The Baby Bells Are Making Their Mama Nervous

A powerful coalition that has kept the Baby Bells safely inside a legal playpen since the 1984 breakup of the Bell system is about to crumble. When the next battle over communications legislation begins in earnest after Labor Day, the big loser could be one of Washington's premier political players: American Telephone & Telegraph Co.

Judge Harold H. Greene altered the political landscape with his July 25 decision to allow the local phone companies to enter the $100 million-a-year information-services business. That gives the Baby Bells leverage as Congress mulls a measure that would set the ground rules for their entry into such electronic services as videotext. The legislation is expected to be combined with a Senate-passed bill that would let the companies make telecommunications gear. The Bells had argued they could help maintain America's technological edge.

In the past, AT&T has joined with the newspaper industry to keep the Bells hemmed in. AT&T feared competition in equipment, and newspapers worried that electronic Yellow Pages would compete with advertising. But lobbyists now expect the Bells to cut a deal with the American Newspaper Publishers Assn. that would leave AT&T out in the cold. The Bells would agree to modest curbs on their information services--but only if the newspapers stay on the sidelines during the expected fight with AT&T over entry into the $75 billion-a-year equipment business. Without newspaper publishers visiting congressmen and printing editorials opposing the legislative drive, it will be tougher for AT&T to stop its offsprings' onslaught.

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