The Federal Communications Commission yesterday took a series of steps designed to dramatically increase competition in the $500-million-a-year international communications business.
The agency acted after learning that the four firms that now control the field are earning annual profits of as much as 60 percent of their investment in facilities.
To make the business more competitive -- and potentially reduce prices -- the FCC agreed to let American Telephone & Telegraph Co. and Western Union offer overseas ("non-voice" services similar to those already offered by other firms.
The decision means that AT&T will be allowed to offer its Dataphone service throughout the world and Western Union will be able to send telegrams and Telex messages outside the United States. Until now Western Union could only operate in the U.S., and AT&T was restricted to voice telephone service overseas.
AT&T and Western Union will be able to compete for international business with the existing companies in the field -- International Telephone and Telegraph, RCA Corp., TRT Telecommunications Corp. and Western Union International, a subsidiary of Xerox Corp. not connected to the domestic telegraph company.
"The easy and profitable life inside the cartel is over," said FCC Chairman Charles Ferris, who called the action a "significant step" toward deregulating communications.
"Essentially it opens up the international market to full competition," said Pic Wagner, a spokesman for AT&T, which had sought international data service authority for several years.
Yesterday's actions parallel earlier FCC decisions to allow other companies to compete with AT&T in the domestic market.
The FCC also took other actions that eased restrictions on the international communications firms and allowed them to offer new services.
The agency authorized the big four international communications firms to offer voice communications -- telephone -- service in addition to their written message -- telegram, Telex and facsimile transmission -- service.
The four also were authorized to offer their international services from 25 American cities and from satellite earth stations.
Until now, the companies could only accept messages at five "gateway" cities -- Washington, New York, Miami, New Orleans and San Francisco. That requirement forced customers to pay for domestic telephone or telegraph service to relay their messages to the gateway.
The FCC approved the series of actions unanimously after receiving a staff audit showing the four international communications companies are now making huge profits.
The pre-tax earnings range from 35 percent of the firms' investment in facilities to a high of 58 percent on Telex service, the report disclosed.
Telex service -- which sends messages directly to a customer's own terminal -- accounts for about $270 millio of the $500-million-a-year international communications business, the staff study said.