Telecommunications reform and the right to oppose it

STEPHEN N. BROWN

Antagonism over telecommunications reform legislation has revealed certain parties` low regard for the right of free speech guaranteed by the First Amendment of the U.S. Constitution. The antagonism has thus far prevented the legislation from becoming law. For example, last August, the regional Bell holding companies` chief lobbyist, Gary McBee of the Alliance for Competitive Communications, announced that the telecommunications reform bill would be out of Congress and on President Clinton`s desk by Halloween. The bill has not made it that far yet because of strenuous opposition from consumer groups and long-distance companies. Consumer groups view the legislation as giving the cable-TV industry and local telephone companies licenses to plunder, while the long-distance companies see the legislation as an invasion of their turf. The bill`s main supporters, the cable-TV industry and the regional Bell holding companies, are hoping it will be wrapped up by Christmas.

Stockholders of the seven holding companies have already received their present. Because the Senate passed its reform bill in early June, the stock prices for local telephone companies have skyrocketed. Ameritech, Bell Atlantic, BellSouth, Nynex, Pacific Telesis, Southwestern Bell and US West stock prices increased by 21%, 16%, 22%, 17%, 15%, 20% and 19%, respectively. Whether those gains are maintained depends on Sen. Larry Pressler (R-SD). When the House/Senate conference committee opened its session to reconcile the House and Senate versions of telecommunications reform, Pressler said, "I am firmly committed to moving this [legislation]...forward as rapidly as possible." He was supported by Senate Republican leader Bob Dole (R-KS), who said, "It remains my desire to pass a final bill before we adjourn this session." Both Senators` statements reflect a nagging worry about the opposition.

Inside the House/Senate conference committee, the opposition was led by Rep. Ed Markey (D-MA), who said, "This year, I feel very optimistic that we can work out these very difficult issues [but] we shouldn`t underestimate the difficulties." Outside Congress, the opposition`s lead players are the Competitive Long Distance Coalition and the Consumer Federation of America. The Coalition, comprising AT&T, MCI, Sprint and 500 other small long-distance companies, mounted a radio, newspaper and television advertising campaign against the legislation. Major national newspapers took the hint by running stories recounting the regional Bell holding companies` monopoly control of local telephone markets. The Wall Street Journal, for example, ran a front page story with the headline: "Rivals Are Hung Up On Baby Bells` Control Over Local Markets." The Federation has done its part, releasing a study saying that consumers would pay an extra $204 per year for basic cable-TV and telephone services. An ordinary cable-TV bill could increase as much as $7 per month, and a local telephone bill could go up by $10 a month if Congress approves the legislation as it is currently worded, according to the Federation. Adding an extra $10 per month to a local telephone bill represents almost a 50% increase in the standard bill. This would be a healthy increase of revenue for the local telephone companies and may be one reason for increased stock prices. The Federation maximized its study`s impact by releasing it not just in Washington, DC, but also at the state level through like-minded organizations from Florida to California.

Chicken Little

These activities have drawn some humorous comments and predictable reactions from the bill`s supporters. Both sides reached into their bag of metaphors and pulled out a chicken. "This bill treats consumers like Colonel Sanders treats chicken--served on a platter with plenty of gravy," said Chuck Malick, of the Colorado Public Interest Research Group. He was urging Colorado`s state officials to oppose the federal legislation. Bell Atlantic`s Vice President and General Counsel James R. Young devised a devastating response to the consumer groups, saying "As Congress prepares to complete the first major overhaul of the telecommunications law in 60 years, the Chicken Little of consumer activists, the Consumer Federation of America, is claiming that the sky is falling." Young accused the Federation of hatching a conspiracy with the long-distance companies: "It`s fair to assume the long-distance crowd had a heavy hand in the [Consumer Federation of America] rate-hike scare. It`s just more evidence of where the [Federation`s] loyalties lie--not with consumers, but with AT&T and the long-distance companies." These comments are great food for public consumption but mask the heavy hitters` meaner game of suppressing free speech.

The Coalition`s advertisements against the legislation were quickly brought to Pressler`s attention. Saying the ads "misconstrued the intent" of the legislation, he demanded a meeting with AT&T`s President and Chief Executive Robert Allen. Pressler asked Allen to have the Coalition withdraw its advertisements, but AT&T refused, saying: "AT&T strongly supports the Coalition efforts, through its advertising and other means, to inform the public about what is at stake." The best that can be said about Pressler`s actions is that they give the appearance of a mild-mannered attempt to intimidate, an attempt that could never work for two reasons: Provided the statements are not clearly provable lies, companies and politicians may run almost any advertisement about their opponents. Pressler knows this because he is an expert politician. Also, with its resources and political clout, AT&T is practically impossible to intimidate. The senator probably pressed for such a meeting to tell the bills` supporters that at least he tried.

A more unusual development is the action of the Turner Broadcasting Network. Its Cable News Network refused to air the advertisements. The network suggested it had "conflict of interest" and said it would reject any commercials that take a position on the telecommunications reform legislation. This may sound like fair treatment, but it is not. The Turner Network and its soon-to-be new owner, Time Warner, support the legislation, but its opponents are the only ones to run advertisements. Within the confines of its own world, the network has suppressed the expression of views contrary to its own interests, much like the state-controlled media of the defunct Soviet Union.

The action should not be taken lightly because of the network`s size and influence. It has nearly 30 news bureaus worldwide. More importantly, Turner Broadcasting has agreed to be purchased by Time Warner, perhaps the world`s top media company. It owns Time Inc., the nation`s number one magazine publisher; Warner Bros., the world`s leading producer and distributor of movies and television programs; Home Box Office; as well as Little, Brown and Co. and Warner Books, both leading book publishers. The influence of the Turner Network will continue because Ted Turner will be the vice chairman of Time Warner.

The right to be heard

Newspapers, magazines and television networks are private property, and they have the right to refuse advertising. The First Amendment right of free speech does not require them to assist anyone in communicating their views. However, the right to free speech carries with it an implication of the right to be heard. How can someone be heard if every magazine, newspaper, television station and other communications avenue refuses to accept the advertisements? The answer to that question is: In this country there is no conspiracy or control such that anyone is denied access to every communications avenue. Some radio or television station or newspaper will run the ad and tell the story. The Wall Street Journal`s article is a case in point. Therefore, there is always the opportunity to exercise the right to be heard. Because such an opportunity is always available, the owners of communications businesses retain their right to refuse their services. This is how the United States balances private property rights in the communications industry with the right of free speech, such that one right does not override the other.

The balance is predicated on the country`s continuing diversity of communications methods and the absence of monopoly control over them--either by government or the private sector. The reform legislation is strongly criticized because it takes a big step toward allowing monopoly control of communications avenues. For example, Bell Atlantic`s Chicken Little, a.k.a. the Consumer Federation of America, points out that the original legislation permitted the regional Bell holding companies to buy up to 50% of their in-region cable companies and in some cases, the entire company and the local newspaper. The 50% limit has been reduced to 35% at the urging of Rep. Markey. Left to its own devices, the communication business in this country could eventually be controlled by just a few companies. In that case, will they follow the example set by the Turner Network and refuse to air an opinion that is contrary to their own interests? When one company controls telephone service, online information services, cable-TV offerings, newspaper and magazine publications, and fiber-optic networks in the same regional or national markets, the ability to suppress the opposition`s right to be heard is substantially increased. This is the greatest weakness of the reform legislation, and it will remain so whatever version becomes law.

Stephen N. Brown specializes in market research and public policy toward new technology in the telecommunications industry. For more information call (615) 399-1239.

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