Top American Telephone & Telegraph Co. officials, at a 1972 executives meeting, discussed ways to prevent MCI Commumications Corp. from gaining a market foothold, according to documents introduced today at MCI's landmark, civil anti-trust suit against the Bell System.
Notes from that meeting indicate that current AT&T chairman Charles Brown, then chairman of Illinois Bell Telephone Co., was quoted as saying: b"Large amounts of revenues vulnerable which we can preserve if we choke off now. I think you have to hit the nails on the head."
Another AT&T official, Thomas Nornberg, then president of Northwestern Bell, is quoted in even more dramatic language. "I would meet 'em or beat 'em," Nornberg reportedly said. "You bastards are not going to take away my business."
Introduction of the transcript, turned up during MCI discovery proceedings, came during the third week of the case, which revolves around MCI allegations of AT&T monopoly practices. During the early 1970s, AT&T prevented MCI, the Washington based telecommunications firm charges, from gaining access to interconnections vital to the growth of MCI's business telephone services.
A jury here is considering the case in which MCI is asking for $2.7 billion in damages.
Bell System attorneys sought to block introduction of the notes, which were taken as informal minutes of a 1972 AT&T executives meeting at Key Largo, Florida. But U.S. District Court Judge John F. Grady permitted their presentation to the jury.
But Grady barred introduction of a controversial letter written by Alfred Kahn, then an economic advisor to AT&T and now President Carter's chief inflation fighter. According to discussions between the attorneys for both sides, the letter purportedly recommends against Bell's adoption of a pricing policy that is central to the MCI allegations.
An AT&T lawyer, George Saunders, told the judge that if the letter were introduced it would appear to the jury that Kahn and another economist, William Baumol could be considered "co-conspirator" in the case. Saunders said introduction of the letter might "create a public brouhaha with respect to the president's chief economic adviser."
Further, Saunders charged that introduction of the letter might be used by MCI to discredit the Carter administration at a time when the administration is considering the possibility of supporting communications legislation currently before Congress. MCI is opposed to a bill currently before the House Commerce committee which revamps the communications regulatory apparatus.
If MCI lawyers "are permitted to stick in a snippet of a letter" and accuse Kahn of "being a conspirator with us, one of the effects, if not the purposes of that will be to create some sort of publicity in -- and Washington papers are here because they were invited by MCI -- some sort of publicity to embarrass the administration for purposes of the legislation," Saunders charged.
Grady said he would allow the letter to be introduced "if there is any further insinuation that Mr. Kahn put his stamp of approval on anything that is in contest in this case and that is covered by this document."
According to the lawyers' discussion, Kahn suggested that a Bell policy to undercut MCI business telephone rates in the Chicago-to-St. Louis market could bring AT&T legal problems. Instead, Kahn reportedly suggested a more "subtle" approach to the competition question, which came to light after a Federal Communications Commission decision in 1971 opened the telecommunications market to expanded competition.
Kahn, who was for several years part of a three member AT&T economic advisory team, is not expected to testify in the case. "Kahn is just too busy to come out here," Saunders told Grady in the judge's chambers on Friday.
The 1972 time period, when AT&T held the meeting and Kahn reportedly wrote the advisory letter, is important to the case because MCI's suit revolves around AT&T practices during that period, particularly in the Chicago-to-St. Louis corridor, which apparently is the subject of Kahn's letter.