American Telephone & Telegraph Co. chairman John D. deButts yesterday urged an immediate prohibition against additional competition in private-line communications services or telephone equipment.
Such a ban should be established while Congress considers the nation's future policy regarding telecommunications competition deButts told a Senate subcommittee.
Without such action in the near future, policies adopted by the Federal Communications Commission in recent years will continue to be implemented with an increasingly adverse impact on residential telephone service, he warned.
"The consequences of inaction are grave," he said somberly as the Senate Commerce Subcommittee on Communications opened oversight hearings on domestic communications policies.
DeButts revealed that he has begun to tell his colleagues that, "as a consequence of piecemeal regulatory decisions . . . our obligation to our shareowners might give us no choice but to set a different course for ourselves."
Specifically, deButts said AT&T would have to reduce long-distance rates to meet increased competition from companies that go after large-volume business users of communications services - firms that don't have the same requirement as AT&T to serve uprofitable rural and residential telephones.
That means, too, that in every state jurisdiction, we will have to file for further increased rates of basic . . . service" because revenues from long-distance calls subsidize local service by $3 billion a year, deButts told the subcommittee.
However, Federal COmmunications Commission Chairman Richard E. Wiley took issue with AT&T statements that all residential services are unprofitable and that higher business rates effectively subsidize local service.
"We see no evidence that business users are subsidizing residential service. The exact reverse may be true," Wiley said, in response to a question by Sen. Robert P. Griffin (R-Mich.).
In some cases, higher residential rates may be subsidizing specialized services of the phone company, Wiley contended.
Another FCC official, Common Carrier Bureau chief Walter Hinchman, said AT&T has "not been able to demonstrate that they know what the costs are" related to various types of service.
This situation has resulted primarlly from the traditional way in which AT&T has operated for a century - without competition, by averaging costs so that some customers are provided service at a cheaper rate than actual costs.
Until recent years, deButts and the FCC officials noted, AT&T has not kept data on every specific cost. AT&T is switching to a different method of accounting that will deal with such items but it will take years to implement nationwide, deButts said.
In response to the deButts plea on a halt to additional competition (the AT&T chief said existing competition is here to stay), Sen. John C. Danforth (R-Mo.) said AT&T has "the burden of proof" in convincing Congress that residential rates now are subsidized.
After deButts noted that such information never before was required, the new senator from Missouri said: "Show me!"