Originally created 03/14/97

Telephone Deregulation Has Downside for Customers



Having trouble with your phone? For years, Bell Atlantic Corp. made it easy to call for repairs, by allowing people to dial a simple three-digit number, 611.

But not anymore. On Saturday, the company will officially retire 611 and replace it with - you might want to grab a pen and write this down - 1-800-275-2355.

The reason: Companies planning to compete against Bell Atlantic in local telephone service were able to persuade regulators that Bell Atlantic would have an unfair dialing advantage with easy-to-remember 611. The competitors' customers, after all, would have to dial an 11-digit number for repairs.

It's but one small example of how competition in the telephone market can bring subtle, bothersome changes to consumer service. Prepare now for another wave of the little devils, as free-market provisions of a new federal telecommunications law kick in.

Americans have been preached to endlessly about the benefits of deregulation in telecommunications: The 1984 breakup of the AT&T Corp. monopoly did help spawn lower-cost long-distance, voice mail, caller identification and the high-speed fiber-optic networks that carry phone and Internet traffic.

But there is a price. To save money or gain competitive advantage, the old monopoly companies often drop longtime conveniences.

For instance, Bell Atlantic used to put alphabetized listings of businesses in both the White Pages and Yellow Pages. But last year it took them out of the White Pages. The company cited a need to reduce printing costs as it competes with the One Book by Reuben H. Donnelley Corp. And Bell Atlantic's Yellow Pages advertisers also like it that users always must turn to the big book for a business number.

"It's a great nuisance to have to lug out the six-pound Yellow Pages every time I need to look up the number of a company I know the name of," said Michael Michaelis, a Washington consultant who calls the change "dastardly."

The fact is that monopolies, despite their shortcomings, have upsides for consumers. In exchange for total market power, regulators can extract concessions from public utilities such as easily dialed repair numbers and higher levels of customer service.

The little annoyances are "the prices you pay for competition," said Debra Berlyn, director of the Competition Policy Institute, a research group funded by long-distance companies. "In the short run, it may seem these changes create a nuisance. But in the long run services should improve and prices should be better."

Similar grumbling followed the 1984 AT&T breakup, which forced the nation to learn how to buy, rather than lease, phones in retail stores. People also discovered that phone lines inside their homes now belonged to them, not the phone company.

And, of course, having a choice of long-distance companies means enduring pesky calls from telemarketers during dinner.

Competition has meant mostly grief for consumers who use pay telephones. Pay phone companies compete by promising hotel and restaurant owners bigger cuts of their business, then charge transient consumers exorbitant rates for toll calls.

Calling cards can bypass the pay phone proprietor's fees, but even they aren't as convenient as they once were. AT&T until last year allowed customers to make local calls on AT&T calling cards just by dialing "0" and their card number, even when the calls are carried solely by local companies such as Bell Atlantic.

But now that AT&T competes in the market for local toll calls it has stopped that customer courtesy, and makes customers dial 11 more digits, 1-800-CALL-ATT, beforehand.

Nowhere has diminished regulatory oversight taken its toll more than in directory services. In a bygone era, telephone operators gave callers the time, weather and addresses along with phone numbers.

Today, Bell Atlantic has computerized and streamlined its 411 service so thoroughly that operators are expected to spend less than 25 seconds on each call.

And AT&T often won't give callers any number until they first press "1" or "2," depending on whether they want automatic dialing of the number for an additional $1.25.

Federal Communications Commission Chairman Reed E. Hundt argues that in a free market, consumer hassles will disappear as rivals try to outdo one another with superior customer service. "Every one of these nuisances is an invitation to a competitor," he says.