The Reagan administration and American Telephone & Telegraph Co. have urged a federal judge to accept AT&T's landmark divestiture settlement--even though both parties acknowledged that some of the criticism raised against the decree may be valid.
In separate legal documents filed with U.S. District Judge Harold H. Greene, AT&T and the Justice Department argued that the settlement was in the public interest and therefore should by approved by the judge without any modifications.
However, at the same time, both sides listed a number of steps they would take to alleviate many of the objections voiced against the settlement, which calls for AT&T to divest itself of its 22 local operating companies.
For example, AT&T laid out in greater detail how it planned to spin off about two-thirds of its assets to try to temper complaints that the divestiture would leave the local companies in poor financial shape.
At the same time, the Justice Department tried to alleviate the fears of state regulators who predict the settlement will lead to sharply higher local rates. The department said it will seek the views of state regulators frequently and give them "great weight" when it approves the specifics of AT&T's divestiture plan.
The Justice Department also said it will permit all interested parties to comment on the detailed plan for 60 days after it is filed to make sure it is aware of all potential problems. Until now, it has declined to take comments on the detailed plan.
The plan won't be submitted until six months after Judge Greene approves the general divestiture plan, signed by AT&T and the Justice Department on Jan. 8. Then AT&T will have another year to complete the divestiture.
The generalized plan has drawn more than 600 comments covering 8,500 pages from individuals, state and federal regulators, and scores of AT&T's competitors. Most of the comments were highly critical of the settlement and called on Judge Greene to order changes in the plan before he accepted the agreement.
However, the Justice Department and AT&T, in responding to this criticism, argued that the judge had no choice but to accept the plan.
"The responsibility of the court. . . is not to determine whether the settlement might be improved, as suggested in some comments, but rather whether . . . it is 'within the reaches of the public interest,' " the Justice Department argued in a document filed with the court very late Thursday night. The settlement is in the public interest because it "establishes an industry structure that will eradicate the potential for anticompetitive behavior" that has existed at AT&T for more than the past 35 years, the Justice Department added.
Until now, both the Justice Department and AT&T have argued that the settlement will not lead to increases in local phone bills, as state regulators have charged. However, the department acknowledged in its filing that the local phone companies may suffer some revenue dsecline as a result of losing the lucrative yellow-page operations.