American Telephone & Telegraph Co., in a potentially explosive move for the entire communications industry, yesterday asked a federal court to rule that a 1956 consent decree with the Justice Department does not bar the company from offering unregulated telecommunications services because of subsequent actions by the Federal Communications Commission.
In asking U.S. District Judge Vincent P. Biunno in New Jersey to review the decree, AT&T opened the possibility of an imminent court review of the recent FCC decision which expanded Bell's participation in new communications markets and deregulated key facets of the telephone equipment business.
But the Bell System, faced with an extraordinarily complex, $10 billion reorganization mandated by the FCC's landmark Computer II decision, said Biunno's interpretation of the 25-year-old decree is needed in light of Justice Department opposition to the thrust of the FCC decision.
The New Jersey filing also comes just one week after the collapse of negotiations aimed at settling the Justice Department's antitrust suit in which the government is seeking to break up the Bell System. Apparently, AT&T had hoped to resolve uncertainties in defining its mission under the decree in that settlement. The antitrust trial resumed yesterday.
"We held it [the court request] in abeyance while the negotiations were going on," said AT&T spokesman Pickard Wagner. "We simply can't wait any longer."
AT&T attorneys said last year that they were considering the judicial action in light of the FCC's decision, which was released in final form last Dec. 30, and reaction from Bell System competitors focused on the legal ramifications of the controversial FCC decision.
"I believe this confirms our contention that the FCC lacks the legal authority to interpret the 1956 consent decree," said A.G.W. Biddle, president of the Computer and Communications Industry Association, which represents many of the industry's leading firms. Biddle's trade group, in conjunction with other AT&T competitors, has petitioned a federal appeals court in an effort to block the Computer II decision.
Biddle said the group hopes Biunno notices that AT&T "still possess virtually unlimited market power" and is the target of the Justice Department suit.
"Instead, the FCC should further amend its recent computer rules, thus restricting AT&T to the provision of basic, regulated telephone service," Biddle added. "If they wish to enter new markets, let their shareholders do so through a wholly separate corporation or by investing in the proven companies out there today."
The 1956 consent decree, which ended an earlier government antitrust suit, bars AT&T from competing in unregulated telecommunications fields, leaving it to provide the basic telephone service that is its historic market role.
But the FCC, noting the dramatic changes which have added competition to key facets of the industry, voted to deregulate telephones on customers' premises and permit AT&T to offer so-called enhanced services such as data processing and other new methods of using the telephone network to transmit information. Those services, under the FCC proposal, could be offered only by a new and separate Bell System subsidiary.
Although the decision was endorsed by the National Telecommunications and Information Administration, the Department of Justice in a filing last year with the FCC, opposed the FCC's interpretation of the consent decree. That policy conflict is at the heart of yesterday's court petition.
Calling the restructuring of the company under the FCC decision "one of the largest corporate reorganizations in history," AT&T said the structural changes involve billions of dollars of assets and reassignment of some 100,000 Bell System employes -- about 10 percent of the company's massive work force.
"A prompt authoritative construction of the decree is required to eliminate the uncertainty as to the necessity of making these massive efforts," AT&T said.
In its filing, AT&T asked the court to hear arguments on the request on April 13 or shortly thereafter. That would give the Justice Department six weeks to respond.
The filing comes on the same day that the taking of testimony began in the current suit. The case had been delayed since January when the two sides told U.S. District Court Judge Harold Greene that they needed the postponement to continue settlement negotiations.
The trial, which was delayed immediately after the completion of opening arguments, was resumed in a deliberate atmosphere characterized by frequent disputes concerning evidence and tesitmony.
Those disputes came despite a complex series of pretrial talks in which Greene ordered the two sides to utilize a novel stipulation process in which the bulk of the case was outlined even before it came into the courtroom.
The first witness, Robert Feiner, president of Phonetele Inc., a California company that makes devices that help route telephone calls, told the court of a series of disputes between AT&T and two of its operating companies during the early 1970s.
Feiner, said his business suffered because of attachments to his equipment that the Bell System forced customers to utilize during that period.