States Confront `Telephone Gap'

New York's phone system lags behind other US states and foreign countries, study finds

TELEPHONES are suddenly ringing loud and clear here in the Empire State. And the caller on the line is the telephone industry itself.

New York's 40 telephone companies are urging New York to do what a number of other states, including Tennessee, Illinois, New Jersey, and Connecticut, have done: forge a coordinated telecommunications policy.

The objective is to modernize the state's telecommunications systems and thus promote economic growth, says Robert Zinnecker, executive vice president of the New York State Telephone Association (NYSTA).

States are discovering that a strong telecommunications policy is essential to attract new businesses and to keep the United States telephone industry competitive with overseas nations, Mr. Zinnecker says. For example, British Telecom reportedly chose Atlanta over New York City as a site for its US headquarters in part because Atlanta has more fiber-optic phone lines than New York.

When Americans think of "rebuilding the infrastructure," a theme that has become politically popular in the late 1980s and early '90s, they tend to think of upgrading bridges and highways, says Zinnecker, whose organization represents New York State's telephone companies.

But what Americans don't realize, he says, is that telephone systems - including fax machines, cellular telephones, emergency services, high-speed electronic delivery lines for computers, and other telecommunications channels - represent an integral part of the industrial infrastructure.

New York State - although home to such important US industries as finance, banking, and publishing - lags behind many overseas nations as well as other US states in telecommunications.

For example, about 40 percent of neighboring New Jersey's phone lines now have access to simultaneous, integrated delivery of voice, data, and video signals on a single telephone line - what phone people call an "integrated services digital network" (ISDN). Some 20 percent of Florida's phone lines have ISDN capability.

In Japan, more than 75 percent of all phone lines have access to ISDN capability. By 1993 Germany is expected to have 100 percent ISDN coverage of all lines in West Germany. East German lines are expected to have 100 percent coverage by the mid-1990s.

But in New York State, only about 1 percent of all lines have ISDN capabilities.

Take another measurement: common channel signaling, an improved high-speed system for processing calls. Some 90 percent of Florida and New Jersey phone lines have access to common channel signaling. All of France's telephones lines have access to such signaling. But in New York State, the number is only about 3 percent.

Currently, there is no overall federal telecommunications policy that mandates common goals in all states - such as replacing copper lines with fiber-optic cables. Each state sets its own policies regarding telecommunications systems.

In May 1991, the NYSTA set up an independent task force of 15 prominent community and business leaders to develop a coordinated plan to modernize the Empire State's telephone systems. The task force report, recently released here, recommends reducing regulatory burdens on the phone industry, while modernizing the communications network.

The NYSTA task force plan would require state support before it could be fully implemented. There is no guaranty that such support - involving political, legal, and regulatory changes - will be forthcoming. Still, the new plan serves as a "case study" of how states can modernize phone networks, experts here argue.

Goals called for in the report include replacing older analog switching systems with computerized digital switches, introducing common channel switching, replacing copper wire with fiber-optic cable, allowing phone companies to be more flexible in pricing competitive services, and speeding up depreciation write-offs on capital projects.

By allowing higher rates of depreciation, some state regulators make investments less costly for the companies, thus encouraging them to go forward with modernizing their cable systems. But the policy might saddle consumers with higher telephone charges, some specialists say.

Moreover, phone service must be expanded to include the economically disadvantaged, the task force argues. In New York State, for example, about 1.3 million households - almost 8 percent of all New Yorkers - have no telephone service.

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