The Reagan administration's antitrust settlement with American Telephone & Telegraph Co. represents a major blow to telephone customers and the local operating companies and should be revamped drastically, the state public utility regulators said yesterday.
"Far from promoting competition, the settlement is actually anticompetitive" because it "would not prevent signficant anticompetitive behavior by AT&T," the regulators said in their legal brief filed by the National Association of Regulatory Utility Commissioners.
Just as magnet draws metal, the historic AT&T settlement attracted a thick assortment of comments yesterday--the last day any interested individual, company or government agency could file views with U.S. District Court.
The Justice Department received more than 150 comments yesterday, most filed late in the afternoon. Almost all expressed differing opinions on the agreement in which AT&T has promised to divest itself of its 22 local operating companies.
To the computer industry, the settlement did not go far enough in breaking up AT&T. But to the newspaper and broadcasting industries, the settlement went too far in allowing AT&T to compete in offering mass-media services such as cable television and the emerging electronic publishing technology.
And to a few other groups, including the North American Telephone Association, settlement of the government's seven-year-old antitrust suit against AT&T represented "a major victory for competitive forces in telecommunications" and therefore should remain untouched.
A host of other organizations, including the Federal Communications Commission and MCI Communications Corp.--AT&T's chief long-distance competitor--agreed that the settlement represented a substantial step forward in competition in the telecommunications industry. Even so, these groups argued that several changes had to be made to ensure competition and to guard against steep increases in local rates.
In addition to more than 300 letters already sent by private individuals, these comments will play a critical role in a federal judge's review of the settlement.
The settlement, announced Jan. 8, requires AT&T to get rid of about two-thirds of its assets when it spins off its local companies, but would permit the communications giant to retain the most profitable part of the Bell System--its research and development arm, Bell Telephone Laboratories; its manufacturing subsidiary, Western Electric; and its long-distance network. For the first time in 25 years, the remaining AT&T would be able to enter any business it wished, no longer barred from entering the computer field as the company has been under a previous government agreement. However, the current agreement bars the divested local companies from offering anything other than local telephone service.
U.S. District Court Judge Harold H. Greene, who presided over the government's trial against AT&T, is responsible for reviewing the settlement to make sure it is in the public interest.
The Justice Department has until May 5 to respond to these comments. After that, Greene has indicated that he may hold further hearings or call for more testimony before making a finding on the settlement.
For the most part, the comments filed yesterday were not unexpected, reflecting earlier public comments these same organizations had made in congressional hearings, press briefings and private chats with reporters.
Of all the comments, Justice Department officials have indicated that they regard the most important to be the FCC's and NARUC's.
The FCC said the settlement would enhance controversy and would more than likely "not have a substantial impact on rates and will not adversely affect the quality of service."
However, the agency added, the decree's restrictions on the local operating companies "are unnecessary and unwise" and should be lifted to allow the divested concerns to compete in almost all areas of the telecommunications industry.
The NARUC also said it did not oppose the divestiture of the local companies per se, but argued that the restrictions on their activities should be lifted because they represent "an unreasonable foreclosure of a major source of competition."