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Unraveling Effects of Industry Deregulation : Consumer Groups Tackle Financial Issues in Telephone Communications and Banking

February 13, 1986|DON G. CAMPBELL | Times Staff Writer

WASHINGTON — In Ronald Reagan's world of deregulation, the country's consumer activists find themselves impaled on the horns of a dilemma--intrigued in many respects, in spite of themselves, by the theory of it all. Distressed, in many areas, by the reality of it.

Here at the 19th Consumer Assembly last week--an annual survey of pocketbook issues sponsored by the Consumer Federation of America, a grass-roots affiliation of 220 largely volunteer, nonprofit groups with a combined membership of 30 million--primary emphasis was on two particularly hot potatoes tumbling out of the deregulation fire: the jumbled telephone situation and the equally controversial impact of what unleashing the banking community has done to consumers.

Sharp Criticism

On broader policy issues, however, such as Reagan's use of the Office of Management and Budget to sharply curtail the activities of such federal agencies as the Environmental Protection Agency, the National Highway Traffic Safety Administration and the Occupational Safety and Health Administration, criticism was sharp, bordering on vitriolic.

Joan Claybrook, president of the activist Public Citizen movement, called the Administration's insistence that proposed agency regulations pass a "cost effective" litmus test clear evidence that "this Administration is openly hostile to what it calls 'social regulation,' that is, regulation that benefits individual citizens at the real or imagined expense of the business community."

Matters of critical importance, such as the need for agency action on food additives, water purity, workplace toxins, hazardous waste disposal and automobile safety, Claybrook argued, have been left "in the hands of low-level political appointees in OMB who have neither the training nor the experience to properly review the many often technical issues raised by proposed agency actions."

Lingering Ambivalence

On the issue of the breakup of Ma Bell two years ago, however, the ambivalence was clearly apparent. "Was it a good thing? Was it a bad thing?" were questions that came both from representatives of the telephone industry itself and from the consumerists. As R. L. Tobias, chairman and chief executive officer of AT&T Communications, reminded the assembly attendees, "divestiture wasn't our idea. But the fact is, there is no turning back. Whether you loved her or hated her, Ma Bell is gone . . . forever."

And an open critic of the post-divestiture telephone industry, Rep. John Bryant (D-Tex.) admitted that in principle the court decision breaking up AT&T's 100-year monopoly was beneficial in giving consumers a badly needed choice, "although the competition that we thought would benefit consumers is shrinking away."

With its massive resources, Bryant said, AT&T has already started with a dominant share of the long-distance market and, of its 100-odd would-be competitors, only a handful, headed by MCI, emerge as possible survivors.

"We're headed right back toward monopoly," Bryant warned, "and even the individual Bell companies that were spun off in the divestiture" are petitioning the courts for permission to go into the telephone equipment and long-distance businesses so that we could end up with a whole batch of new, smaller, AT&Ts."

With the cost of residential telephone service having risen an average of 35% to 50% nationally since divestiture, Bryant added, "AT&T should not be further deregulated until a 'level playing field' has been reached. Until we have equal access across the board." (Equal access refers to the access fee every telephone user pays for linkage to long-distance lines whether he uses long-distance or not.)

Confusing Situations

Confusion over the telephone situation--whether to lease or own the equipment; which long-distance carrier to select; what happens if you don't make a selection; how to compute long-distance changes, and who is responsible for maintenance of what equipment and why--resulted in the announcement here last week of a major research project to be conducted jointly by the Consumer Federation of America, AT&T and the 21-million-member American Assn. of Retired Persons. To be funded by AT&T, the nationwide, in-depth study will zero in on the confusion created by the Ma Bell breakup and how telecommunications technologies can be applied to meet current and emerging consumer needs in education and health care.

"With older citizens," according to Cyril Brickfield, executive director of the American Assn. of Retired Persons, "we know that a full 66% find the telephone situation extremely confusing and that about 20% have curtailed their use of the phone under the belief--rightly or wrongly--that the costs have gone up. They have, locally, of course, but they haven't for long-distance, but they're not drawing the distinction."

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