AT&T in its familiar structure, as a regulated telephone monopoly, is about to disappear. The divestiture is on a double track. The Justice Department and AT&T agreed last January on a consent decree that lays out one blueprint. The decree is now before Judge Harold Greene, who can accept it, deny it, or propose changes. Meanwhile, a lot of people in Congress believe--correctly, in our view--that the reorganization of the entire telecommunications industry ought not be left to a judge settling an antitrust case. Rep. Timothy E. Wirth has drafted complex and sophisticated legislation. Comparing the decree and the bill, you will find four major issues:
The divestiture: The decree would leave to the company the process of divesting its local operating companies, like C&P, from the new, largely deregulated, AT&T. Mr. Wirth is not alone in fearing that AT&T management would administer this break- up to its own advantage, at the cost of the local companies. The Wirth bill would require the newly independent operating companies first to be separately established, under their own directors and managements, before they begin to negotiate--at arm's length, as equals--the division of the assets with AT&T. The allocation of assets has an obvious bearing on future phone rates.
Long-distance competition: The new AT&T would still be in the long-distance phone business, as well as in the computer business and the equipment manufacturing business. The Justice Department assumes that the Federal Communications Commission would continue, at least for the present, to regulate long-distance phone service. The Wirth bill would tighten that regulation and give substantial advantages to AT&T's long-distance competitors, a policy that AT&T attacks as unfair. The question is how to broaden competition in a field in which one company, AT&T, now has 96 percent of the business.
Information, news and entertainment: The decree would allow AT&T into these businesses. The newspaper and cable television industries have vehemently objected to the competitive implications of AT&T's providing these services over its own nationwide network, still the next thing to a monopoly. The Wirth bill would permit AT&T to go into the information business, but not to distribute its services over its own lines.
Customers' equipment: That means anything on the end of a phone wire in your home or your office --a conventional telephone, a computer terminal, a video screen. The decree allows AT&T to keep providing that equipment, and it forbids the local telephone operating companies to compete. Other communications equipment manufacturers fear that, with its present momentum, AT&T would continue to hold most of the market. The Wirth bill resorts to the awkward device of keeping the local companies out of this market for several years-- while, presumably, buyers' habits change--and then inviting them back in. You would buy a phone at a store, as you now buy a radio.
The challenge here is to ensure competition in a rapidly growing industry now dominated by one huge and extremely efficient company. The decree worked out between Justice and AT&T leaves a real possibility that, in several lines of business, it will only replace the present regulated monopoly with an unregulated monopoly. The Wirth bill may go too far in trying to take care of all the competitors' fears. But Congress needs to remember that those fears are not groundless.