Business Notes REGULATION

Telephone companies look with envy at the cable-television business. But they are barred from offering cable service because regulators have feared that the phone companies' financial clout and network of lines would give them an unfair advantage over independent operators who had to install their own wiring. Now that cable companies have run wires past 80% of U.S. homes, the phone companies argue that the prohibition is unnecessary. Last week the Federal Communications Commission proposed lifting the restrictions that bar local telephone companies from offering cable service in their areas. The FCC will invite public comment on its plan before drafting a final proposal, and beyond that, any loosening would require a change by Congress in its own statutory bar. Moreover, the U.S. District Court in Washington would have to modify a separate consent decree that governs the activities of the regional phone companies created by the breakup of AT&T.

If phone companies are allowed to enter the cable business, they are expected to try to entice consumers to order such high-tech services as video telephones, home shopping and a video-on-demand service that would allow customers to select and receive movies and other programs by phone.

Cable companies, which oppose the FCC proposal, argue that phone users would be forced to subsidize the multibillion-dollar cost of installing wires able to carry both voice and video signals. The possible result: higher phone bills.