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GOV'T READY TO SET NEW TELECOM RULES MERGERS A HOT TOPIC AT COMNET CONFERENCE

By Published on .

The recent merger-mania in the telecommunications industry has strengthened the major players on the information highway and likely will continue.

But despite the fact that most of the merger partners will come under intense antitrust scrutiny, key government officials seem willing to let industry take the lead in enacting new legislation.

At last week's ComNet '94 conference in Washington, there were few unkind words for the mergers that have taken place. But that's not surprising considering that among the key government and business leaders present were executives from AT&T, Time Warner and MCI Communications, all of which have jumped into alliances in the past year.

"We should be cheering them on," said Peter Huber, a senior fellow at the Manhattan Institute for Public Policy. "They all will be reviewed by the Department of Justice" for potential antitrust effects.

Even regional telephone company Ameritech, to date a go-it-alone type, wouldn't categorically rule out future mergers or strategic alliances.

"Don't predict the future based on actions that we've taken to date," said Richard Brown, Ameritech's vice chairman. "The regional bell operating companies are clearly differentiating themselves now. We haven't made any large investments ... but have an in-region plan to be a full-service provider."

U.S. Rep. Rick Boucher (D., Va.) echoed Mr. Huber's enthusiasm for the recent merger-mania.

"I see these combinations as very much in the public interest," he said. "Phone companies in the [cable] territory of TCI will provide competition to the incumbent ... and in those areas where a Bell Atlantic offers phone service, there will be competition to the incumbent cable operators."

And while linkups of the MCI-British Telecommunications sort likely will continue, Rep. Boucher offered the somber warning that Congress is not likely to consider lifting the 25% ceiling on foreign investment in U.S. companies before 1995, at the earliest.

"In the next three months, the House of Representatives will do the most comprehensive rewrite ever of the Federal Communications Act," he said. "And I think it is in our own national economic self-interest not to foreclose on any alliances."

That President Clinton will enact information highway legislation in the near future seemed all but certain last week. The president called for it in his State of the Union address and Congress seems amenable.

"It's going to happen" this year, said Rep. Billy Tauzin (D., La.), a member of the powerful House Energy and Commerce Committee that will fashion the legislation. "We don't know the content yet, but it certainly will pass in the House and probably in the Senate."

"When Al Gore makes speeches of the sort that he's made recently ... we can see that the administration is serious about this," he said.

And what the Clinton administration also appears to be serious about is letting industry take the lead in shaping the information highway and the legislation that will precede it.

Rep. Tauzin said he not only wasn't concerned about the possibility that industry is shaping public policy, he was downright enthusiastic about it.

"I think that is an exciting prospect," he said. "My concern is more that Congress might do it wrong in an overzealous attempt to protect consumers. But maybe Congress will take a lesson here from the market place and get it right."

Even a Clinton administra tion spokeswoman for the in formation highway agreed. "The administration is seek ing to be a facilitator," said Michele Farquhar, director of the Office of Policy Coordi nation and Management, Na tional Telecommunications and Information Administra tion. "And I think that in the next two to three weeks we will know a lot more about the details of the administra tion's own legislation.

About the only guaranteed element of the administra tion's bill will be a provision to guarantee universal access, Ms. Farquhar said.

"What we are going to have is a convergence of TV, telephone and computer in a way that must be more accessible ... so we will not have a nation of information haves and have-nots."

But the Manhattan Institute's Mr. Huber, while not rejecting the notion of universal access, asked almost rhetorically whether there has been any consideration that some people might not want, or need, the "Niagara" of information that will be available.

"Instead of talking about information haves and have-nots, we should think about have-whats," he said. "We've got to be careful about endorsing universal access until we know what it is. Schools will need one service, but hospitals another."

Not surprisingly, the business executives at the conference saw a limited role for the federal government in shaping the information networks of tomorrow.

"I think [we need] current legislation opening up the industry to competition," said Gary Parsons, exec VP at MCI. "The administration has pulled back from the idea of owning or building or running the network, to the idea of setting the standards. That is the appropriate role for government."

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