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APA carries its own banner.

Role in AG-Bell Rate Case Puts Press Group in Limelight

WHEN THE ARKANSAS Press Association entered the tussle over rates between Southwestern Bell Telephone Co. and the state attorney general's office, many casual observers found it curious.

Why would a press association, a trade group comprised of the state's newspapers, be concerned with alleged over-earnings by Southwestern Bell?

Some observers, most notably Southwestern Bell sympathizers, have seen a conspiracy theory. The most prominent theory has painted the alliance in a political light, pointing out that Milton Scott, Attorney General Winston Bryant's former campaign director and APA's lobbyist, has had his fingers firmly entrenched in the Southwestern Bell issue.

Scott has heard the allegation.

"As far as that being related to |APA's intervention in the rate review case~, you can draw something, but there's really nothing there," Scott says.

Promoters of that theory perhaps assign even greater influence to Scott than he wields. Scott and APA Executive Director Dennis Schick say neither of them single-handedly led APA into the feud between Southwestern Bell and the attorney general.

In late July, the APA's 10-member board of directors voted unanimously to enter the case after hearing presentations from representatives of the attorney general's office and from Mike Flynn, president of the Arkansas division of Southwestern Bell.

The APA's short-lived involvement in the case also suggests that the group was more interested in its own agenda than in bolstering Bryant's position. Schick emphasizes that the argument over whether Southwestern Bell has over-earnings that should be returned to ratepayers has, all along, been the attorney general's issue.

"That really wasn't our fight from the beginning," he says.

Instead, he says, the APA's concern was whether Southwestern Bell would channel any over-earnings into a fiber-optic network that would have the phone utility sitting pretty if it chose to enter the electronic publishing field. The APA contended that allowing this scenario to unfold would be an unfair competitive advantage.

"I have to admit that I've been a little disappointed when it's characterized that we entered the case in support of the attorney general's office and to take up the banner he had, which was not the case at all," Schick says.

"The implication always is that we didn't stay true to our mission or that we didn't get what we went in for or that we were getting what we could get and getting out, and none of that is true. We went in for a completely different reason."

Left in the Lurch?

Shirley Guntharp, deputy attorney general and the lead attorney on the Southwestern Bell case, says she wasn't surprised by the APA's withdrawal from the case, knowing that its interests differed from the attorney general's. She notes, however, that the APA didn't agree that Southwestern Bell's plan was in the public interest.

However, Lawrence Graves, a spokesman for the attorney general, says he was surprised by the APA's action.

"We, of course, were elated to have them on board and, frankly, surprised to see them leave," he says. "I thought once they made that commitment, they would hang in there."

Bryant is opposing an agreement between Southwestern Bell and the Public Service Commission staff that would allow the phone company to invest surplus earnings in infrastructure improvement. A hearing before commission members, who will rule on the matter, recently concluded and a decision likely will come down by year's end.

Schick notes that though the trade organization's interest in the case might seem novel to some, press associations around the country are carefully monitoring (and challenging in other states) efforts by telephone utilities to pave an entrance into the electronic publishing business by erecting fiber-optic networks.

Although the APA, in name, represents only print journalism interests, the group has a vital interest in whether Southwestern Bell uses surplus revenues to set up fiber-optic networks.

The APA's membership leans heavily toward publishers of small-town newspapers who have seen the future -- and it doesn't look like newspapers as we know them. It looks more like a personal computer that scrolls reams of information at the touch of a fingertip. And when that future materializes, the APA has made it clear that it doesn't want to be out of the game before it commences.

"It wasn't so much a matter that we were concerned with having competition, but we wanted to make sure that those government-granted monopolies were not permitted to use that monopoly power to compete with us as free-enterprise businesses," Schick says.

Although Southwestern Bell has said all along that it doesn't have any plans to get into electronic publishing, the APA wasn't satisfied with lip service.

"We believe what they say, but that isn't quite good enough for protecting your members down the line somewhere," Schick says.

Coming to Terms

The APA asked to be excused from the Southwestern Bell case Sept. 20 after an agreement was reached that an independent subsidiary would be established if the company decided to enter electronic publishing before 1997. Modeled after a similar agreement in New Jersey, it would seem to give newspaper publishers or other interested parties a head start in entering the field.

Although APA representatives say they're happy with the agreement and came away with what they wanted, Flynn suggests it wasn't necessary for APA to enter the case to get the agreement. He calls the situation "sort of a no-brainer."

"I think they came to the conclusion that there was nothing to be resolved," Flynn says.

He says he sees Southwestern Bell's future role as a deliverer of information services, rather than a purveyor of content.

"We ought to be a partner and not an enemy," Flynn says.

"We feel that the steps we took were proper, and we're satisfied with the outcome at this point," says Ron Kemp, APA president and publisher of KMB Publishers Inc., which publishes papers in Rector, Piggott and Manila.

He says the APA's main goal was "to be a player in the game," an objective that appears to have been met.

Schick says the group thought it was important to put its money where its mouth was by committing financial resources to the cause. He says the APA's involvement in the case could cost between $25,000-$35,000, which he acknowledges is a big expense for the group. In fact, the APA has asked members to contribute to a legal defense fund to help cover costs.

Both APA and attorney general representatives are quick to point out that, when it comes to financial resources, they're fighting an uphill battle against Southwestern Bell, which will probably end up spending about $40,000 on raising public awareness about the case, according to a company spokesman. It's an expense the company says will be borne by shareholders.

With such time and money commitments involved, each party obviously believes it has critical issues at stake. Whether the APA's role will, in retrospect, be viewed as tilting at windmills or a prescient move to secure its future may be determined by tomorrow's technology.

Terms of Agreement Between SW Bell, Press Association

The following are some of the highlights of the agreement between the Arkansas Press Association and Southwestern Bell Telephone Co. that led the APA to withdraw from the rate review case between the phone company and state Attorney General Winston Bryant:

* Through the end of 1996, Southwestern Bell Telephone Co. cannot engage in electronic publishing except through an independent corporate affiliate.

* No cross-subsidization in any form would be allowed. No officers, property, functions or facilities can be shared with the subsidiary that would engage in electronic publishing.

* Any transaction between Southwestern Bell and any corporate affiliate that engages in electronic publishing cannot be based on preference or discrimination and is to be carried out at arm's length.

* Southwestern Bell's facilities necessary to transmit electronic publishing will be made available to all entities, whether affiliated with Southwestern Bell or not, on reasonable request and on the same terms and conditions.
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Title Annotation:Arkansas Press Association settles rates dispute with Southwestern Bell Telephone Co.
Author:Walters, Dixie
Publication:Arkansas Business
Date:Oct 4, 1993
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