing the federal deficit. Much of the pressure for legislation has come directly from the regional Bell companies, which want the flexibility of being able to provide new services, Capitol Hill sources have said.
The Federal Communications Commission, which regulates AT&T and the regional Bell companies -- insofar as the services they provide cross state lines -- is reviewing when and how to drop restrictions it imposed on new services before the Bell breakup. The legislation introduced yesterday seeks to empower the states to protect consumers, because Wyden fears the FCC will not divide costs for new services equitably.
"We have chosen this approach for a reason -- we weren't able to get adequate information . . . from the FCC on how costs [for services] are allocated for small businesses," Wyden said.