Hold the phone - 1996 telecommunications act will profoundly impact small businesses and home offices - Vantage Point - Government Activity - Column

Home Office Computing, April, 1996 by Peter Lewis

Only an Act of Congress Could Change Our Phone Systems; Only Time Will Tell How Much

CONFUSED OR ANNOYED BY THE INCESSANT PITCHES OF long-distance telephone companies? To use a phrase that was popular in 1934, the last time Congress overhauled the nation's telecommunications laws, "You ain't seen nothing yet."

The 1996 telecommunications reform bill signed by President Clinton earlier this year will have a profound impact on home offices and small businesses. The legislation completely changes the landscape for wired and wireless communications, not surprising since most of today's technologies were not even envisioned 62 years ago. But just how good is this news?

If all goes according to plan, the telecommunications system that has only recently yielded such handy home-office tools as call waiting, call forwarding, three-way calling, call return, auto redial and so forth--services that have long been available to big businesses at big cost--will soon enter a period of unprecedented innovation for all phone company customers. Rural businesses, in particular, can hope for improved choices in communications as a result. But they are also the most the new competitive because prices for the expected new services are likely to rise unless state regulators step in to help.

Thousands of entrepreneurs have moved to small towns and rural areas in recent years, some because they were fed up with big-city problems, some because they were downsized from corporate jobs. Traditionally, for such corporate refugees, the benefits of small-town life have come at the cost of isolation, both physical and virtual. The Internet and satellite communications offer tantalizing connections to urban centers. But as a general role, the more stars one can see in the sky at night, the fewer options there are for connecting to the Internet at 28.8Kbps a second or faster or for finding a reliable cell for mobile phones, at least at reasonable rates.

In Montana, for example, where television satellite dishes are the unofficial state flower, the new competition among media companies is likely to result in a blossoming of available interactive services. That is the thinking of Congress, anyway, which reasoned that regulatory hurdles were keeping companies from offering cheap wireless services to citizens in areas where stringing wires and fibers is impractical.

It is unclear whether Congress's thinking is realistic. Many home-based workers in remote areas are worried that telecommunications companies, free to chase customers in new markets, will ignore them or will raise rates to prohibitive levels. Thinking optimistically, commerce, like nature, abhors a vacuum, and someone is likely to step in to reach this growing market.

Even in places where the stars are not always visible, the new communications environment will change significantly. Bundled services are likely to proliferate. The local cable company will probably offer phone service and Internet access. The local phone company will probably offer long-distance phone service along with seven HBO channels, via satellite. The long-distance phone company will offer interactive shopping and Web-hosting services. The local newspaper will offer Internet access and cable modems and digital rock 'n roll radio.

You get the idea. Before long, when the phone rings, my resident teenagers will probably trip over themselves trying to figure out whether to answer the television set, the computer, the videophone, the stereo, the intercom, or some other smart appliance.

It is easy to get carried away with visions of unlimited cheap bandwidth and ubiquitous communications devices. The reality of this new regulatory environment will be more mundane.

When deregulation starts having practical effects, my family dinners will be interrupted more frequently by "slam" calls from fast-talking operators trying to get me to switch Internet and cable carriers. Tipped off by my previous online browsing habits, advertisements on each Web site I visit will ambush me with offers of package deals for cable and phone service. My productivity will sag as I waste hours calculating which combination of telephone, cable, and Internet service offers me the best deal.

The country's most famous home-office workers, Bill Clinton and Al Gore, hail this new telecommunications landscape as a triumph for Congress and America. They say it brings us into the 21st century. It will be interesting to see if the 21st century looks as good to them a year from now as it does today.

PETER LEWIS writes regularly for The New York Times and, starting this month, is a regular contributor to this section.