Telephone service will never be the same after this weekend, as the government-ordered deregulation of the telecommunications industry begins to take root and flower.
In keeping with federal orders that took effect yesterday, the Chesapeake & Potomac Telephone Co. will gradually abandon its traditional business of installing phones in customers' homes and businesses and charging a monthly rental for their use.
It has stopped restocking its inventory of telephone equipment and when that supply runs out, probably before year's end, anyone who wants new, additional or replacement equipment will have to buy it. Customers also will be urged to do their own wiring and installation.
C&P has asked Maryland regulators to allow customers to buy their existing phones and wants to offer discounts of $15 to $20 a phone for a limited period. The company plans to do the same in the District and Virginia before spring.
Phone owners also will have to arrange for repairs, just as they do now with television sets, blenders and hair dryers. C&P, which has provided free repair service for leased telephones, intends to charge for repairs to customer-owned Bell equipment, once the warranty or service agreement has expired.
Regulatory and judicial decisions on other fronts will mean further changes. There will be increasing competition between long distance carriers. Sooner or later, new local rate structures will encourage consumers to monitor the length of their calls more carefully. Billing also will be altered, though not immediately.
And if some specialists are right, this new competition will lower the cost of standard phones and speed the availability of a new generation of "smart" phones employing computer technology--cordless phones and automatic dialing features among them.
All of this may be unsettling for those who haven't been following telephone deregulation. "Some customers may be surprised to discover they are unable to get the complete one-stop service they have come to expect from us," said Web Chamberlin, a C&P representative. "And they may not understand why we're doing business this way."
The changes stem partly from the reorganization of C&P's current parent, the American Telephone & Telegraph Co. ordered in 1981 by the Federal Communications Commission. At present AT&T owns the long distance lines and the local Bell operating companies like C&P, which provide local service and telephone equipment. But under the restructuring, the local companies will be limited to providing service; they no longer will be responsible for providing new equipment beyond what was in their inventory on Dec. 31, 1982.
From now on, equipment will come from the new, unregulated subsidiary of AT&T called American Bell Inc. and its competitors. American Bell intends to sell rather than lease telephone equipment to residential and single-line business customers.
Large businesses also will have the option of buying or leasing the more sophisticated phone equipment, like computerized switchboards, drawing on an expanding list of suppliers.
"Attitudes will change in a major way in 1983," said Harry Freeman, senior vice president at American Express Co., a major telecommunications user. "We view AT&T more and more like any other communications carrier. We'll buy from them only if it makes sense."
The picture will become more complicated on Jan. 1, 1984, when AT&T must divest itself of its 22 local operating companies under an agreement signed a year ago with the Justice Department ending a long antitrust suit. Seven independent regional phone companies will take their place.
Until only a decade ago, AT&T had virtually no competition, operating a government-endorsed monopoly in both the telephone equipment and service businesses. Consumers essentially had no choices to make. When, for instance, someone changed residences, a simple call to the telephone company brought new dial tone service and telephones as well. Virtually all phones were leased from the local phone company.
But competitors in the equipment and long distance fields eventually persuaded regulators that the nation's telecommunications service could not reach its full potential unless AT&T's dominance was reduced.
Today, the picture is dramatically different. There is competition in long distance service by firms like MCI Communications Corp. and International Telephone & Telegraph Co. Phones, colorful, portable, sophisticated or simple, are available at retail stores of every description, made by domestic or international manufacturers, with only a limited registration program supervising the process.
There will be more incentives for the average customer to buy rather than lease equipment, as C&P's telephone inventory disappears. C&P has filed a petition in Maryland to sell customers the standard, "Trimline" and "Princess" telephones they now lease, offering discounted prices for 90 days. Unless disapproved by the Maryland Public Service Commission, the sale would begin Jan. 13. Discounted prices would range from $19.95 for the standard rotary-dial phone to $54.95 for the Trimline Touch-Tone phone. After the 90 day period, the price range would be $34.95 to $74.95. Phones sold from C&P's inventory from Jan. 13 on would also carry the higher prices.
Similar sale plans are being made in Virginia and the District of Columbia. C&P customers who want to continue leasing their equipment rather than buy it, however, will be permitted to do so, Chamberlin said.
But ultimately, when the lease inventory is all gone, there will be no choice for customers seeking new, additional or changed service except to buy their equipment.
Lee Richardson, president of the Maryland Citizens Consumer Council, believes that those who buy rather than lease will be better off in the long run. "Economically, it makes more sense for people to spend $20 to $30 for a telephone than to pay $300 in rental fees over a period of 10 years," he said.
American Bell's sales efforts will face growing competition, however. As FCC rulings allowed customers to connect their own telephone equipment to the nationwide network, a host of retailers began selling telephone equipment. Consumers today can buy a wide range of phones, with varying styles and functions at speciality stores, department stores, and even at the corner drugstore.
W. Bell & Co., a discount company, started selling decorator phones several years ago. Sales were so good, according to merchandiser Tim Farmer, that the line has been expanded to include basic phone styles as well as designer phones. Today W. Bell offers about 30 telephone instruments, ranging in price from $28.50 to $170.
Farmer, like most in the industry, predicts that competition, resulting from deregulation, will lead to lower prices.
George Kuhnreich, director of corporate planning for Tandy Corp., owner of the Radio Shack chain, which feature a large line of telephones, believes that the real value of competition for consumers will be in getting more technologically sophisticated products for the dollar.
"A year or two or three down the road, your $39.90 telelphone could have the features of today's $100 telephone," Kuhnreich said. Within the next five years, he predicts, there will be advanced telephones that can print a caller's telephone number as your phone is ringing.
In the metropolitan Washington area, the telephone company has had 24 Bell Phone centers dispensing equipment to customers who wanted to lease or buy Bell phones. But 13 of those stores now have been taken over by American Bell, and with the start of business tomorrow they will only handle telephone sales.
Meantime, C&P has opened 21 Telephone Service centers in the Washington area. The centers will be stocked with lease equipment from the remaining C&P inventory and with do-it-yourself installation products. Under the plan, customers who want to lease C&P phones or who need their C&P lease phones repaired or replaced would go to the most convenient service center. In addition, some of the centers will sell whatever remains of the C&P designer telephone equipment.
Customers who are unable to go into a telephone service center can have equipment delivered through the mail or a parcel delivery service, according to C&P representative Chamberlin. But customers who do that will have to pay for it, he said.
Chamberlin said C&P will service and maintain the equipment it leases and sells to customers, but the company won't be responsible for servicing any equipment other than its own. Also, after an initial warranty period, the company would have the option of charging for repairs on equipment that C&P has sold to customers.
Telephone store workers expect these changes to hit some customers harder than others.
"Many customers think they own the phone they have in their house now, because it has been there for years they don't realize that they are paying a monthly rent on the phone," said Yvonne Drayton, a former manager of the Wheaton Plaza phone store, who has been transferred to the AT&T operation in New Jersey.
To help customers understand the new world of phone service, the telephone company has launched a consumer advertising campaign called "Let's Talk." The ads raise and answer specific questions about repair service, Phone Center stores, regulatory changes and other telephone company topics.
Consumers can call on the toll-free number 1-800-555-5000 for additional information.