Federal regulators Thursday took sweeping steps that could vastly expand telephone and television services and create new competition for the nation's communications and media giants.
The Federal Communications Commission ruled that regional phone companies may transmit movies and other television services by phone lines nationwide. The commission also voted to allow phone companies to purchase up to a 5% stake in cable TV or video programming companies.
The FCC's decision pits the nation's phone companies as potentially formidable competitors against the cable TV industry, TV networks and neighborhood video rental stores.
The commission also took the first steps toward creating a nationwide radio network for the next generation of portable telephones, two-way paging devices and tiny notebook computers.
Known generically as "personal communication" devices, these systems represent a competitive threat both to the existing phone network as well as the nation's wireless cellular system.
FCC Chairman Alfred Sikes said the commission's actions "constitute truly critical components . . . of what futurists have called a 'glittering communications mosaic.' "
However, the commission's actions were immediately criticized by some as unfair to existing media operators and as potential costly boondoggles for American consumers.
"When you cut through all the technical ballyhoo, this is a kind of half-step toward encouraging phone companies to build a lot of hugely expensive TV plants, with telephone customers financing the investment," charged James P. Mooney, president and chief executive of the National Cable Television Assn.
Cable TV operators now hold effective monopolies in their service territories and, since 1986, fees for basic cable services have jumped an average of more than 50% nationwide.
Under the "video dial tone" service, customers could pick what programs they wanted to watch on TV by simply dialing their telephone.
While those programs would include movies and other entertainment, it may someday also include educational programs to be viewed at home or schools, medical image transfer and business services.
Mooney's charges underscored the intense political fight that has been waged in Washington and in state capitals over efforts to expand new communications technologies and create new competition among the businesses offering them.
