The Federal Communications Commission is getting ready to urge a federal judge to change the Reagan administration's historic divestiture agreement with American Telephone & Telegraph Co. to guarantee that the divested local companies will continue to remain in strong financial health.
Under unanimous orders from the seven FCC commissioners during a private meeting last week, the agency's staff is preparing legal papers to argue that the settlement places unnecessary restrictions on the local operating companies, which are all slated to be spun off from AT&T. The settlement limits local firms to providing only basic local telephone service and bars them from selling telephone equipment, computer and information services or other lucrative telecommunications services.
According to commission sources, the commissioners endorsed the general competitive thrust of the divestiture plan, in which AT&T would keep most of the competitive activities of its business: its research and development arm, Bell Telephone Laboratories, its manufacturing subsidiary, Western Electric, and its long-distance network.
However, commissioners were concerned that the restrictions on the divested local companies could ultimately drive up local telephone rates because the local companies would be limited in the areas in which they could derive revenue. Additionally, sources say, the commission will ask the federal judge who must approve the settlement to set up a periodic review of the settlement to make sure that it remains in the public interest and does not become outdated by technology.
The commission also wants the judge to make the FCC a party to the settlement, which currently is an agreement solely between AT&T and the Justice Department. Citing its expertise in telecommunications, the FCC wants to make sure it will still have jurisdiction over AT&T--and that it seeks changes in the settlement directly through the courts.
Because of its role in setting telecommunications policy, the FCC's position paper could play a significant role in the decision by U.S. District Judge Harold H. Greene to approve the settlement signed Jan. 8 by AT&T and the government.
At the very least, however, it is certain to intensify the debate over the role of the local operating companies. Last week, the House telecommunications subcommittee approved legislation that would overturn key parts of the settlement by giving the local concerns greater opportunities to enter the lucrative telecommunications activities