"You want choices. And Bell's got them . . . A great new way to shop the System."

Those are the words you will be reading soon in magazine advertisements or hearing in television commercials, part of a major new advertising campaign by American Telephone & Telegraph Co.

As part of it's long-time telepohone servise and equipment monopoly crumbles under the impact of government-mandated competition. AT&T is doubling its 1978 advertising budget to $22.5 millon.

A major part of the campaign will be promotion of Bell System equipment mamufactured by Western Electric Co. for use in homes and business. The Federal Commnunications Commission has opened up the telecommunications equipment market to all companies, provided the devices are registered with the regulatory agency.

And AT&T is gearing up to do battle with non-Bell System equipment makers through a nationwide chain of 1,100 retail stores called "Phone Centers," where customers may buy their own telephone devices.

[WORD ILLEGIBLE] Chesapeake & Potamac phone stores in the metropolitan area and 10 more planned in the next year of the stores - 2900 14th St. NW. in one of the city most depressed areas - was signed this week. and C&P hopes to be open for business there early next year.

But the new retail venture of AT&T and an expanded advertising campaign do not mean that the nation's largest private corporation suddenly has halted its drive in Wahington to put a stop to the new era of FCC-mandated competition.

To the contrary, officials of AT&T and other private telephone companies have been meeting regularly to draft legislative proposals on the subject.

There has been speculation in recent months that AT&T hatched one of the biggest lobbying failures in modern history promoting the Consumer Communications Reform Act. legislation supported by some 200 members of Congress at the end of 1976.

This so-called "Bell bill." for which support by members of the Senate and House has dwindled in recent months, would insulate existing telephone companies from some new competition.

Only by preserving some profitable business as monopoly ventures will AT&T and other telephone companies be able to keep high-cost residential rates down, the Bell System has argued.

In 1976, AT&T and smaller independent telephone companies (which share interstate revenues with the Bell System) spent some $2.5 million to support the legislation. Early this year, the same companies were spending more than $25,000 a quarter on a similar lobbying effort. Communications unions and some state regulators also have backed the bill.

But instead of gaining support for specific legislation, the telephone industry effort created a drive in Congress to look at all regulation of communications by the FCC.

James E. Olson, executive vice president of AT&T in charges of government and regulator matters, said in an interview that recent developments on Capitol Hill do not mean the proposed legislation is dead.

He conceded that there is only a "very remote" chance for passage of the legislation in its current form. However, the major issues raised by the industry "are very much alive" and "we got a dialogue going" Olson stated.

As part of the dialogue a telephone industry task force today will send to Congress a final set of recommendations on what should be included in new legislation.

"We want specific legislation or guidelines for the FCC," declared AT&T's Oslon.

In particular, Olson said he expects the task force recommendations will emphasize the industry's new that "averaging" of rates has served the U.S. well - providing low-profit, long-distance service to sparse areas. In effect, these services currently are priced to cover full costs and permitted levels of profits. Services over shorter distances are priced higher than neccessary to "average" the overall costs and provide telephone service universally to the population.

The question is how to accommodate in intercity markets and maintain access for all to the national telephone system, Oslon said.

To begin with, AT&T and the non-Bell telephone companies want Congress simply to reaffirm language in the Communications Act of 1934 that there should be a nationwide, high-quality, low-cost telecommunications service available to all.

If this is national policy, telephone industry representatives have stated, the FCC has been moving in the opposite direction by allegedly ignoring the economic consequences of new competition in equipment and services.

For example, said Olson, basic residental rate structure would have to be increased in the future if AT&T long-distance revenues decrease. Currently, the cost of a customer telephone message in heavy-volume markets such as New Chicago is below that of serving a small town in North Dakota. The lower costs possible by the huge number of calls between key markets.

Up to half of all business interstate telephone revenues from such services as wide area telecommunications services (WATS) over among the 32 largest metropolitan areas out of 17,700 U.S. telephone exchanges.

More than 85 percent of such business revenues come from the 144 largest metropolitan areas, and the largest 3,000 business customers generate 35 per cent of all business interstate revenues, with an average annual interstate billing of more than $600,000 per customer.

In addition, fewer than 10 percent of all residential customers generate half of all residential interstate long-distance revenues.

What telephone industry spokemen say these figures demostrate in the danger they face if key interstate voice telephone business is permitted to be won away by new interstate common carriers.

If Congress restates the 1934 atc to emphasize a goal of universal service, the telephone industry will interpret that as a mandate ti the FCC to prevent further competitive inroads.

This would translate into a requirment that companies seeking new intercity services must meet certain "public interest standards," providing evidence that higher home telephone rates won't result.

In addition, the industry wants the FCC to require that the "primary" telephone instrument for each customer - at least one telephone for each line - be provided by the local telephone company.

With all these proposals, ATOT and the smaller telephone companies are offering Congress difficult decision, one most members of the House and Senate would like to avoid.

If home telephone rates are to be favored in the future as they have favored in the past, the industry is claiming that Congress must do something soon.

Edwin E. Spievack, a lawyer for the North American Telephone Association, has been running a close checking weekly on congressional support for the Bell legislation or some bill with similar provisions.

NATA represents manufactures and sellers of telephone equipment that complete with AT&T's western Electric subsidiary.

Spievack said recently that if a floor vote was forced in the House on the industry's bill, the margin would be about 5 or 6 votes, with the outcome in doubt.

"They have not stopped picking up support," said Spievack of the telephone industry, which he described as "well entrenched in local communities."

He added that one stategy AT&T and its associates may follow is to get Congress to vote for legislation that reads like an endorsement of free enterprise competition, but which establishes state regulatory agencies, and not the FCC, in the role of final decision-maker.

This would be tantamount to halting competition against existing telephone companies in many states, where regulators for favor the status quo and where political pressures emphasize a desire to keep residental rates low.

John Eger, who headed the Ford administration's White House Office of Telecommunications Policy for two years, said recently that AT&-T indeed is presenting this country with a dilemma because too many Americans in and out of Congress "are ready to believe" AT&T chairman John D. de-Butts when he says competition won't work in the telephone business.

From its inception, AT&-T has been buffered from the reality of the marketplace "for valid reasons, "Eger said. Without the monopoly given AT&-T for switched telephone service, "The system as we know it could never have grown to give us, as it has, the finest telephone service in the world." he added.

And today AT&-T is "our greatest national resources" in an era of exploding information technology, Eger continued. But, sadly in his view, this national resource is focusing financial and intellectual power to prevent competition in "apart of its business that fails to produce a proportionate share of profit and eats up potential reserves."

AT&-T's leadership should move in another direction, building a marriage of the existing telephone network with the computer, said Eger. "AT&-T must stay ahead . . . It is more important to this information society . . . for AT&-T to do exteremely well in research and development . . . without monopoly protection, in open, uninhibited competition," to keep U.S. in a position of technology leadership, he concluded.