The House communications subcommittee yesterday moved a step closer to passing legislation deregulating the telephone industry in actions that included a 10-to-3 vote to restructure the Bell System over a 10-year period.
But the subcommittee defeated two efforts designed to give the Federal Communications Commission most of the authority for the gradual deregulation by insisting that Congress must set these guidelines for the Bell System.
Rejecting arguments that last week's $1.8 billion decision against American Telephone & Telegraph Co. in the MCI Communications Corp. antitrust suit indicates that Congress should not move to free AT&T from strong regulatory oversight, the subcommittee set out to rewrite the mandate for both the FCC and the industry.
The action on the proposal by Rep. James Broyhill (R-N.C.) was attacked immediately by the Computer and Communications Industry Association, which has fought the deregulation effort since it began four years ago.
"The Bell System wants the opportunity to enter these markets without any of the risks associated with new ventures," said Stephanie Biddle, a spokesman for the association.
A spokesman for AT&T called the subcommittee's action "pleasing" and said the company will comment further once the bill is passed in final form by the subcommittee.
The bill would allow AT&T, by many standards the nation's largest company's to enter communications markets from which it had been barred in exchange for its historic monopoly in basic telephone service.
The subcommittee is scheduled to continue working on the deregulation legislation today.
The Broyhill amendment would require AT&T to set up separate subsidiaries for these new ventures over four transition periods beginning four years from enactment but would bar the FCC from altering the structure of the Broyhill plan.
Earlier in the day, Rep. Robert Matsui (D-Calif.), said the MCI case indicates the "realities of the situation," and said that the Washington-based telecommunications company "would probably have not survived" the six-year period since the suit was filed if had not been capitalized.
Rep. Edward Markey (D-Mass.) echoed that view, saying that the MCI decision suggests that Congress should insure that that an "800-pound gorilla doesn't completely obliterate the field." Markey was referring to AT&T's size in comparison to much of the industry.
Both Matsui and Markey introduced FCC-supported amendments to the communications bill that effectively would have given the commission the right to supervise many of the changes in the telephone industry's structure that are the crux of the legislative effort.
The Matsui proposal would have given the FCC the authority to restructure AT&T. That effort lost on a surprising 7-to-7 vote.
The legislation, initially proposed by Rep. Lionel Van Deerlin (D-Calif.), the panel's chairman, originally was passed by the subcommittee in January, but is under consideration again primarily to develop restrictions on AT&T.
Although there has been considerable subcommittee bickering about how to handle the moves, the introduction of the Broyhill amendment in May seemed to produce a consensus.
The Broyhill plan was adopted from a proposal put together by Carter inflation fighter Alfred Kahn and Henry Geller, head of the National Telecommunications and Information Administration.
Critics of the legislation such as Consumers Union, segments of the computer industry, some independent phone companies and AT&T competitors such as MCI say it could allow AT&T to run competitors out of the industry by freeing the company from regulation.
Opponents say the legislation could hamper the Justice Department's pending lawsuit to break up AT&T. In a letter yesterday, Sanford Litvack, head of Justice Department's Antitrust Division, said language in the bill will "preserve" the federal court's authority in the case, although Markey insisted that when the judge in the case reads the legislation, he could conclude that the government's case "is a violation of existing law."
Before the panel adjourned, however, Matsui won unanimously approval of an antitrust amendment that would bar courts and prosecutors from interpreting the law as altering either damage or relief claims resulting from government or private antitrust suits involving AT&T.