Information services: a possible minefield for cellular operators

Mobile Phone News, July 2, 1992

Cellular operators have pursued the creation of information services with great zeal since the ban on regional Bell operating companies (RBOCs) offering such services was lifted last summer by Judge Harold Greene. However, the offering of the services was stymied by legislation introduced by Rep. Jack Brooks (D-Texas). Brooks' antitrust bill, which limits the development of new information services by RBOCs, was approved by the House Judiciary Committee on Wednesday. Cellular providers with existing services are somewhat protected by a grandfather clause written into the bill just prior to the vote. If the bill becomes law, the grandfather clause would allow services already in existence 60 days prior to enactment of the legislation to continue operations. However, new service development would be restricted.

The full House Judiciary Committee passed Brooks' HR 5096 bill July 1 with a 24-9 vote. The bill will now go to the .floor of the House of Representatives for a full vote. There is no time frame as to when the House vote will take place--it is up to the discretion of the committee chairman to introduce the bill for a full vote. The bill will then go to the Senate for approval. ...Brooks Intention Was To Prevent Monopolistic Practices

Brooks, chairman of the full Judiciary Committee since 1989, dropped HR 5096, the AntiTrust Reform Act of 1992, into the House hopper on May 7. The legislation was assigned immediately to his Judiciary Committee. The bill will require the RBOCs to receive attorney general permission to enter into new restricted business services.

In the original bill, it would have taken up to seven years for the RBOCs to be granted full approval to enter all three restricted business services-- customer premise equipment (CPE) manufacturing, information services and long-distance services. In amendments offered during the contentious markup, the waiting periods for CPE manufacturing and information services were struck from the bill, but long-distance services was given a five-year waiting period.

The bill has been landed by the American Newspaper Publishers Association and Consumer Federation of America. However, opposition to HR 5096 came from more than 525 organizations and individuals including: local chapters of the AARP; educators; health-care providers; small businesses; information service providers; small- and medium-sized telecom manufacturers; state and local governments; and labor unions.

...Operators Test the Water

One by one, cellular operators have provided subscribers with information services, becoming purveyors of information via the air waves. Information-type services have been customer driven and are viewed by cellular operators as an auxiliary service offering. Operators are bullish on the new services because they can effectively enhance airtime use, thus increasing an operators' revenue.

Recognizing that the right to offer information services might be revoked, the RBOCs' mobile divisions have all entered the information service business with zeal, bringing real-time information to the cellular customer.

The RBOCs' cellular divisions have approached information service offerings from different perspectives. For example, Pactel Cellular offers the services through a third party; and Southwestern Bell Mobile Systems and BellSouth have developed their own services. The services PacTel Cellular provides its customers are not true information services as provided for in MFJ--the services are offered through a third party.

"Pactel prefers not to have its business activities restricted," said PacTel. The Brooks bill will allow non-RBOCs such as McCaw Cellular Inc. and Vanguard Cellular to freely offer information services--creating an unfair advantage for the nonwireline operators, said PacTel.

...SBMS Would Hate To Disconnect Satisfied Information Service Customers

"We are aggressively deploying services and "[the Brooks bill] provides a disservice to our customers," said Walter Patterson, of Southwestern Bell. SBMS deployment of information services was customer driven, and "it is absurd to think that we would have to disconnect them," Patterson added.

SMBS has encountered success with information services, said Patterson. This month more than 50,000 calls will be made accessing everything from late-breaking news to traffic and weather information. "Amid all the rhetoric of this bill, the facts are being obscured: consumers already are benefiting from the information services we've introduced. And let's face it, our entry into the market has promoted competition," said Horace Wilkins, vice president-government and industry affairs, Southwestern Bell Corp.

BellSouth has been testing in Los Angeles a Personal Information Clip service in conjunction with Dow Jones. If the Brooks bill is enacted, expansion of the clip service will be prohibited.

BellSouth did everything it could to oppose Brook's bill. The chairman of BellSouth's board has written to every employee explaining the implications of HR 5096 and requested that the employees write their congressman, said Bill McCloskey, manager of media relations for BellSouth. Also, BellSouth has initiated a series of advertisements to support its cause and has been making personal visits to each congressman to gain support.