The American Telephone & Telegraph Co. yesterday called the government's antitrust suit against it "baseless," and said the charges "reveal a total misunderstanding of the history of the telecommunications industry."

In a 452-page "statement of contentions and proofs" filed in U.S. District Court here as part of the four-year-old suit, the communications giant replied to a government statement of charges filed two months ago.

In early November, the Justice Department filed a 628-page document to support its case to break up the huge company, indicating that it may try to divide AT&T into even more parts than it originally contemplated in order to restore true competition to the telecommunications industry.

The Justice filing contended, for example, that the divestiture by AT&T of Western Electric Co., its manufacturing subsidiary, may not be enough to spur competition in the manufacture of telecommunications equipment because the divested company would start with "such a large market share."

Consequently, the government said it might request that Western itself be split into more than one entity.

But in yesterday's response, the Bell System attacked the Justice Department's argument as much too broad and said the government is wasting its money by making sweeping charges. It said the government case should be limited to specifics.

"Specifically, the government has largely ignored the technological forces that determined the structure of the Bell System, the regulatory statutes and policies that governed the operations of the System both before and after 1968, the effect of those statutes and policies upon the System, and the nature of the controversies that commenced in 1968 out of which the charges in this case arose," AT&T said.

Harold S. Levy, AT&T general solicitor, said the case could be resolved expeditiously if the government "is prepared to agree to these well-documented technological and economic facts, and will restrict its evidence to the narrow range of truly disputed issues."

For its part, however, the Justice Department has sought certain court rulings to speed the trial process, some of which AT&T have fought in court.

"The government entirely overlooks the consequences of procompetition events which have occurred in the industry during the past 10 years as the FCC has fostered the successful entry of hundreds of new market participants, thereby continuously decreasing the market share of general service carriers like Bell," the Bell statement said.

Bell denied government charges that the company controls entry and prices in the market, asserting that, "Under the regulatory statutes applicable here, the Bell System cannot be held to have control over entry or prices in any market as a matter of law."

Pointing out that some of the largest companies in the country, including IBM and Xerox, plan to enter the industry, AT&T said that "it also is apparent that defendants (AT&T) do not have, and have not exercised, control over either entry or pricing as a matter of fact."