American Telephone and Telegraph Co. Chairman Charles L. Brown denied today that he recommended in 1972 that company management "choke off" MCI Communications Corp.
Instead, Brown insisted he sought to encourage Bell System officials to respond to the new competition in the long distance telephone market.
Brown didn't dispute the accuracy of the notes of another AT&T official who quoted him as saying that AT&T should "choke off" competitors such as MCI but implied his comments had been misinterpreted.
Brown's testimony, before a near-capacity courtroom here, came during what appears to be the final week of testimony in MCI's $2.7 billion antitrust suit against AT&T, the telephone giant that Brown has headed since February 1979.
MCI is alleging that AT&T engaged in monopoly practices during the early 1970s in preventing MCI from gaining access to interconnections vital to the growth of MCI's business telephone services.
Notes from a 1972 AT&T management meeting in Key Largo, Fla., were presented to the jury in February. At the time of the meeting, Brown was president of Illinois Bell Telephone Co. Brown, according to the notes taken by an AT&T vice president, had urged Bell officials to "take account" of the prospect of interstate competition. A 1971 Federal Communications Commission decision had opened the industry, previously an AT&T monopoly, to competition.
Brown was quoted as saying that "large amounts" of AT&T revenues would be "vulnerable" to the new competitors in the market. According to the notes, Brown said the money could be retained by AT&P "if we choke off now."
That statement has become a major part of MCI's effort to prove that AT&T officials deliberately deined MCI access to vital interconnections necessary for the Washington-based firm to build its long distance business service.
But an hour and a quarter of testimony, Brown said he was expressing "frustration" with the failure of At&tY high-level management to file for adjusted rates in order to compete in the intercity market.
Brown said the competitors, like MCI, had found a "cream-skimming bonanza" in which they could sell their telepone service in profitable high-volume routes, leaving AT&T with the remaining, less profitable markets. AT&T officials repeatedly have insisted that they need rate relief from the averaging system under which those rates are set.
The AT&T chief executive said that at no time did he advocate Bell System efforts to put MCI efforts to put MCI out of business.
"I couldn't see management doing anything to de-average and I was upset," he said, referring to the key Largo statement.
Under rigorous questioning by MCI attorney Chester Kamin, Brown said that in 1973 he told Bell System officials that at some point before 1980 they would be forced to provide firms like MCI with a variety of specialized hookups to the AT&T nationwide system.
At a company presentation a year after the Kay Largo meeting, Brown said he already knew that the competitors would be developing a big business but at that time AT&T didn't have to provide those interconnections. Ultimately, FCC and court decisions force AT&T to provide those links.
AT&T attorneys say they have only two more witnesses to present before concluding their case. That testimony will be followed by an MCI rebuttal of several days, before closing arguments. Then the suit will go to the jury, probably during the first week of June.