Untangle The U.S. Telecom Laws Now

Not since the days of Alexander Graham Bell has America's communications world seen such momentous change. Phone companies want to invade cable-TV turf. Cable companies want to provide phone service. Long-distance carriers want to crack local markets. It's nothing less than a phone frenzy, driven by unrelenting changes in technology.

Problem is, U.S. regulation hasn't kept pace with innovation. So far, efforts to spur competition have been bogged down by industry and partisan bickering. A balkanized system is already taking shape, with freewheeling competition in some states, regulatory straitjackets in others.

The delay in overhauling telecom regulation is not a simple case of heavy-handed government bureaucracy. This is a battle between the haves and the have-lots. Both the cable companies and the U.S. Baby Bells are giant, regulated monopolies, and AT&T still controls 60% of the long-distance market. Each player wants to protect its turf while lobbying to eliminate regulations that prevent it from penetrating its rivals' territory. The Baby Bells say they want simultaneous entry for all players, but long-distance and cable companies want the Bells shackled until there's measurable competition.

One solution: Let the Bells and cable companies compete immediately in each other's markets. That would open up two regulated markets quickly. Then, as soon as it appears that competitors have gained a foothold, permit the Bells and long-distance companies to enter each other's markets.

Washington is ready--even eager--to get out of the way. But partisan and industry differences threaten to hold up action this year. If legislation doesn't pass soon, it may get caught up in the 1996 Presidential election. Not a happy prospect. The telecom players and their political allies should act immediately.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE