American Telephone and Telegraph Co. Chairman Charles L. Brown today was sharply critical of efforts by the nation's newspaper industry to block AT&T's plans to enter the home data information market.

"I really don't think it helps very much for the American Newspaper Publishers Association to clothe its economic interests in First Amendment rhetoric," Brown said here. "The issue is advertising, competition for advertising and nothing else."

The publishers group has been fighting a legislative and regulatory battle against Bell System efforts to begin a test a few hundred miles from here in Austin of a system for delivering data via phone lines to home terminals. The Texas Daily Newspaper Association, aided by the national GROUP, HAS FORCED A RECONSIDERATION OF QUICK APPROVAL OF THE AT&T plan, charging that the test is an effort by AT&T to get into the news business for the first time.

"For our part, we have consistently made it plain that we have no desire to generate or control information content or the program materials that our facilities carry," Brown said.

"We have tried to make it clear that we have no intention of getting into the business of creating or controlling electronic information comparable to the news, the editorials, the features, found in newspapers. We'll leave that to the people who are best prepared to provide it -- the news and broadcast industries."

Brown's comments on the issue, made during a press conference here made during a press conference here before the company's annual stockholders meeting, signified his sharpest attack yet on the newspaper industry and indicated the company's determination to go ahead with the Austin trial. The Texas Public Utility Commission has scheduled hearing on July 6 to consider the AT&T petition, despite the state newspaper group's charge that the agency is "rushing to judgment."

In a wide-ranging press conference, Brown announced what he termed "flat" first-quarter AT&T profits of $1.59 billion ($2.05 a share) compared with $1.42 billion ($1.98) a year earlier.

Brown strongly warned that in order to meet the needs of system expansion, local telephone rates are likely to rise on a "gradual basis" despite a recent AT&T request to the Federal Communications Commission for a 16 percent increase in long-distance charges. "Local rates have nowhere else to go," he said.

Brown also renewed a company plea that the Justice Department drop its nearly-seven-year-old antitrust suit, which seeks to split up the firm, the world's largest company.

"The suit makes no more sense today than it did the day it was filed," Brown said. "Indeed, it makes less sense today. It makes less sense because most of the controversies that gave rise to it have long since been resolved by regulatory commissions and by the courts.

"Today improving America's lagging productivity and re-engineering its innovative capacities are urgent national priorities. What sense does it make, then, for the government to continue a course of actino aimed at breaking up a business that has far outperformed the economy in precisely those aspects of performance?" he asked.

Brown said no settlement talks are under way in any of the three major antitrust cases against AT&T -- the government's case, and private suits brought by MCI Communications Corp. and Litton Industries.

In remarks to stockholders, Brown said that "better than a setlement, of course, would be a withdrawal of the suit altogether." Brown's remark was greeted by loud applause from the 1398 stockholders attending the meeting.

Brown also renewed the company's efforts to encourage speedy congressional action on revising the 1934 Communications Act. Such a bill recently was introduced in Congress by a coalition of Senate Republicans.

Asked about a feature of that bill which for the first time proposes that AT&T set up a separate subsidiary to market information services, Brown said that "whether it be one subsidiary or five or seven," the structure is not as important as the "assurance" of the separation between regulated and unregulated AT&T businesses.