Telecommunications revolution awaits green light. Experts say nation's well-being hinges on the new technology

Imagine being able to arrange all your finances, do most of your shopping, or browse through vast libraries of information without lifting more than your fingers. Imagine watching full-screen video images of historical events or the face of a friend as you chat on the phone.

In the next 20 or 30 years, this will all be possible, says Robert Harris, an international economist and director of the business and public-policy program at the University of California at Berkeley. Some of the technology, like ``video phones,'' is already available in some form.

``Our future social and economic health will depend substantially upon our nation's success in building a telecommunications system the equal of any in the world,'' reports the subcommittee on telecommunications at the National Governors' Association, in revising its goals this year.

But that system must have a coherent modernized infrastructure, industry experts say, and right now there is no such structure in the United States.

The typical US business has more telecommunications services at its disposal than are available anywhere else in the world, but when it comes to residential services, ``we have a bit of a chicken-and-egg problem,'' says Eli Noam, professor of regulatory economics and law at Columbia University Business School. He is co-chairman of a Pacific telecommunications group scheduled to meet in October.

Governments of other countries have tried subsidizing that egg with limited success, he says.

In Japan, ``teletopias'' - several thousand homes wired to receive full-service telecommunications units - will help companies determine which services are marketable. And France has invested in the Minitel network, over which 5,500 vendors offer their services.

Videotex, on the other hand, was a commercial flop in Japan and elsewhere.

In the huge and relatively diverse US market, government subsidies seem highly unlikely, analysts say.

But without some federal or state incentive, and flexibility, companies will be reluctant to innovate and unable to respond to new competitors, says a recent report of the Northeast-Midwest Institute, which examined those regions' telecommunications efforts. Competitiveness in telecommunications could provide states with significant economic growth, the report concluded.

Since the breakup of the American Telephone & Telegraph Company in 1984, telephone policy has been decided by the US District Court under Judge Harold Greene. Because the regional Bell phone companies still monopolize local services, the judge has refused to let them provide the content for the various information services they put on their networks.

Although a ruling in March loosened that somewhat, by allowing the ``Baby Bells'' to transmit information services like electronic mail, videotex, audiotex, and voice-messaging, it also confirmed the court's stand against giving the Bells any control over content.

Many industry experts say that this limitation, along with the inability of the industry's main players to agree on major issues, has retarded the development of a national framework.

While other countries ``treat telecommunications as a strategic industry,'' says Dr. Harris at Berkeley, ``we treat it like it's just a telephone service.''

``Infrastructure is still thought of as roads and bridges,'' says Louise Arnheim, an associate at Shooshan & Jackson Inc., an industry consulting firm. She recommends ``a favorable regulatory climate for current and future telecommunications providers.''

Recently, however, the Federal Communications Commission, the House Telecommunications Subcommittee, and the National Governors' Association recognized the importance of telecommunications to economic competitiveness and have suggested releasing local Bell companies from many of their current restrictions.

On July 14, Rep. John Dingell (D) of Michigan presented a resolution to the House Committee on Energy and Commerce calling for the ``full participation of American industry in the provision of telecommunications equipment and services.''

The FCC has proposed that local phone companies be allowed to own and operate cable systems in their service areas, and that these phone companies be able to provide information services, so long as they make basic network service available to other providers of information services on a nondiscriminatory and tariffed basis. It also seeks more flexibility in regulating the industry.

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