Witnesses for MCI Communications Corp. said today that American Telephone & Telegraph Co. delayed new MCI service offerings through illegal actions during the 1970s, preventing the company from expanding as rapidly as it could have.
As a result, according to the witnesses, the rival telephone company lost substantial revenue.
The testimony came in the second day of hearings in a trial for damages in U.S. District Court here.
MCI is asking for $5.8 billion in damages in its 10-year-old antitrust suit against AT&T. The six counts on which the jury in Judge John F. Grady's court must decide the damages involve charges that AT&T illegally refused to interconnect MCI to local phone networks so long-distance calls could be completed.
Should MCI win the amount it is asking, the money will be automatically trebled to $17.4 billion -- the largest award in U.S. corporate history.
James Lorie, a professor at the University of Chicago Graduate School of Business and a specialist in corporate finance, said MCI was prevented from making essential investments to expand its telecommunications network by AT&T's actions in the mid-1970s. As a result, the company generated less revenue than it should have, he said.
MCI's witnesses also sought to shoot down arguments by AT&T that earlier studies by MCI indicated that the company is owed less damages than it is seeking now. AT&T has said that MCI should receive no more than $10 million in damages.
The earlier studies were for the original trial in which MCI was awarded $600 million in damages. A U.S. Circuit Court of Appeals rejected some of the jury's findings against AT&T and sent the case back to U.S. District Court to determine new damages.
The original study of damages did not include regular business and residential long-distance revenue calculations that contributed significantly to MCI's revenue stream, Lorie said.
The study that has been done for this trial -- which determines that MCI would have made $2.9 billion more in revenue over the last 10 years if not for AT&T's actions -- is "more extensive and complete and provides a much better basis for estimates," Lorie said. MCI wants to double that amount to $5.8 billion because the company claims it will have to pay out half the award in taxes.
Bert C. Roberts, president of MCI Telecommunications Corp., the long-distance branch of MCI, said marketing was impaired by AT&T and therefore business picked up at a later date than it otherwise would have.
"We were stopped dead in our tracks because of connections AT&T denied to us," Roberts said.
Because connections were denied, MCI had only "meager" resources with which to market services and no money to advertise on television, he said.
Roberts said AT&T's actions delayed for several months the "Execunet" business service offering that essentially gives businesses regular long-distance service. AT&T also contributed to a delay in MCI's residential long-distance service offerings, said Roberts. MCI introduced residential long-distance service in 1980 but would have offered it in 1977, he said.