IN THE 1967 spoof-thriller movie "The President's Analyst" the villain (who kidnaps the president's shrink) turns out to be not the KGB or the CIA, but the most nefarious agency of all -- TPC. That stands, of course, for The Phone Company. The James Coburn-Godfrey Cambridge movie was released more than a decade before the courts broke up Ma Bell in favor of a brave new world of phone deregulation. But the gag produced knowing howls from appreciative movie audiences. Then as now, The Phone Company was the utility we loved to hate.
Policymakers just can't seem to get it right. Back then, AT&T's sin was that it used monopoly power to keep out competitors and to prohibit the attachment of handy new gadgets made by non-Bell suppliers, such as answering machines. It was accused of overcharging consumers so its stock could deliver richly for widows and orphans.
Are we any better off today? I'm not so sure.
At least The Phone Company of that era reliably delivered a dial tone, a literate directory-assistance operator, an installer or repairman, you didn't wait on hold forever, and you didn't need a degree in accounting to keep from getting ripped off in your phone bill.
The Phone Company was regulated, but regulatory politics of that era were fairly simple. AT&T was guaranteed a set rate of return, and it jousted with state public utilities commissions over how to calculate that rate. But thanks to the Bell System's huge investment in technology (subsidized by ratepayers), the cost of a phone call kept coming down and down.
Today, two decades after the break-up, The Phone Company is a hydra-headed monster, and regulation of the rules of fair competition is a hopeless mess. In principle, consumers benefit from a choice of competing phone companies, but we aren't any happier.
Cellphones do provide a measure of real competition, but they have their own technical problems. (One thing about old-fashioned phone service: It didn't keep cutting out on you.)
In the era of deregulation, MCI, briefly known as WorldCom, went bust in one of the most spectacular and corrupt bankruptcies ever. Along the way, WorldCom and the others, in an attempt to grab market share, overinvested so much money in excess capacity that today none of them can make a decent profit. Widow and orphan stockholders took a bath.
Each competitor is trying to recoup in time-tested ways - gouging consumers, overcharging each other, laying off workers, cutting wages and benefits, degrading service, and lobbying Congress for special treatment.
Now, MCI wants to reemerge from bankruptcy, with disguised taxpayer subsidies that its rivals, AT&T and Verizon, are resisting. The last thing they need is another competitor, least all one subsidized by writing off most of its debt.
AT&T and Verizon mounted a legal and public relations blitz accusing MCI of playing accounting games to cheat local phone companies out of access charges for routing long-distance calls. But MCI's competitors also play access-charge games.
When you think about it, the whole set-up is idiotic. If there were one, seamless phone company, no money would be wasted on gamesmanship over how much a local company charges a long distance company or the fair price when a local phone company leases lines to a prospective competitor.
We don't have deregulation. We have far more complex regulation, necessitated by competing (but necessarily interconnected) phone companies. We don't have meaningful competition either, because pricing is so (deliberately) complex. Mainly, we have is a whole new set of hassles that didn't exist when there was one regulated phone company.
Indeed, the hassles have become so universally irritating that Verizon, the first phone company to win regulatory approval to offer both local and long distance service, now advertises the stunning convenience of having just one phone company. Imagine that! (I currently use Verizon for both, but try getting a local operator to connect you to international directory assistance.)
I know, a single monopoly phone company might retard innovation, and it might gouge consumers. But the reality would be far more transparent than the mess we have today. And if regulators are arguably competent to figure out the fair price for AT&T to charge Verizon, and the fair way of scoring the MCI bankruptcy, they are more than competent to set fair rates.
So I kind of miss Ma Bell. Then again, in this era of George W. Bush and market madness, I even miss Ronald Reagan a little.
Robert Kuttner is co-editor of The American Prospect.
© Copyright 2003 Globe Newspaper Company.