John D. deButts will retire next Feb. 1 as board chairman and chief executive officer of American Telephone & Telegraph Co., the giant telecommunications firm said in a surprise announcement yesterday.

The 63-year old outgoing chairman, who began a 42-year Bell System career with Chesapeake & Potomac Telephone Co. in Richmond, said he decided to retire about 14 months early to spend more time with his wife and family.

There was immediate speculation in Washington that deButts may be placing himself in position for a high governmetn post by President Carter, since the AT&T chief has been one of the business leaders consulted most often by the administration.

But deButts, currently chairman of the Business Council and a key figure in the Business Roundtable told reporters yesterday that he does not "expect to undertake any full time assignments."

The retiring AT&T chief will be moving to metropolitan Washington, however. After looking at several country properties in the area, deButts picked a Northern Virginia site "in the land of my forebears - Upperville," where he will build a new home.

At AT&T, the largest private enterprise organization in the world and source of most American telephone services, deButts will be succeeded by Charles L. Brown, a 57-years old native of Richmond who has been president of the firm since last year.

Although there have been reports of some disagreements inside AT&T on the combative prosture of deButts in challenging federal government regulatory policies and potential business competitors, all information available yesterday indicated that the decision to retire early was made by deButts with no pressure from others or internal conflict.

"Actually, I have been discussing my desire to retire a little early with our board of directors . . . for almost a year," deButts said.

The AT&T chief, who nominated Brown to be his successor at a board meeting yesterday, said the telephone company is "strong financially, strong in service quality, strong organizationally, strong technologially and especially strong in its management capability."

Generally, Wall Street analysts and other telecommunications industry experts agree that AT&T today is a much stronger company than the one over which deButts assumed control in 1972. He has started AT&T and its regional operating subsidiaries, such as C&p in this area, on a new course of marketing services to meet more individualized customer needs.

Although this change may have appeared to be inevitable in the face of Federal Communications Commission policies, favouring competition for AT&T in selling telephone services and equipment to larger users, it amounts to a revoluntary change in Bell System concepts of universal service and shared costs.

One industry analyst, Steven Chrust at Sanford Bernstein & Co., of New York, said deButts will be leaving AT&T "right at the top." The telephone giant will report record profits for 1978 but Chrust predicts a slow-down in growth during 1979 and 1980. The analyst also forecast that deButts could announce another dividend rate increase as he leaves next February, possibly to $5 a share from the current $4.60.

Robert LaBlanc, telecommunications analyst at Salomon Brothers, said yesterday's announcement was "a little surprising and also not surprising. DeButts has always been a vigorous individual. His early retirement probably signals that he's going to be moving into government service."

LaBlanc asserted that deButts managed to improve profits steadily, while holding actual price increase to one-half the consumer price index rise, and noted that AT&T was the first major firm to put a hold on executive wage boosts and Western Electric equipment prices, in response to the initial phase of the administration's anti-inflation program.

"My speculation has been that Robert Strauss has been looking for a good public figure, particularly someone strong with business, to take over the job as chief inflation fighter," LaBlanc said. There also were suggestions that deButts could be a future Treasury Secretary, if W. Michael Blumenthal steps down from that post.

Asked about these suggestions yesterday, deButts said: "I'm not considering such a position and I haven't been asked, but I'm really not looking for a full time job."

deButts also told The Washington Post that while business and labor have to cooperate in a drive to halt inflationary trends in the economy, the main problem is the government itself.

"Business must hold down costs and improve productivity . . . labor has to hold down demands but mostly government must have better controls over regulations and spending," he said. He offered praise of President Carter for enactment of civil service reform which deButts called "a big step in the right direction." [WORD ILLEGIBLE] for add 5

The decision of deButts yesterday led to a through realignment of AT&T's stop management after Feb. 1, when Brown takes over as chairman and chief executive. Other executive promotions included :

William Ellinghaus, a 56-year-old native of Baltimore, will succeed Brown as president and chief operation officer. Vice chairman and a director of AT&T since 1976. Ellinghaus began his Bell System career as a craftsman for C&P of Maryland in 1940.

James Olson, 52, currently an AT&T executive vice president and formerly president of Illinois Bell, will become vice chairman and a director to succeed Ellinghaus.

William S. Cashel, 58, continues as vice chairman and chief financial officer and will assume chairmanship of AT&T's planning council, a seniro executive group that reviews business strategy.