The Reagan administration insisted yesterday that the antitrust suit against American Telephone & Telegraph Co. was blocking adoption of a new communications act despite assurances from House and Senate leaders that they do not intend to block the bill.
Commerce Secretary Malcolm Baldrige told the Senate Judiciary Committee that it is "almost impossible for an updated modern act in telecommunications policy to get through the Senate and House" with the antitrust suit "hanging over their heads."
Last week, Reps. Timothy Wirth (D-Colo.), chairman of the House telecommunications subcommittee, and Peter Rodino (D-N.J.), chairman of the Judiciary Committee, each asserted that they do not intend to let the pending antitrust suit impair a rewite of the 1934 Communications Act.
Judiciary Committee Chairman Strom Thurmond (R-S.C.) gave reporters similar assurances after yesterday's hearing and said he did not expect to press for referral of the bill to this committee.
Thurmond called the hearing to assess a Justice Department request last week that the case be delayed for close to a year so that Congress could move forward with its consideration of legislation. U.S. District Judge Harold Greene rejected the request.
The assistant attorney general for antitrust, William Baxter, told Greene last week that the Justice Department would "discontinue" the litigation, which seeks to split the giant phone company into separate units, if amended communications legislation is passed by Congress.
But Baster and Baldrige said the rejection of the administration's request to delay the case leaves their plans with respect to the suit in limbo. Baldrige said it would be "inappropriate for me to speculate on what the administration's position would be if Congress did not pass the Telecommunications Act this session."
Meanwhile, the case continued yesterday, with Greene raising questions about a report from the Defense Department introduced this week by AT&T. The report states that the divestiture of AT&T would have a "lethal long-term effect" on the national communications network.
But because the report states that it was prepared with advice from AT&T, as well as AT&T competitors, Greene said he will hold a hearing soon to determine the value of the controversial report as evidence in the case and "the extent to which AT&T personnel cooperated in its production." An AT&T lawyer told Greene that "AT&T personnel had nothing whatever to do with the writing" of the paper.
Responding to a question from Thurmond, Baxter confirmed an internal administration report that AT&T lawyers had agreed to settle the case last year by divesting a portion of the company's Western Electric Co. subsidiary. Although Baxter rejected that plan, negotiated by the Carter administration, he stated that the proposed settlement "called for spinning off some pretty-good-sized pieces" of Western Electric.
AT&T Chairman Charles Brown, responding to the conclusions of that report, said last week that the company "never intends" to divest Western Electric and took issue with the administration's characterizations of the terms of the earlier negotiations.
Baxter continued to raise questions about the wisdom of legislation passed by a 16-to-1 vote by the Senate Commerce Committee that permits AT&T to enter new markets through a separate subsidiary, even though his efforts to alter administration support for the bill have resulted only in plans to seek support for two amendments to the bill.
One would force AT&T to sell equipment to its subsidiaries only after a certain amount of outside sales, and the other would force the company to grant competitors access to its local network at fair rates.
Baxter called the bill a "highly regulatory approach" and said one could only "guess" about the success of the Federal Communications Commission in "policing" the line between AT&T regulated and unregulated businesses under the legislation.
Although AT&T had been consulted about the amendment before its presentation to congressional leaders last week, a company spokesman said yesterday AT&T is "opposing" the equipment amendment because it is no longer part of a package that involve the dropping of the antitrust suit.