A historic consensus within the telephone industry on the rewriting of the nation's telecommunication's laws evaporated yesterday as General Telephone & Electronics Corp., second only to American Telephone & Telephone Co., firmly opposed legislation now before a Senate committee.
GTE Chairman Theodore F. Brophy said he opposes the foundation of the legislation -- the proposed restructuring of AT&T.
Warning that a new AT&T subsidiary would control 80 percent of the customer-premises equipment market, Brophy said the new enterprise could overwhelm competitors.
"The provisions for a fully separated affiliate presently set out in the bill won't solve the problem," Brophy said in prepared testimony. The proposed structural plan, Brophy said, "will not permit the growth of fair and open competition, which is an objective of the bill."
The Brophy remarks followed testimony by AT&T Chairman Charles Brown, in which Brown insisted that legislation is necessary to clarify the industry's future. "Its passage would make it plain that Congress means what the bill says, namely that it's for competition -- real competition -- and not for a mishmash of protectionist causes that seek to define who may complete and who may not," Brown said.
Much of Brown's testimony before the committee was devoted to repeated questioning from Sen. Robert Packwood (R-Ore.), Commerce Committee chairman and a sponsor of the legislation now being considered, on opposition of the American Newspaper Publishers Association to the bill. The ANPA has been arguing that the legislation would permit AT&T unfairly to enter new markets, such as home advertising and information services.
Brown, in prepared testimony, restated the AT&T position that the company does "not seek to publish newspapers, enter into the news business or engage in radio or TV programming." But Brown also said that a provision of the legislation ordering AT&T to set up a separate company to distribute existing information services, such as time, sports and weather, "is a severe handicap" and unfair since similar restrictions do not apply to cable television companies.
Pressed by Packwood about whether he could support a blanket restriction on AT&T originating any information, Brown tentatively concurred. "Off the top of my head, I don't think we have any objections to that," he said. "But I may write you a six-page letter tomorrow."
In addition to the information subsidiary provision, Brown also criticized a section of the bill that would permit the Federal Communications Commission to monitor the lines between the regulated and unregulated AT&T businesses, particularly a proposal that would let the FCC evalutate possible AT&T "anticompetivive practices."
International Business Machines Corp. endorsed Brown's call for quick legislative action to simplify the regulatory and judicial logjam which the legislation's proponents say is slowing the industry's growth.
While GTE was making its break with the industry, Paul Henson, chairman of United Telecommunications Inc. warmly endorsed the bill, asserting that the legislation would allow his company, the second-largest independent telephone company in the nation, "to become a more effective competitor" in new communications markets.