Industry and investment community reaction to a court ruling altering the proposed break-up of American Telephone & Telegraph Co. was generally positive today, although key players in the telecommunications business suggested that AT&T's ultimate fate should be determined by Congress.

In particular, U.S. District Judge Harold H. Greene's decision today did not address the concerns of firms who manufacture and distribute telecommunications equipment. Representatives of those AT&T competitors warned that even the divested Bell System could improperly subsidize its competitive activities with funds from consumers forced to use AT&T services, such as their long-distance network.

But the newspaper, cable television and long-distance services industries praised Greene's proposals, which directly addressed concerns they raised about potential unfair competition from AT&T.

Wall Street analysts, meanwhile, said the decision would go a long way toward ending investor uncertainty about the future of AT&T.

Not so pleased was Theodore F. Brophy, chairman of GTE Corp., AT&T's largest competitor, who said that based on a preliminary reading of the 178-page decision, the Greene proposals "are only one step toward fully protecting the public interest."

Brophy said the changes "only underscore the urgent need for congressional action" to establish national policy, but said, however, he is glad that Greene rejected the initial form of the agreement.

Kenneth Oshman, president of Rolm Corp., one of the largest manufacturers of computer controlled telecommunications equipment, said he is "extremely disappointed" with the decision.

"Everybody continues to ignore our part of the business," Oshman said. "I don't see any justification for the local companies going into the terminal equipment business. They'll probably lose money at it and it will weaken them. We were hoping for more safeguards and we'll fight them at the public utility commissions and in the courts."

And A. G. W. Biddle, president of the Computer and Communications Industry Association, called the proposals "an improvement" over the initial agreement but said the members of his trade group were extremely concerned over the fact that AT&T will no longer be required to share its patents with other firms.

Other AT&T competitors, whose problems with the Jan. 8 settlement package were addressed in today's decision, generally praised the action. "We see the initial settlement as a procompetitive document," said Gary Tobin, a spokesman for MCI Communications Corp., the leading non-AT&T long-distance company.

But Mitchell Brecher, an attorney for Southern Pacific Communications, another long-distance firm, said his firm was pleased with the pricing provision of the decision, but disappointed that local telephone firms are not compelled to provide the same types of bills for all long-distance services.

The support from the newspaper and cable industries for Greene's proposals was unequivocal. Each had sought a ban against AT&T controlling or accumulating news and other information sent out over its long-distance lines, a proposal Greene suggested be adopted for a seven-year period.

The American Newspaper Publishers Association urged that the proposed agreement between the government and AT&T be "promptly consummated."

Though ANPA said it was still studying the details, the association, which represents the nation's largest newspapers, said the "public interest will be served" if electronic publishing develops "as Judge Greene recommends -- in an atmosphere in which AT&T may not control both information, content and the conduit over which that information must flow."

On balance, Wall Street was just as pleased. "I think what Judge Greene did is well within the realm of reason," said John Bain, an analyst with Lehman Brothers Kuhn Loeb.

Several analysts, however, said they were maintaining their bearish view of AT&T's stock, which rose 3/8 to 50 1/2 today. "The consent decree is a negative for AT&T stock," said Edward M. Greenberg, of Sanford C. Bernstein & Co.

Individuals and institutions who hold AT&T stock are "used to a nice regular dividend and some capital appreciation, but on divestiture day suddenly they are portfolio managers of eight stocks. That might create a lot of selling pressure," Greenberg said.