The Federal Communications Commission, in a major policy decision, voted yesterday to restructure the telephone industry in an attempt to prevent the American Telephone & Telegraph Corp, from dominating the expanding field of computer telecommunications.
The decision compels AT&T to set up a separate, financially independent subsidiary by March 1982 to sell the full range of communications equipment, from the home telephone to the most advanced data terminals. The decision affects roughly $10 billion of AT&T's $110 billion in equipment and other assets.
The same requirement will govern General Telephone and Electronics Corp., a major AT&T competitor. GTE has already set up an equipment-marketing subsidiary.
By the March 1982 deadline, the two companies will have to either sell telephones and communications equipment to customers, or establish subsidiaries to deal directly with customers.
The commission policy, approved by a 5-2 vote yesterday after four years of study and debate, draws a sharp line between the basic telephone network providing local and long distance service, and the fast-changing field of telecommunications.
The FCC will continue to regulate basic telephone services provided by the Bell System and its competitors. But it is deregulating what it called "enhanced" communications services, which link computers in different locations, for example, or permit remote banking and information exchange.
While the commission majority was, ineffect, inviting AT&T and GTE to compete freely in the telecommunications field, it said it wanted to be sure that AT&T, did not use the huge financial strength provided by its telephone customers to dominate the market for "enhanced" telecommunications.
AT&T Vice Chairman James E. Olson said the company looks forward to competing in the deregulated terminal market and in data communicatins products and services as a consequence of the FCC action. But, he added, the decision raises serious organizational and legal questions.
"We are concerned about the all-too-brief two-year transition period imposed by today's action. We also are troubled by the degree of seperation the order places between the Bell operating companies on the one hand, and Bell Laboratories and Western Electric."
The split vote on the commission appeared to result from the insistence of the staff and chairman Charles D. Ferris on a clear, arms-length separation between the basic telephone services provided by AT&T and GTE, and the new subsidiaries they would have to establish to market telecommunications hardware.
"Deregulation will encourage even greater competition and innovation in telephone equipment," said Ferris.
No consumer, he added, "will be required to change his or her relationship with the local telephone company." Consumers may purchase their telephone equipment, or continue to be billed for its use. "It is our expectation that a customer's total bill for communications equipment and service will not increase," he said.
A federal-state regulatory committee will be formed to supervise the transition to the March 1982 deregulation of telephone terminal equipment.
The FCC decision may eliminate the need for a comprehensive rewriting of the Federal Communications Act, particularly regarding the role of AT&T, said Rep. Lionel Van Deerlin, (D-Calif.). Van Deerlin is chairman of a House communications subcommittee whose attempts at a revision have become stalled.
"The FCC has hit a home run with its new policy," said Van Deerlin. Calling the FCC decision the agency's most significant in a dozen years, Van Deerlin said, "With the commission moving in this direction, a complex bill . . . may not be necessary."
Philip L. Verveer, chief of the FCC common carrier bureau, who presented the staff proposal to the commision, said its aproval could ease concerns at the Justice Department over AT&T's role in the telecommunications equipment market.
It remains to be seen whether the courts will permit AT&T to form a subsidiary to enter the telecommunications equipment market, however. A 1956 consent decree between AT&T and the Justice Department bars the company from engaging in data processing services.
"Who's going to sue us? Everybody," asked Commissioner Robert E. Lee. "I think that's a fair assumption," Verveer replied.