Phone companies want restrictions lifted

Published July 7, 1994|Updated Oct. 7, 2005

Unsure Congress will come to their aid, four of the nation's largest telephone companies asked a federal court Wednesday to abolish legal restrictions on products and services they may provide.

Their lawsuit, filed in U.S. District Court, challenges continuation of a consent decree that broke up the Bell System in 1984.

The decree bars the regional Bell phone companies that emerged from the old AT&T from engaging in a number of businesses, including long-distance service and the manufacturing of telecommunications equipment.

"The court has become a shadow regulator," delaying the introduction of new services to consumers, said telecommunications law expert Peter Huber, whose firm filed the suit for the Bell companies.

Parties in the suit are Bell Atlantic Corp., BellSouth, Nynex Corp. and Southwestern Bell Corp.

The regional Bells have been trying to get Congress to do away with the restrictions for years. Major telecommunications reform legislation is pending, but passage this year is uncertain. "There's no guarantee that Congress will act, so we owe it to our shareholders to pursue all avenues," said Nynex lobbyist Thomas Tauke.

The crux of the companies' argument is that technology and the telecommunications marketplace have changed dramatically since 1984, so the consent decree is no longer necessary.

For instance, several dozen companies now provide competing local telephone service, mostly to businesses, in 72 cities, Huber said. And cable companies and wireless communications companies have the technical capability to deliver local telephone service, a market they plan to enter in a big way.

In addition, federal regulators have instituted policies since 1984 that make it easier for companies to compete against local telephone carriers and make it more difficult for local telephone companies to thwart competition, Huber said.

It could take years for the courts to rule, lawyers on both sides said. U.S. District Judge Harold Greene oversees the consent decree.

The suit cites opinions from leading academics who contend "the consent decree is discouraging, rather than encouraging competition in the telecommunications marketplace," Tauke said.

These academics say consumers have paid between $38-billion and $58-billion more than they should have for long-distance service over the past 10 years due to lack of competition and long-distance carriers' inefficiencies, according to the suit.

AT&T long has opposed Bell companies' efforts for greater telecommunication freedoms unless it is given the same latitude.

"Until... we have real competition for local phone service, the reasons the consent decree was entered in the first place are still valid, still protect the consumer and are still required," AT&T spokeswoman Adele Ambrose said.