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Why Americans miss out on valuable phone services

By Barbara BradleyStaff writer of The Christian Science Monitor / October 6, 1987


Let's pretend last week's earthquake happened in Tokyo instead of Los Angeles. The damage would probably have been as great. But the damage control would have been far greater.

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After an earthquake in Japan, a person can pick up a phone, dial into a computer data base, and find out which hospitals have beds available, locations of treatment centers, ambulances, and fire stations, or where to get relief supplies. The information is provided through Japan's national telephone company.

That can't happen in the United States. Last month federal Judge Harold H. Greene, who is overseeing the deregulation of the telephone industry, decided that local telephone companies cannot provide such information.

Under the Sept. 10 ruling, a phone company like New England Telephone is allowed to transmit information between the information provider on one end of a phone line, like Dow Jones News Retrieval or Dun & Bradstreet, and the person (or his computer) on the other end. But the phone company cannot generate the actual information. That turns out to be a thin, some say arbitrary, line.

But that line is enough so that potential competitors - like Dow Jones and Telenet (which delivers the information in packets over the phone lines), as well as alarm companies and secretarial services - are breathing a sigh of relief. They worried that if the phone companies had their own information services, or had financial relationships with those that do, they could use their control of the phone lines to throw customer business in the most profitable direction (for the phone companies, that is). They might give competitors inferior line access, for example, or provide services so cheaply it would drive small companies out of business.

When the phone companies were still part of the pre-1984 regulated system, they ``participated widely in anticompetitive activities,'' Judge Greene wrote in his decision, the first full review since the breakup. ``Were they to be freed of the restrictions, they could be expected to resume anticompetitive practices in short order, to the detriment of both competitors and consumers,'' he concluded.

Critics of Mr. Greene's ruling say that the technologies and services are so important that they must be weighed against the anticompetitive risks. But Greene doesn't have that option: His job is to administer the antitrust laws. Consequently, there is ``overwhelming bipartisan consensus,'' says an aide on the House Committee on Energy and Commerce, to transfer authority from Greene to regulators at the Federal Communications Commission, who can make such trade-offs.

Until that happens - and concrete action probably won't be considered before next year at the earliest - some legislators and telecommunications experts say the public is being cheated out of valuable services. Moreover, they say, the US industry is being encouraged to give up its technological lead to other countries.

``The real tragedy of this decision is not that it's simply restricting a set of companies as to what they can do,'' says Robert G. Harris, a telecommunications expert at the University of California, Berkeley. ``The tragedy is that it's restricting the use of a very powerful technology.''

Greene has, in effect, determined what services the American consumer can expect in the next three years and what ones they will be denied. (The next review will come in 1990.) He also left open some loopholes about videotext services (printed information received on a television or computer screen), and asked for comments over the next few weeks. He's expected to make a ruling on these issues in early December.