What is good for the Bell System may not be good for the rest of the nation's 1,483 telephone companies.
That is what several independent telephone company officials are telling key congressional leaders in the aftermath of American Telephone & Telegraph Co.'s agreement with the Justice Department that ends the government's 8-year-old antitrust suit against AT&T.
Their fear: The policy set forth in the settlement, which calls for the divestiture of all local operations of AT&T's 22 regional subsidiaries, may be expanded to the smaller phone companies that together provide 20 percent of the nation's phone service. The new local companies, split off from AT&T, will be barred from offering any services other than basic local connections.
If so, the independents say their operations could be limited only to local phone service, with sharp restrictions imposed on their growing activities into equipment sales and highly sophisticated telecommunications services.
"Historically, what has happened to AT&T has subsequently happened to the independents," said John M. Lothschuetz, vice president and Washington counsel for United Telephone System Inc., the nation's third-largest telephone company after AT&T and General Telephone & Electronics Corp.
"Although it may not happen tomorrow or the next day, somewhere down the road there may be a similar attempt to limit all local carriers to local service and not allow us to enter into other areas such as cable television, and terminal-equipment sales," Lothschuetz commented.
"The only way this can be corrected is through legislation," he added, saying he and other independent company officials already have "been up to the Hill to voice our concerns" and press for immediate legislation.
"You're going to have legislation pretty quickly," said Charles Wohlstetter, Continental Telephone Corp.'s chairman. "This consent decree cannot be left standing as is."
These independents, including Central Telephone & Utilities Corp. (Centel), the fifth-largest, have been contacting congressmen and their aides. These are among the most aggressive independents in the development and marketing of new technology.
But according to the U.S. Independent Telephone Association (USITA), which represents all 1,428 independent telephone firms, the smaller companies also are concerned.
Jack Harrington, the USITA's director of government relations, said members are growing increasingly worried that the policy of the settlement "can slop over to us."
What's more, many firms are concerned about the future of long-distance service and facilities, he said. Some of the long-distance facilities AT&T use are owned by the independents. As a result, the companies want to be assured that these facilities will continue to be used and that the companies will continue to be paid for their use after the divestiture plan is implemented.
Independents also say they are worried about the power of the newly constituted AT&T to bypass them. Although it no longer will own the local phone companies, AT&T will retain the most profitable parts of its business--including its long-distance division, manufacturer Western Electric, and its research and development arm, Bell Telephone Laboratories.
"As we read the consent decree, Bell could come in to a local exchange and provide terminal equipment on an unregulated basis or enhanced services in competition with the local firm," says United's Lothschuetz. Bell also could give a large telephone user a special system such as a mobile radio that hooks directly into its long-distance network, thereby depriving the local company of revenue.
Continental, which says it provides the most rural service in the country, says it also is concerned that the settlement could lead to sharply higher rates for rural residents who live in areas where few companies want to offer competitive services. "We must have legislation to make sure there are no immediate and unacceptable increases" in rural phone bills, says William Friedman, Continental's vice president.
"I don't want to be in the area when we tell them what their rates will be," said Wohlstetter, who predicts that if rural rates are not subsidized, those charges could increase by two or three times. "We do enjoy a subsidy," Wohlstetter said. "We lose money on a great deal of our residential telephones."
In another development, 24 states yesterday asked U.S. District Court Judge Harold Greene for intervention privileges in the proceedings before Greene on settlement of the government's suit against AT&T.
While not taking a position on the merits of the case, the states said that Greene is authorized to conduct a full evaluation of the agreement.
The Justice Department and AT&T have dismissed the suit and have filed the settlement before a New Jersey judge as a modification of an earlier decree. The United States and AT&T say Greene does not have authority under the Tunney Act to reject or to approve the settlement.