The Federal Communications Commission yesterday proposed allowing American Telephone & Telegraph Co. to market both telephone equipment and services through any of its subsidiaries.
The move is the largest step the FCC has taken to overhaul the so-called "Computer II" rules established in 1980 to check anti-competitive activities by marketing equipment and services through separate subsidiaries. That rule also requires AT&T to offer "enhanced" services, such as digital data processing, separately from basic phone service.
The commission yesterday said it was changing the rule because of increased competition in the marketplace. It said that AT&T's share of the phone equipment market dropped from 80 percent of sales in 1980 to 30 percent today.
The costs of the rule, which was meant to protect fair competition in the marketplace, now outweigh the benefits, the FCC said. But the agency will require the company to keep separate accounting books on equipment and service sales.
The FCC yesterday also granted AT&T Technologies permission to customize software for AT&T Information Systems, the equipment arm of AT&T, a boon to bidding on lucrative customized business networks. AT&T also will be able to realign some personnel functions between AT&T Technologies and AT&T Information Systems, cutting company expenses.
The agency is expected to enact the new rule sometime in the next six months.
But AT&T, which had petitioned the agency to drop all its "Computer II" requirements, said the decision was too little, too late. "It is unthinkable that government would prolong monopoly rules and bureaucratic control of our business when there is no longer a monopoly," said Charles Marshall, executive vice president of AT&T.
"Today's action needlessly continues customer confusion, denies the American public lower-cost products and innovative enhancements to the telecommunications network, and perpetuates a wholly unfair advantage for our competitors, both foreign and domestic."
The FCC will be reexamining the whole "Computer II" rule in future sessions. Specifically, it will consider whether to allow the joint marketing of basic and enhanced services.