U.S. District Judge Harold H. Greene closed the biggest antitrust case in the nation's history yesterday by issuing the final court order that will lead to the breakup of the American Telephone & Telegraph Co.
With his signature on a two-page order, Judge Greene formally ended AT&T's era of monopoly and simultaneously forced the largest corporate reorganization in history. The world's biggest business, with more than 1 million employes, will spin off seven regional telephone companies and leave behind a new AT&T with a core of high-technology and telecommunications businesses.
Industry observers say the plan is as much a birth certificate as an obituary because it restructures AT&T for life as a competitor, rather than as a monopolist, in a burgeoning marketplace.
AT&T spokesman Pic Wagner said the judge's final approval of the divestiture plan "has cleared the decks for us to advance briskly into the competitive telecommunications marketplace. . . . We can now concentrate on rapidly bringing new and innovative services and products to the public, instead of debating endlessly in courtrooms and commission hearing rooms over the use of new technology."
One result of the antitrust settlement will be that AT&T will lose its "Bell" name. Only the seven regional operating companies, which will be independent of AT&T, will be allowed the use of the Bell insignia, Judge Greene ruled.
The breakup of the Bell System will mean changes in telephone service pricing--both higher and lower--and more competition and different kinds of communications services and equipment in the marketplace.
AT&T is trying furiously to meet the Jan. 1, 1984, deadline for reorganization, a task that requires the division of more than $153 billion in assets and the issuance of new shares for the new Bell entities. One Bell executive has likened that process to "taking apart and reassembling a Boeing 747" while still in flight.
The odyssey to divestiture began in late 1974 when the Justice Department filed suit against AT&T, charging that the company had used its relationship with the local Bell companies and their networks to block would-be competitors in both equipment and long-distance services markets. The Justice Department reportedly was seeking the divestiture of Western Electric, AT&T's giant manufacturing subsidiary.
Just before the case was scheduled to come to trial, AT&T and Justice hammered out a consent decree agreement in January 1982. The decree set the framework for the divestiture of AT&T's 22 local operating companies into seven regional corporate groupings. Those companies comprised roughly three-quarters of AT&T's assets.
AT&T, on the other hand, would keep its long-distance services, Western Electric, the highly regarded Bell Labs and, most important, would gain the opportunity to enter nonregulated markets.
By virtue of another Justice Department action--a 1956 consent decree--AT&T was effectively barred from offering nonregulated services. This proved to be a particular hardship in the 1970s as telecommunications and data-processing technologies were beginning to merge. Computers that could communicate and communications devices that could compute blurred the lines that the Federal Communications Commission had used to determine what services it would regulate.
Moreover, beginning in 1968, the FCC had begun to implement a philosophy of gradually deregulating the telecommunications industry and thus undermining AT&T's position as a de facto monopoly. Companies such as MCI Communications Corp. began offering services directly competitive with those of Bell
In addition, Congress attempted to update the Communications Act of 1934 and thus restructure the telecommunications industry.
Most industry observers agree that the 1982 consent decree is the critical decision that reshapes the telecommunications landscape. It supplanted the 1956 consent decree and eliminated many of the regulatory problems facing the FCC.
Judge Greene, whose handling of the case was widely praised, approved a tentative settlement in August 1982, and AT&T filed its formal plan of reorganization in December. After requesting several modifications this past July, including that of the use of the Bell name, Greene signed off on the reorganization yesterday. The plan goes into effect on Jan. 1, 1984.
"While very painful for everybody involved, the settlement was probably best for the country," said Robert E. LaBlanc, a telecommunications consultant. "While the transition of the next couple of years is likely to be painful with all the repricing that will occur, the new structure in the industry will give new technologies a chance to come to the forefront."