A letter apparently sent by MCI Communications Corp. to the Federal Communications Commission in 1973, and introduced today as evidence by American Telephone and Telegraph Co. in the $900 million antitrust suit against the Bell System, indicates that MCI, at that time, was not concerned by AT&T's interconnection rates.
The letter, from MCI chairman William McGowan to Bernard Strassburg, chief of the FCC's Common Carrier Bureau, includes numerous examples of AT&T's refusal to provide local hookups for MCI customers, but denies that pricing problems are part of the complaint.
"I am not raising questions of either the fair price of service or the technical details of accomplishing interconnection to date -- these have not really been problems," McGowan wrote in the Sept. 27, 1973 letter.
The letter, entered into evidence during the second day of McGowan's rigorous cross-examination by George Saunders, an AT&T lawyer, is particularly significant because a major part of MCI's antitrust suit against Bell is based on the claim that AT&T set up unfair pricing practices during the early 1970's.
Those rates, which MCI claims were twice as high as those AT&T offered Western Union, another Bell customer, involve local interconnections between buyers of MCI's business telephone services. Those connections and Bell's alleged failure to provide reasonable rates for the hookups are the basis for the suit.
McGowan, who remained unflappable during Saunder's questioning, had reiterated his claims before the jury until the letter was brought up. McGowan said that all MCI wanted were the hookups and "a fair price for what they were providing us."
Saunders repeatedly asked McGowan Why MCI, the Washington-based telecommunications firm, did not formally petition the FCC in order to get a commission ruling on Bell's refusal to contract for the local services.
In 1971, the FCC unanimously agreed to allow new forms of competition in the "specialized common carrier" business, a decision that MCI has argued, with the support of a U.S. appeals court affirmation of the decision, entitled it to contract for those hookups.
Pressed by Saunders, McGowan insisted today that he had hoped in 1973 that Bell would contract for those services without a lengthy regulatory or court confrontation. "I didn't need to get into any court fight . . . any regulatory arena," he said. "I wanted to go into business."
Saunders introduced a series of memos later in the day outlining MCI's precarious financial condition during the 1972-73 period. In addition, one document said that MCI had a backlog of 600 pending orders it could not fill.
Saunders also cited a 1972 prospectus published by MCI which said the company could build a 65-city communications network for $80 million, which McGowan defended as accurate at the time. Eventually, MCI was able to build a 34-city network for $50 million, McGowan said.
The AT&T lawyer repeatedly challenged the reasons for the financial problems of MCI during those years, suggesting that the filing of this law suit in March 1974 can be attributed to MCI's precarious financial condition.
But McGowan did not budget from MCI's contention that the company's financial difficulties then and the filing of the suit were directly a result of Bell's failure to provide the interconnections.
McGowan said that "after what Bell did to us," company financial projections had to be revised.