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February 9, 1996

President Signs Telecommunications Bill

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  • President Clinton during the signing of the telecom bill.


    WASHINGTON -- President Clinton on Thursday signed a sweeping bill to overhaul the telecommunications industry, starting a new round of warfare between the giant media and communications companies even before the ink was dry.

    Scores of industry executives, from Ted Turner to the chairman of AT&T, crowded into the signing ceremony along with politicians of both parties and the lobbyists, lawyers and regulators who will be the foot soldiers in the struggles ahead.

    "Today, with the stroke of a pen, our laws will catch up with the future," Clinton said, signing a bill that knocks down regulatory barriers and opens up local telephone, long-distance service and cable television to new competition.

    Within hours of the signing at the Library of Congress, however, civil liberties groups filed a lawsuit challenging provisions that block indecent sexual material from being transmitted over computer networks. Television broadcasters began bracing for a new battle with the Clinton administration over provisions aimed at reducing violence on television. And top executives at local and long-distance telephone companies immediately vowed to start attacking each other's markets within the next 12 months.

    AT&T chairman and chief executive Robert E. Allen vowed that his company would try to offer local telephone service in every state and pledged to capture one-third of the business now controlled by the regional Bell companies.

    Elsewhere in the same room, the president of Bell Atlantic Corp. all but said publicly that his company was actively seeking some kind of alliance or merger with Nynex Corp. -- a deal that would create a company that controls local phone service from Virginia through Maine.

    The measure, passed after years of struggle and lobbying between rival segments of the communications industry, is expected to unleash a wave of mergers and acquisitions but eventually knock down traditional monopolies in local telephone service and cable television.

    Its most immediate impact will probably be ferocious legal battles in the the courtroom and at the Federal Communications Commission. In Philadelphia, a broad range of civil liberties groups led by the American Civil Liberties Union immediately sought a court injunction against provisions that impose heavy fines and prison terms on those who make available pornography or indecent sexual material over computer networks.

    In Brooklyn, abortion-rights groups went to court to block a provision that some say would make it illegal to transmit information about abortions over computer networks.

    But the Justice Department said the provision, which expanded the reach of a little-known law passed in 1873, was clearly unconstitutional and would never be enforced.

    Clinton also put new pressure on television broadcasters to develop a system for rating violence on their shows. The new law requires manufacturers of television sets to install a special V-chip in every new set to allow parents to automatically block any program with a special code.

    To be effective, however, broadcasters must develop a system for deciding which shows are violent and then transmit the signal. Commercial broadcasters are adamantly opposed to the whole idea, and some have threatened to challenge the law in court.

    Thursday, Clinton announced that the White House would meet with representatives of the entertainment industry Feb. 29 to discuss ways of reducing gratuitous violence on television and to make a plea for a new rating system.

    "However well-intentioned, legislative proposals to restrict violence or access to programs deemed to contain 'objectionable content' mean government control of what people see and hear and violate the First Amendment," the National Association of Broadcasters said in a statement Thursday.

    Much of Thursday's ceremony was couched in theater and hoopla, a rare moment of relief shared by political leaders from both parties and executives of most segments of industry after finally passing the huge bill.

    To that end, Vice President Al Gore engaged in a bid of cybershtick with Lily Tomlin, the comedian, who reprised her famous role as Ernestine the telephone operator. Ms. Tomlin, who appeared over a voice-and-video link through the Internet, told Gore he wasn't as stiff as he he seemed. "You're just a techno-nerd," she snorted, as Gore politely thanked her.

    Behind the theater, however, the country's biggest telephone and media companies were already gearing up for a new era of unbridled competition. One of the biggest battles will between the local Bell telephone companies and long-distance carriers like AT&T, MCI Communications and Sprint.

    Allen, AT&T's chairman, said his company would offer an unprecedented new range of local, long-distance and even television services to its customers in the near future.

    Allen said his company would immediately start striking deals to lease local telephone capacity from both the Bells and from newer rivals in the local phone market, and that AT&T would also invest in local communication networks of its own -- possibly using wireless links as a substitute for phone service carried over copper wires today.

    Even though long-distance carriers fought adamantly against provisions to let the Bell companies offer long-distance service within about two years, Allen said the future was bright for his company.

    "This legislation is good for America, it's good for the communications industry and, not incidentally, it's good for AT&T," he said.

    James G. Cullen, president of Bell Atlantic, which provides local phone service to the Middle Atlantic states, said his company would start offering long-distance service outside its traditional region immediately and inside its region within a year. He also strongly suggested Thursday that Bell Atlantic would team up in some fashion -- though probably not an outright merger -- with Nynex, which serves New York and New England.

    "We've got to figure out how we can offer long-distance and local service in competition with the likes of AT&T," Cullen said as he waited for Clinton to arrive at the signing ceremony.

    Cullen insisted he could not comment on widespread news reports about merger talks with Nynex, but offered a broad hint. "In between where we are today and something that falls short of a full merger, there are things that make sense," he said.

    Cable television executives, who suffered a huge political defeat only four years ago when Congress voted to regulate cable rates, gleefully talked about how the new law would sweep away regulatory barriers that keep them from entering the local phone business and other new markets.

    "The beauty of this is that there is enough new business, both domestically and internationally, that there won't be a war of attrition" between telephone and cable companies, said Gerald Levin, the chairman and chief executive of Time Warner Inc.

    Even some consumer advocates who had warned that the new law would raise prices for consumers and lead to a new era of media conglomerates said the final bill had been moderated by pressure from Gore and Senate Democrats and might actually be good for ordinary people.

    "This bill went from being a consumer nightmare to being something that, while it still has significant risks, is dramatically improved and offers at least at hope of greater competition and lower prices," said Gene Kimmelman, co-director of Consumers Union.

    Other Sites of Interest
  • Information on H.R. 1004/S. 652 - The Communications Decency Act available through the Thomas search engine.
  • The actual bill signed by President Clinton from the White House homepage.

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