If the Bell operating companies are allowed to branch into new business areas, they should not be forced to use the profits from those ventures to lower the cost of basic telephone service, several government and telephone officials said yesterday.
The seven regional telephone companies are prohibited from offering long-distance or data-processing services and from manufacturing equipment as a provision of the Bell system breakup in 1984.
A consensus has been building in Congress to lift some of the restrictions, but members have voiced concerns that telephone users should be protected in the process. A key issue is whether profits from the new ventures should be used to subsidize local telephone service to keep rates down.
However, some officials fear that telephone customers ultimately could pay for risky ventures if they fail. Rep. John Bryant (D-Tex.) said action by Congress must contain "very strong assurances that rate payers will not bear the burden of financing new ventures."
In hearings before the House telecommunications subcommittee yesterday, members asked if some revenue from competitive services could be used to subsidize local phone rates.
Douglas Ginsburg, assistant attorney general in the Justice Department's antitrust division, called it "misleading and dangerous" to think that competitive businesses should subsidize telephone rates.
"If safeguards are too restrictive, it may well diminish the desire of the Bell operating companies to diversify," he said at the hearing yesterday.
The Justice Department is to complete a report early next year on whether it is time to lift the restrictions from the regional firms. They have been pressing for the restrictions to be eased, pointing to increased competition from companies such as American Telephone & Telegraph Co., and also arguing that consumers could benefit from computerized health, alarm, and other services that could be offered over telephone networks.
Pacific Telesis, the regional company based in San Fransisco, and US West, based in Denver, both said any new subsidiaries would be required to pay a reasonable share of the costs.
"A fair share of the fixed costs of the network would be allocated to those services utilizing the network," said Mary Hallisy, a spokeswoman for Pacific Telesis.
Larry DeMuth, executive vice president and general counsel at US West, said the company did not support subsidies from competitive services going to monopoly local telephone services.
In a separate action yesterday, the Federal Communications Commission denied permission to four regional telephone companies, Bell Atlantic Corp., Southwestern Bell Telephone Co., Bell South and Ameritech, to market both equipment and services in one package.