Molly Ivins April 14

AUSTIN, Texas — You may recall that when the Telecom Act of 1996 was passed, we were all promised that it would lead to a great flowering of competition that would give consumers greater choice and in turn cause cable prices to drop dramatically and local phone service to become wonderfully cheap.

So far, no good. Three years after President Clinton signed the Telecom Act into law, cable rates have risen 21 percent, four times faster than the increase in the Consumer Price Index, and local phone rates are up 10 percent.

Instead of increased competition, the act led to merger mania — the seven Baby Bells have become four giant regional phone companies (the Sister Bells?), and where there were four major long-distance companies, now there are three. Since the act went into effect, there have been more than a dozen telecommunications mergers worth more than $295 billion, and industry experts say more will come. The law that was supposed to increase competition has just made the monopolies larger.

New government rules have saved long-distance carriers as much as $1 billion in local connection costs, but not one penny has been passed on to consumers, according to consumer groups.

Much as I hate the dread words "Told you so," there were at the time a few of us pointing out that when you let an industry write the law deregulating itself, which is what Congress let happen in this case, the result is not likely to be a festival for consumers.

Last month, Consumers Union and the Consumer Federation of America issued a report calling the bill a disaster area. And — surprise! — the study found a sharply segmented consumer market, with low-volume users of telecom and media services getting the rawest deal. The report says the act has given rise to a "digital divide," in which poor and rural people don't have the same access to new technologies as wealthier urban and suburban people.

The ever-inventive phone companies are really ripping off users of pay phones — a necessity in poor neighborhoods. A particularly amusing ploy is that 35-cent phone call from a pay phone that takes only quarters and gives no change. Then, there was the proposal to charge people for NOT using long distance — I liked that one.

In California, PacBell has just started charging an extra 50 cents per line per month so rate payers can keep their numbers IF they ever switch to another local phone company. The fees may be in place for as long as five years.

PacBell has 98 percent of the customers in California because it has no competition in most of the state.

You'll be happy to learn that the local phone companies blame the long-distance companies for the lack of competition and choice, while the long-distance companies blame the local companies. And they both blame the Federal Communications Commission, which, according to them, is still regulating too much, even though they wrote the law deregulating themselves.

You see, the agency has not given any of the Baby Bells permission to offer long-distance service in local markets. Mean old FCC. The reason the FCC hasn't done that is because none of the Baby Bells has yet opened up its monopolies over local phone service, so they don't meet the Telecom Act's requirements. The Supreme Court recently backed the FCC on this issue.

Never underestimate the power of politicians to step in and make things even worse. Guess who came to the meeting this month sponsored by the U.S. Telephone Association. That nice new House Speaker Dennis Hastert, who told the friendly lobbyists — who give so generously to campaigns — that he would help them get shed of that nasty FCC. "I am confident we can restructure the FCC and help drag the overly bureaucratic agency kicking and screaming into the 21st century," said Hastert, according to the Chicago Tribune.

What the telecom companies are really scrambling for is the Internet — delivery of data services to millions of Americans and an incalculable potential world market. The big slugfest there is between cable operators, betting on high-speed cable modems, and phone companies, investing in digital subscriber lines, or DSLs. And guess what? Both sides want the FCC, that over-regulating, over-bureaucratic, 20th-century agency, to give them an edge.

Now, follow this closely. The long-distance companies — the same guys who have saved more than $1 billion and not passed any of it back to us — have passed along to us the costs of the e-rate. That is the special education telephone rate that helps schools and libraries, particularly in poor and rural areas, get on line. As Sen. Bob Kerrey of Nebraska has rather rudely reminded the long-distance companies, they did promise not to pass those e-rate fees along to consumers.

And even though the fees are being passed on to us, the long-distance companies still don't want to pay them, and so we have a new round of political attacks by Republicans on the program, with several bills to either eliminate or cut the program.

Republicans like to call the fees "the Gore tax" because the Veep is keen on getting all the schools hooked up to the Internet. How about a "bad faith tax" on the whole industry?

Molly Ivins is a columnist for the Fort Worth Star-Telegram. To find out more about Molly Ivins and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

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