It seems that way. With new technologies like satellite and microwave battling cable and telephone for control of the Information Highway, Gore has set himself up as a high-tech traffic cop. Unfortunately, his speech did little to clear up the confusion about the road ahead. Only a Luddite could find fault with his general direction–more private investment and competition, open access to still-undefined “networks,” flexibility in regulation and a democratic approach to the flow of information. But he glossed over details of orchestrating competing interests in an industry that changes daily. His most intriguing suggestion–that companies could speed up deregulation by allowing competitors to hook into their networks–was left hanging. So were the details of who will pay to keep basic service affordable.
Still, Ernestine assured him she wanted “to be a futurist like you, because frankly, I think I’d have a better future.” Not unless Gore can fill these gaps in his sketchy plan:
Big companies are itching to own both programming and the lines that will carry it to your screen and phone. But they might use their control over pricing to block competitive programming. If cable giant TCI were allowed to own a company like Viacom, which owns MTV, it might make it too expensive for you to watch a competing music-video channel. Although the local phone companies are already regulated as common carriers and must charge a standard price to those who want to send information over their network of wire and fiber-optics cable, there’s a growing outcry to force cable companies–and other newcomers–to go the same route.
New technologies from cable to satellite need to connect to parts of the Bell system to compete. It doesn’t make sense to build new facilities when the Bells have plenty of excess capacity. But your not-so-friendly local phone company is barring the door. While some states like New York require the Bells to give full access, there will be resistance in other regions where the Bells are more successful at controlling state regulators. A thornier question: will the Bells be forced to plug competitors into their supersecret signaling software, which controls phone traffic? That would increase the risk that technical failures in one part of the phone system would spread.
As American as the open road, universal service means basic dial tone for everyone, cheap. But deregulation means that there has to be a new way to pay for it. In the past it has been part of a cozy subsidy deal between the states and the telephone companies, supported largely by fees from the long-distance carriers. But now MCI wants to build its own local network, and the Bells want to compete in long distance. So who will pay to keep residential service cheap? The logical answer is to start a pool that would distribute the burden equally among all those who want to provide telephone service. But beware. The dirty little secret of universal service is that the Bells’ byzantine accounting makes it impossible to tell if, overall, it is a money loser, as the Bells have insisted for years. That’s why they are expected to try to keep control of the money pooled for universal service and their competitors to try to wrestle it away. Gore and the Federal Communications Commission will have to run interference, because consumer groups will argue that the money should go directly to users. But what should be subsidized? Service to the poor? Rural areas?
Although the theory is that more competition in telecommunications will lead to greater innovation, it’s also true that building an international digital network takes piles of cash. But only monopolies like the telephone companies and near monopolies like cable and long-distance companies have that kind of money. Deregulation will help upstarts compete, but lawmakers and regulators will have to consider whether big companies may be stretched too thinly in a field that requires massive upfront investment. Anne Bingaman, the Arizona-born litigator who just became the nation’s top antitrust enforcer, says the administration supports her “obsession with doing the right thing”–deciding which mergers will best promote real competition.
Communications technology has always outpaced law and regulation. A gaggle of bills will emerge from Congress next month, including one shaped by Gore himself. They will set timetables for both competition in the local markets and the Bells’ entrance into long distance. There are proposals to allow more cable and phone companies to merge, and to shift much of the regulatory power from the states to Washington. Says an aide with the House telecommunications subcommittee: “Everyone wants a piece of this issue.” They better move fast.
