THE AMERICAN Telephone and Telegraph Company got a pat on the head the other day from the Federal Communications Commission. The commission found its performance "excellent in terms of providing high quality nationwide telecommunications service at reasonable cost." And it found no evidence in the record before it to justify breaking up this huge company. That ought to be regarded as good news by Ma Bell and its stockholders. But whether it is enough to satisfy them remains to be seen.
Another part of the FCC decision requires the telephone company to introduce more competition into the way its subsidiaries handle their procurement. And competition is not something that AT&T has shown much fondness for in recent years. John D. deButts, the chairman of its board, tried to persuade Congress last year to make the FCC stop encouraging competition in certain other aspects of the telecommunications business. And the lobbying efforts have been enormous on behalf of proposed legislation that would grant this company a practically complete monopoly in its field.
The FCC's key finding on competition centers on the relationship between AT&T and its subsidiary, Western Electric. The result of this and other arrangements, the FCC said, is that the "preponderant" portion of the equipment used by telephone operating companies around the country - other AT&T subsidaries - is bought from Western Electric. That occurs, the commission said, not necessarily because the equipment is cheaper or bettern than that made by other companies but because of the way the Bell System is organized and functions.Those arrangements are also the heart of the antitrust case the Department of Justice filed two years ago seeking to break up Ma Bell. And they, along with the company's policies on the use by customers of non-Bell equipment and the provision of private line business services by other companies, have been the target of much other criticism.
Some of that criticism will now be blunted, as will part of the government's antitrust case, by the FCC's favorable finding on the quality and cost of nationwide service. Compared with telecommunications services provided in other nations, there can be little doubt about the quality of the Bell System's operations. But it is much harder to judge the reasonableness of its costs and its response to innovation. Size alone, has much to do with that. With a profit margin of more than $300,000,000 a month, Ma Bell can throw more resources into defending its operations than any unit of government - or anyone else - can throw into questioning them.
While we can understand AT&T's dislike of competition - operations are much easier and often more profitable without it - we would like to see this centerpiece of American corporate igenuity demonstrate a little more faith in the free enterprise system. Competition is, after all, the device this nation has seized upon as the best mechanism for keeping prices reasonable. The alternative is government regulation, and the size of AT&T makes that unusually difficult. By giving AT&T a directive to let the forces of competition work in at least some parts of its empire, the FCC has taken a step in the right direction.