Business Notes Competition

Ever since the historic breakup of the Bell System in 1984, the seven local telephone companies known as the "Baby Bells" have been pleading for an end to regulations barring them from the information-services business. Last week a federal judge in Washington finally gave the companies the green light to use their phone lines to provide such services as electronic publishing, computer banking and home shopping. While the Baby Bells rejoiced, the ruling was immediately attacked by newspaper publishers, who fear the loss of classified advertising revenues to the phone companies, as well as information-service vendors, who are afraid of being squeezed out of the $9 billion-a-year market by their much bigger rivals. Consumer groups also voiced concerns about possibly higher phone rates, and appeals are expected.

Such fretting may be premature. So far, the computerized data business has been filled with a lot less profit than promise, largely because of consumer indifference. The growing list of disappointed entries includes ventures backed by Knight-Ridder, Times Mirror and Chemical Banking. Despite their advantage in size and expertise, say analysts, the newly freed Baby Bells could join the list.