Attorneys for American Telephone & Telegraph Co. today tried to demonstrate in federal court here that the staff of the Federal Communications Commission was deeply divided over the legal interpretation of a landmark FCC decision in 1971 that opened the telephone industry to competition.
In testimony presented during the final days of MCI Communication Corp.'s $2.7 billion antitrust suit against it, the Bell System introduced a December 1973 memo from Walter Hinchman, then the FCC's chief of plans and policy, saying the 1971 FCC ruling "remains essentially silent as to the obligation" of companies such as AT&T to offer services that MCI now claims it then was entitled to.
The memo by Hinchman, who later became chief of the FCC's Common Carrier Bureau -- the office that handles telephone regulation -- contradicts an Oct. 19, 1973, letter by Bernard Strassburg, Hinchman's predecessor as bureau head.
Strassburg's letter, introduced earlier in the case, was sent to AT&T had to give firms such as MCI hookups to specialized telephone services.
During testimony earler this week, Strassburg had defended the letter and said he still believes that AT&T had to provide MCI with the switching services after the initial decision was issued.
The Hinchman memo was introduced today during the testimony of John Pettit, who was the FCC's general counsel in 1973 when the controversy about AT&T's obligations was particulary intense.
The issue is significant because a major MCI allegation in the lawsuit is that AT&T stymied the Washington-based company's growth by failing to grant it the hookups it said it needed to build its then-fledging business telephone service.
Pettit said it was "inappropriate" for Strassburg to have sent the Oct 19, 1973, letter and said the letter was in conflict with other FCC readings of the 1971 decision. The Hinchman memo is an indication of a slit among top level FCC staff members about the so-called specialized common carrier decision. Pettit is now a private attorney who has done some work for AT&T.
"The language of the specialized-carrier decision is vague as to what constitutes the specialized private-line services which are its subject," Hinchman wrote on Dec. 5, 1973. p
Hinchman also wrote the order could be interpreted to mean that companies such as MCI were authorized only to offer conventional telephone services and not the intricate foreign exchange (FX) and common control switching arrangement (CSSA) hookups that MCI claims AT&T was ordered to provide.
"On the other hand, no such distinction among the various types switched and nonswitched private-line services was made in the ordering clauses, leaving open the possibility of interpreting it to encompass all private-line service," he wrote.
"This ambiguity is at the heart of the current controversy before the commission and the courts as to whether AT&T must interconnect with MCI so that the latter may offer foreign-exchange and common-control-switching-arrangement private-line services in competition with Bell," Hinchman wrote.
The decision "authorized these carriers to obtain such services from the established carriers, but remains essentially silent as to the obligation of estalbished carriers to actually offer the requisite services," Hinchman wrote. "This strange situtation is also a point of contention in recent filings by AT&T."
In April 1974, the FCC ruled that AT&T had to provide these services.
Federal courts already had given MCI the right to interconnect with Bell System lines for basic business telephone service.
The MCI suit, which was filed in 1974, covers 1971 to 1974 and charges AT&T, by same standards the nation's largest company, with a variety of violations of federal antitrust law.
Pettit testified during AT&T's response to a final MCI rebuttal. MCI finished its rebuttal phase of the case earlier today.
After presentation of evidence on an AT&T multi-million-dollar counter-claim, closing arguments in the case are scheduled to begin Monday before the suit goes to the jury later next week.