By Kalpana Srinivasan
Associated Press
WASHINGTON — Five years ago, a law was passed to relax the government's hand in regulating communications — from radio to cable to telephone — and let competition work to cut prices and usher in new services.
The government still regulates, perhaps less than before, though some argue that innovation is bogged down in red tape and inertia. While Republicans are now in control, the aim remains to get services such as high-speed Internet access more quickly to consumers.
"We are about to enter a whole new world of communications,'' says Rep. Billy Tauzin, R-La., the new chairman of the House Commerce Committee, watchdog over the communications industry and its regulators.
"If we don't finish deregulating, the danger is the old regulations are going to creep into the new world.''
Others argue that decreased federal involvement has shortchanged consumers.
"Relaxing regulations at a time when markets are not working to bring down prices and offer consumers more competition will invariably lead to higher cable rates, higher prices for Internet access,'' said Gene Kimmelman of Consumers Union. "Over the long run we might even see the end of long-distance rate reductions.''
A recent Federal Communications Commission report found that cable TV companies raised monthly rates for programming and equipment by 5.8 percent last year. The government stopped regulating most cable TV services nearly two years ago, following a directive of the 1996 law.
Still, at the FCC, "the bias will be toward market forces rather than regulation,'' said Scott Cleland, an analyst with The Precursor Group, which anticipates changes in the sector for institutional investors.
The commission's new chief, Michael Powell, believes that when the government loosens its hold on companies, new players can come into the market. Ultimately, consumers determine whether new enterprises succeed or fail, he says.
"He seems to be willing to re-examine some of the unproven assumptions the agency has just lived with for years,'' said Edward O. Fritts, the broadcast industry's top lobbyist. That could mean taking another look at whether certain restrictions on radio and TV stations are still needed, given the rise of other sources of information like the Internet.
The government might free up other sectors, too, such as the wireless industry. Those companies face a ceiling on how much airwaves space they can control in a market. They want that lifted and say they need greater room to offer consumers wireless Internet access and video, and other new services.
"We are sitting here sucking eggs waiting'' while other countries move ahead with services, said Tom Wheeler, president of the Cellular Telecommunications and Internet Association.
Wireless is an important way to give consumers more choices, for phone service and Internet access, according to Powell.
"When the consumer looks out from the living room window and can buy from three or four people similar services, I think we are basically on the right track,'' Powell said.
The 1996 law gave the Bell companies a chance to escape federal restrictions and offer their local customers long-distance service. First, they have to prove that their local markets are open to competition.
But the Bells say — and Tauzin agrees — this process is cumbersome and has delayed the prospects for consumers getting new choices for long-distance.
Rivals continue to say "not so fast.'' With fewer restrictions, the Bells have less incentive to play fair in the market.
Despite the evolving hands-off philosophy, officials recognize they might have to step in on some issues, including the switch from analog to digital television. Digital technology allows broadcasters to offer crystal clear pictures, more channels or even new services such as stock quotes and sports scores.
"Digital will allow consumers many new free services provided we have all segments of the telecom industry participating,'' Fritts said.
But disputes among the broadcast, cable and TV electronics industries have slowed the prospects of that new technology reaching consumers.
Tauzin said he will bring together all the parties in hopes of identifying the trouble spots and jump starting the transition.
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