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IP: Two years after big telecom bill: Promises unfulfilled (from
From: Dave Farber <farber () cis upenn edu>
Date: Tue, 20 Jan 1998 13:32:26 -0500
Two years after big telecom bill: Promises unfulfilled By Jeannine Aversa Associated Press Writer WASHINGTON (AP) -- These were the promises of the telecommunications bill: lower cable TV rates, lower phone bills and a dazzling array of work and entertainment choices only a touchtone away. Two years later, the reality is higher prices and not much competition. The average American doesn't have another local cable or phone company to switch to. And the promised explosion of innovative new services is more a whimper than a bang. "This new law is truly revolutionary legislation that will bring the future to our doorstep," President Clinton said when he signed the measure Feb. 8, 1996. He predicted "consumers will receive the benefits of lower prices, better quality and greater choices in their telephone and cable services." Supporters in Congress, at the Federal Communications Commission and in industry made the same claims. "It will start an explosion of new devices being available to American citizens. There will be an explosion of new investment in our country," said then-Sen. Larry Pressler, a co-author of the measure. But those optimistic forecasts have yet to come true. In 1997, cable TV rates rose 6.9 percent, local phone rates rose 1 percent and in-state toll call rates went up 2.8 percent while interstate long-distance rates declined 4.3 percent, according to the government. Consumer prices for all goods and services went up 1.7 percent during the same period. In 1996, the bureau reported across-the-board increases in cable and phone prices. It also costs more to make a call from most pay phones. Rep. Thomas Bliley, R-Va., another co-author of the bill, predicted it would break up "two of the biggest government monopolies left -- the monopolies in local telephone service and in cable television. Beside lower rates and better service, the result will be innovative new products and services." Instead, long-distance companies have had trouble building local phone businesses, and local phone and cable companies have scaled back plans to invade each others' businesses. And key provisions in the 1996 law aimed at opening the $100 billion local phone business to competitors were overturned in federal court rulings last year. Federal regulators are now scrambling to find ways to boost competition for cable and local phone companies and to lower soaring cable rates. AT&T has stopped marketing local phone service and MCI has suffered steep losses from local phone investments. Both companies in part blame regulations they say make it too expensive to provide local phone service. Authors of the law assumed it would encourage cable companies to get into the telephone business and phone companies to start offering cable. "Talk about broken promises, one of the premises of the `96 act was that the telephone companies would get involved in the provision of video," said Clinton's top telecommunications policy adviser, Larry Irving. Banking on more competition, Congress decided to end the FCC's authority to regulate cable TV rates on March 31, 1999. With competition not materializing as envisioned, some in Congress say they'll push to extend the FCC's rate authority. "Americans do not have real choice in the provision of cable TV services," said FCC Chairman Bill Kennard. A new FCC report found that there's head-to-head cable competition in only 81 communities. And competition to cable from satellites, wireless cable and others is growing more slowly than anticipated. Consumer groups, which want the government to do more to hold down cable and phone rates, call the law a failure. "Virtually none of the promise of price reductions and competition has materialized. On the contrary, these industries are becoming more entrenched monopolies with rates spiraling upwards," said Gene Kimmelman, co-director of Consumers Union's Washington office.
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