Challenge for Cable Regulators

A $51.5-billion bid by AT&T; for the MediaOne Group reportedly was accepted by the cable company on Saturday, and already AT&T;’s move is being billed as either a visionary act or investment recklessness on the part of Chairman C. Michael Armstrong. Most observers agree, however, that the merger would reshuffle the neatly arranged stack of communication services, erasing the current boundaries among voice, data and video services. The government, in examining the motley pile, must make sure that the consumer, who in the end would pay for all this, is not forgotten.

There are good reasons to worry about the consumer. The Telecommunications Act of 1996 was designed to help the public by bringing competition into the local phone markets and prodding voice, data and cable companies into entering each other’s territory. Little of that has happened. The regional telephone companies, the Baby Bells, have tangled the law in a welter of lawsuits to prevent others from entering their turf, all the while growing ever bigger by merging with one another.

Meanwhile, residential phone bills keep going up, replete with new charges even the nation’s top telecom regulator, Federal Communications Commission Chairman William E. Kennard, admits he doesn’t understand. Cable companies too have been spending a bundle on legal fees to stifle competition from satellite TV, leaving consumers with little more than larger bills.

Yes, consumers have benefited from new technologies and services offered by their phone companies. They are also certain to reap benefits from AT&T;’s inroads into the cable business. After all, what AT&T; is offering--for the first time--is the whole gamut of services to its millions of residential customers and delivering them via one route, the cable. Consumers would gain access to digital television, high-speed Internet connections and sophisticated voice phone services. Only a few consumers and corporate clients enjoy such luxuries today.

But the merger would also change the telecommunications landscape for the regulators, who have taken separate approaches in dealing with phone companies, cable TV and multi-service providers.

It’s too soon to suggest any detailed regulations for an industry that is changing as rapidly as new technologies allow. But there are questions the federal regulators should address so consumers do not miss out on the benefits of deregulation.

AT&T;, America’s largest phone company, has already acquired the country’s second-largest cable company, Tele-Communications Inc., or TCI. By gobbling up MediaOne, its reach would extend to a substantial percentage of the nation’s homes. Moreover, through its cable ownership, AT&T; would gain control of dozens of cable channels. With cable likely to become the most important electronic conduit to homes, the obvious concern should be about the breadth of power concentrated in the hands of one company.

Already, Internet providers like America Online, which deliver their services over phone lines, are worried that their access to cable will be restricted.

Of particular concern to Los Angeles would be AT&T;’s control of cable channels and, through ownership links to Time Warner Entertainment and Warner Bros. studios, even program producers. Surely the studios have an interest in the widest possible distribution of their product, which they might not get under AT&T; control.

Consumer representatives are also worried that huge numbers of consumers in poor or rural areas will be bypassed by the telecommunication revolution altogether.

Telecommunications advances have the potential to reshape the American economy and bring exciting new services to millions of homes. The regulators must make sure the pipelines carrying the Digital Age to homes and businesses are kept open and those providing the services are free to compete with one another. That was the idea behind the 1996 law in the first place.