Like spoiled children everywhere, the nation's seven Baby Bell are stamping their feet and crying "More! Now!" It's not enough that the Regional Bell Operating Companies (RBOCs for short) have a monopoly, enabling them to amass annual collective revenues in excess of $80 billion. Now they want to put their aggregate hooks into nonbasic-telephone businesses such as online information services. And the Supreme Court has given them the okey-dokey to do so.
It hasn't always been this way. Back in 1984, when the consent decree governing the breakup of the Bell System was implemented, Judge Harold Greene prohibited the RBOCs from getting into the information service business, citing his fear (and telephone company history) of unfair competition. At issue is that RBOCs would control both the information content and distribution means. As Judge Greene said, "If the regional companies were permitted to generate information and to transmit it, they would...appear to be the only entities in the developed world to have this kind of stranglehold on information." A federal Court of Appeals overrode Judge Greene, however, forcing him to lift the ban. The Supreme Court seconded the Appeals Court.
Surprisingly, established nationwide online services (such as CompuServe) seem blase about the possibility of Baby Bell online services. If anything, they see opportunity waiting in the wings, maybe in terms of joint ventures. Likewise, cable TV vendors and independent database publishers are quiet, even though the phone companies pose a long-term threat to them all.
Newspapers, who have been tinkering with online services for the past decade or so, are squealing the most. Few, if any, of them have enjoyed any success with these services, even though they've had nearly ten years to do so. They've had about as much luck as, well, the phone companies had selling computer systems. The American Newspaper Publishers Association (ANPA), spokesgroup for the dailies, cites a litany of laments: The newspapers will have to buy services from their direct competitors, the phone companies will have a window into their competitors' business, and so on. The RBOCs are responding with a nasty ad campaign which takes shots at newspapers that have taken a stand against them. But deep down, the real concern is advertising revenue.
This brings us to questions about the kind of services the RBOCs might offer. The "editorial" material would probably be sports reports, stock quotes, school lunch and restaurant menus, alarm monitoring, and the like. Phone companies also say that its information services would be "great equalizers," providing electronic access for the elderly, the physically disabled, and small business.
Still, the initial forays will likely provide "electronic yellow pages" that let callers dial up information about sales and services of local businesses or "electronic classified ads," thus directly competing with advertising in local newspapers. Nevertheless, the ANPA maintains that the big issue is that phone companies "will be able to take advantage of [their] monopoly position to hamper other information services."
I'd guess that within the next six months or so we'll start seeing tentative toe-dipping into phone-accessible, phone-sponsored services such as news summaries, retail information, and so on. One RBOC (Pacific Bell) has already launched its efforts by creating new divisions and naming executives. Much to the dismay of other newspapers, Pulitzer Publishing and its flagship St. Louis Post-Dispatch have announced the possibility of a joint venture with Southwestern Bell to develop an information service (news and classified ads) for 10,000 to 12,000 home computer users.
But the RBOCs will go slow because: 1. Some Baby Bells have already had their fingers burnt when dipping into nonphone pockets (remember videotex); 2. there just isn't that much business out there anyway (RBOCs counter that initially there wasn't a market for phones, either); 3. the telephone network currently isn't capable of carrying the kind of information that people will eventually demand (broadcast-quality video, for instance); and 4. some state and federal rules remain to be dealt with.
In the meantime, the Telecommunications Act of 1991 (H.R. 3515) that's before Congress is a compromise of sorts. It would allow RBOCs to get into the online service game, but only if they follow fair rules of play.
Frankly, I have a problem with the the idea that a local monopoly -- one whose government-established rates and profits are guaranteed and paid for by you and me -- will be out there competing with companies that have no such guarantee. The trend, in Judge Greene's words, toward "the concentration of the sources of information of the American people into just a few, dominant collaborative conglomerates" is equally disconcerting.
The question of whether or not the Information Age is upon us isn't at stake here, nor is the question of what it will look like. It's here and it will evolve. What's at issue is who will provide that information to us and at what cost -- monetary and (more importantly) otherwise. And I'm going to call my congressman about this -- as soon as our phones are working again.
Copyright © 1992, Dr. Dobb's Journal