What arrival of 'Baby Bell' means to phone customers

The woman with designer sunglasses and multiple shopping bags steps between counters laden with telephones. Her perplexed look hints she's not finding what she wants in this downtown Bell Phone Center. The sales clerk approaches, flashing a confident smile. After all, when it comes to phones, this place has enough to wire a small suburb.

There are phones stashed inside pseudo-jewelry boxes ($235), molded plastic Winnie-the-Pooh phones ($149), and sleek cordless portables ($169). There's even a phone with a simulated alligator-skin faceplate ($109) for the caller who has everything.

But the woman wants to rentm a phone, and this place only sellsm them. Put simply, getting a phone isn't as easy as it used to be. She's told to go up the street to the New England Telephone Servicem Center.

Sweeping regulatory changes - embodied in Federal Communications Commission (FCC) orders that took effect Jan. 1 - are beginning to reach out and touch consumers.

These changes allowed American Telephone and Telegraph Company (AT&T) to set up an unregulated subsidiary, American Bell (affectionately known as ''Baby Bell''). This new company sells phones through 461 Bell Phone Center Stores scattered across the country, as well as through some Sears and Target stores.

What may seem especially confusing to many people is that many of the Bell Phone Center Stores and local company service centers used to all be the same thing. Baby Bell simply skimmed off a portion of those locations to start their retail business. They both even still have identical blue bell-shaped logos over their doorways.

While customers will still be able to rent phones for the forseeable future, phone manufacturers are hoping they won't want to. It will most likely become increasingly difficult to lease a phone. At the same time, heated-up competition in phone sales will probably bring prices down and add features that boggle the imagination.

In years to come, consumers will have the option of buying phones through Bell Phone Center Stores, a large number of retail stores, or catalogs, rather than rent them from the local phone company. A growing number of consumers are already buying - some 5 million last year, and an expected 10 million this year.

Industry experts, watching the changes, say telephones are becoming consumer appliances - like toaster ovens and trash compacters - that you buy and maintain yourself.

The market is an attractive one: An estimated 80 million US households have phones, many with more than one.

Next on the agenda, and adding to confusion over the changing shape of phone service, is the busting up of American Telephone & Telegraph Company (AT&T) slated to start next year. This will result in, among other things, higher local telephone service rates.

''Consumers will first of all be faced with confusion,'' says Samuel Simon, executive director of the Telecommunications Research and Action Center, a consumer-advocate group based in Washington. But out of the chaos, he adds, will emerge more choices and, in some cases, the opportunity to save money.

For example, Bell's basic beige Trimline telephone with push-buttons costs $ 71.95 at the Phone Center, while a nearby Radio Shack sells a similar phone for stores. ''But a telephone isn't just plastic and wires; it's also the service that stands behind it,'' says Randall L. Tobias, president of the consumer products division of American Bell.

The FCC rule changes that went into effect at the start of this year blocked local phone companies from adding to their stock of phones until the end of this year. This means if you move or want to add an extension phone, you'll have to hope the local company has what you want in inventory.

Delays are likely to crop up when certain styles of phones run out in one city and must be shipped in from another, ''such as if the Princess you want is in Bangor and you're in Boston,'' says AT&T spokesman Bill Mullane.

At least seven states have pushed ahead with programs to sell customers the phones they already have in their homes. Many more states are now considering the move.

About 10 percent of California's 8 million residential customers have bought their phones since the sale option was first offered there last October. Under the plan, for example, a Princess telephone with rotary dial costs $27 to buy, compared to $2.27 a month to rent. At that rate, the phone pays for itself in less than a year - a promotional point the company is quick to highlight. But the payback on other models can be considerably longer.

Phones sold directly from phone company inventories generally cost about $10 to $20 more than the phones already in the home. What some enterprising buyers have discovered is that they can swap their rented phones for newer leased models, then turn around and buy them at the lower rate.

Insiders point out, however, that response to sales programs has been disappointing and suggest that most consumers would rather stick with leasing as long as possible. Indeed, it may be wise to hold off buying until prices have been driven down through a period of open competition.

If you decide to buy a phone - whether from the local phone company, AT&T's Baby Bell, or a competing retail supplier - here are a few basic factors you should consider:

Service. It used to be you could just give a jingle and the phone company sent the guy with a panel truck and tool belt to fix any problems. With ownership, you take care of repairs. American Bell gives a one-year warranty with each phone it sells, so no permanent fee structure has been established for parts and service.

It's a good idea to check out the procedure for getting a phone repaired before you buy. A phone bought at Radio Shack, for instance, can be returned to the store, where it will be shipped to a regional service center. Or you can ship it directly in for service yourself. But the turnaround time for Radio Shack repairs is about one to two weeks.

Price. Unregulated prices mean you can save money by shopping around, comparing the prices and options available from different suppliers. Today, you can buy the basic black rotary equipment for under $20. Many of the phones being built today are only meant to last a few years, rather than the 10 to 20 years easily squeezed out of the old models.

Options. Decide what the phone will be used for. If you want to subscribe to one of AT&T's long-distance competitors, such as MCI or Sprint, you will need to have push-button dialing. If it's an extension for the workshop or garage, you may want to stick with a basic model.

One of the reasons for buying a phone is the growing array of electronic options, such automatic dialing, now becoming available. Phone industry experts say the once-lowly cradle and receiver are in the midst of a technological revolution. Before long, phones will be on the market that do everything from turn on lights and appliances to letting Mom and Dad know when the baby is crying in another room.

Consumer advocate Mr. Simon likens the growing selection of phones to having a choice between good silver and everyday knives and forks. ''The same distinction is now developing between different grades of telephones,'' he says.

Baby Bell recently unveiled its first high-tech phone designs. One model, called the Genesis Telesystem, can be programmed to do such things as automatically dial a busy number until a connection is made, tell you time and date, and how long you've been talking. (It costs $350, plus $30 to $50 for each programming cartridge, needed to give the phone added features.)

Not everyone, of course, will want or need a phone that looks like it belongs more on the space shuttle than on the hall table. For those customers, Bell intends to continue offering ''your very basic, plain-vanilla telephone service, '' says American Bell's Mr. Tobias. But even unadorned desk phones will utilize more electronic parts in years to come.

Some observers warn that although electronic phones offer a smorgasbord of special features, they tend to be less durable and may not deliver the voice quality possible with older models.

As it now stands, ownership of all leased phones will shift from the local operating companies to AT&T at the beginning of next year. That's when the 22 local companies will splinter away from AT&T, as the result of the now-famous antitrust settlement that broke apart the $150 billion company.

It's not yet clear what will happen to billing after rented phones are transferred from local companies to AT&T. It's possible consumers will begin receiving two separate bills - one for the phone rental and the other for phone service. However, says one company spokesman, it's also possible AT&T could contract with local companies to continue including the billing in one statement.

To help confused customers, local operating companies have established ''Let's Talk'' phone banks, staffed by employees to field consumers' questions. The toll-free number in the continental US is 1-800-555-5000. You can also send a self-addressed, stamped envelope to the Telecommunications Research and Action Center, Box 12038, Washington, D.C. 20005, and get a one-page synopsis of major changes in phone service.