A somewhat better connection

HEADNOTE

The past quarter-century was one of halting progress.

WENTY-FIVE YEARS IS A VERY LONG time in high-technology industries like telecommunications. In 1977, none of us owned a personal computer or a cellular

telephone. That same year, state and federal regulators were trying to use the federal courts to block competition in telephone handsets and long-distance services. At the same time, AT&T was defending itself against monopolization charges brought by the U.S. Justice Department, despite the fact that its monopoly had been conceived, nurtured, and protected by the government itself.

Today, the very same regulatory commissions that were once working to protect AT&T's monopoly in long distance and telephone terminal equipment have been converted, at least rhetorically, into advocates for competition and consumer welfare. They have come a long way - or have they?

Unlike transportation, the change in atmosphere has not led to deregulation in telecommunications. Most telecom service rates are still regulated or at least subject to the filing of regulatory tariffs. AT&T and WorldCom cannot selectively cut prices without running afoul of rules that require geographically uniform rates. Local telephone companies are more highly regulated today than 25 years ago because they are now required to sell services to their competitors at (regulated) costbased prices.