The Federal Communications Commission is expected today to ease restrictions that required American Telephone & Telegraph Co. to operate its regulated long-distance business completely separately from its telecommunications and computer equipment business.
The commission is expected to replace the requirement for handling the two lines of business through separate subsidiaries with a requirement that AT&T simply account for the businesses separately.
The anticipated action, which AT&T sought, would allow the company's equipment subsidiary, AT&T Information Systems, and its long-distance arm, AT&T Communications, to market services jointly to business customers in competition with companies such as International Business Machines Corp. It also would allow AT&T to reduce its sales force by consolidating it.
Consumer advocates and competitors said yesterday the move, if approved, could make it easier for AT&T to subsidize new services and its equipment business with revenue from its regulated bread-and-butter long-distance service.
"Now AT&T will be able to use complicated bookkeeping to . . . subsidize equipment and special long-distance business services by overcharging on residential and small-business customers' long-distance service," said Gene Kimmelman, legislative director for the Consumer Federation of America, a Washington consumer advocacy group.
AT&T "can use ratepayer money to subsidize its competitive operations -- that not only runs up phone bills, it runs out competition," said Al Kramer, general counsel for the North American Telecommunications Association, a national association of independent equipment providers.
The FCC has required AT&T to provide customer equipment and enhanced information services through a separate subsidiary since 1980, when the company first sought to introduce data processing capabilities into its telephone network. The rules, imposed before the Bell System breakup, were meant to prevent the subsidy of competitive ventures with revenue from monopoly services.
AT&T had petitioned the FCC for removal of the barriers to integrated marketing, arguing that divestiture and competition in the long-distance market made them unnecessary. "We asked for the action because the rules had become outdated and were written for a company that no longer exists," said AT&T spokeswoman Edith Herman. "The rules basically require AT&T to operate in a highly competitive environment with their hands tied."
Industry analysts said yesterday any removal of the separations would aid AT&T's revenue potential. "It will be a tremendous marketing advantage for them," said Glenn Powers, a telecommunications analyst with Northern Business Information Inc., a New York market research firm. "Their competitive position will improve . . . in terms of a combined force of sales-people and technologies they can integrate."
In 1984, AT&T Information Systems generated $10.7 billion of AT&T's total $33.2 billion in revenue, he said. Last year, AT&T was in a dead heat for highest market share in telecommunications devices called PBXs, holding 19.6 percent of the market, while Northern Telecom held 19.5 percent. AT&T held the highest market share -- 26 percent -- in telephone key systems, he said.
In February, the FCC proposed to eliminate the requirements for keeping the operations separate because of changes in the telecommunications industry, particularly the spinoff of the regional Bell telephone companies, which provide local telephone service. The agency also proposed the use of an accounting system to monitor AT&T. "Usually, the commission has a track record of adopting its proposals," said one FCC source.
An accounting system would be imposed to ensure no cross-subsidy between the new services and the old, regulated service takes place, said another FCC source. Certain other "safeguards" to ensure that AT&T's equipment arm has no competitive advantage over other equipment companies by having advance notice about anticipated AT&T network changes also would be imposed, the source said.
The agency also will consider whether AT&T should be required to separate new services such as network message retrieval from its regulated long-distance business.
The FCC also will decide today whether to allow AT&T's controversial "Pro America" discount calling plan to go into effect. Long-distance companies such as MCI and GTE/Sprint have charged the proposed plan is predatorily priced below cost.