Baby Bells Go to Court Pushing Deregulation

Congress is already considering several bills

THE Baby Bells, the seven regional phone companies spawned by the 1984 AT&T breakup, opened a second front in their war with the government over telecommunications regulations Wednesday.

The United States Congress is considering several bills that would introduce more competition into the heavily regulated telecommunications industry.

Now four of the seven companies - Bell Atlantic Corp, BellSouth Corp., Nynex Corp., and Southwestern Bell Corp. - are also filing a legal motion that asks US District Judge Harold H. Greene to overturn his 1982 consent decree that prevents the Bells from offering anything but local phone service.

If the decree is vacated, industry watchers say they expect significantly lower prices for services, more jobs, and a boosted gross national product.

``Greater competition benefits the consumer,'' says Peter Huber, spokesman for the four Bell companies. ``It pushes prices down and pushes the quality of service up.''

Experts expect deregulation, as well as increased competition, to take place over the next decade, regardless of actions on Capitol Hill or in the Justice Department, says Adam Thierer of the Heritage Foundation.

Bells' options

If Judge Greene does decide to overturn the decree, the Bells could offer long-distance service and cable TV, and also could manufacture and sell telecommunications equipment.

In the past, Greene has made notoriously slow decisions, which suggests that a resolution could be a long wait.

Even though the Bells are filing the motion, they are ``still hopeful about legislation,'' according to Bell Atlantic spokeswoman Joan Rasmussen.

The legislation is in danger of not getting through the Senate this session. If the Senate cannot get a bill out, Congress will have to start all over again next session, slowing the move toward legislative deregulation.

But the Baby Bells have had more success in the judicial arena than the legislative one, Mr. Thierer says. The other three Bells -

US West Inc., Pacific Telesis Group., and Ameritech Corporation - declined to join in the effort because they are tied up with their own deregulatory efforts. The effects of deregulating the telecommunications industry could be huge, according to studies such as one by the WEFA Group, an economic research organization based in Burlington, Mass.

The study suggests a $63-billion-a-year savings to consumers through lower prices. Such prices would bring more demand and faster development of new technologies. It also forecasts gross national product growth of an additional half percent a year.

Big savings?

Some people, such as Daniel Sichel of the Brookings Institution, a Washington-based think tank, say those numbers are too optimistic. ``Even though this may be very good for a lot of people,'' Mr. Sichel says, ``it isn't big enough to affect the top line of the economy.... There's a lot more going on than telecommunications.''

The various telecommunications bills now in the Senate allow for some deregulation of the industry, effectively ending the Baby Bells' monopolies on local phone service.

Although the Bells are supportive of legislation recently passed by the House, they object to having to wait for local competition to develop before they can enter the long-distance and highly profitable intrastate toll call markets, as the House's current bill proposes. The government argues that without the current Baby Bell restrictions, universal service would be eliminated. It is expensive to wire and maintain phone service in remote areas, while urban customers are cheap to service.

Other companies are starting to enter the local phone service market and are luring customers away from the Baby Bells, according to another Bell Atlantic spokesperson.

The Bells argue that they should have the right to compete in the long-distance and equipment manufacturing markets if companies like AT&T, MCI, GTE, and Sprint can compete in the local exchange markets unfettered by regulations.

By law, the Bells must provide everyone with phone service and charge each person a certain rate. Bell competitors can set their own prices and don't have to provide universal service.