Declaring that it's the job of Congress, not the courts, to set telecommunications policy, the chairman of the House telecommunications subcommittee unveiled legislation yesterday to alter the Justice Department's landmark divestiture settlement with American Telephone & Telegraph.
With the support of more than one-third of his subcommittee (including two Republican members), Rep. Timothy Wirth (D-Colo.) called for legislation to overturn a number of key provisions of the settlement, which requires AT&T to spin off its 22 local operating companies, such as C&P Telephone companies.
Although Wirth supported this divestiture plan in general, he would give the divested local operating companies greater opportunities to compete in the increasingly lucrative telecommunications industry than they now have under the settlement plan.
Under Wirth's plan, the local companies would be able to offer Yellow Pages and sell telephone equipment--two activities they would be barred from offering under the consent decree, which limits their operations to providing local phone service.
Additionally, Wirth would alter the way in which the divestiture plan was implemented to give officials of the local operating companies greater say in the way in which they are divested--in particular, the way in which their assets are valued and their debts are picked up by the parent AT&T.
At the same time, Wirth called for tighter restrictions on one of the most profitable parts of the Bell System that will remain with the parent AT&T--the long-distance system. Currently--and under the consent decree--AT&T operates its long-distance network through a division totally controlled by AT&T. Under Wirth's bill, this division would have to be placed in a fully separated subsidiary in which 10 percent of the stock would have to be independently owned.
This legislation is needed "to cushion the dramatic increase in rates"--perhaps double or triple the current local rates--that many local industry experts predict will occur as a result of the settlement, Wirth said. He said his legislation is needed to guarantee the "viability of the local operating companies--to make sure they don't go the way of the railroads."
Wirth's legislation was denounced immediately by AT&T. Although AT&T said it continues to support the need for legislation to replace the 48-year-old communications law, it said it did not favor this bill.
"It is also difficult for us to be enthused about yet another bill that reportedly imposes more, rather than less, regulation, hamstrings us and favors our competitors and--astonishingly in this version--appears to require partial divestiture of our long-distance system," AT&T said.