SINCE AT&T has taken to quoting us in its vehement campaign against Rep. Timothy Wirth's bill, perhaps we might add a few less quotable words. AT&T is about to be broken up. The key question is whether this gigantic divestiture will be governed by an agreement between the company and the Justice Department, now being weighed by a federal court, or by Congress.
The reason for the spate of newspaper ads is that the Wirth Bill--the famous H.R. 5158--is now being marked up in the Commerce Committee. The Senate has already passed legislation. AT&T greatly prefers the deal that it got from Justice, and is trying to fight off any further conditions that might be imposed by Congress.
The present version of the Wirth bill strikes us, as the AT&T ads correctly noted, as excessively cumbersome--although not beyond remedy. But there is another side to the case. The central purpose of the divestiture is to allow the future AT&T to expand into competitive and unregulated businesses. The dilemmas lie in the transition from a legal monopoly to a competitive industry. How is the government to guarantee effective competition in the long-distance business, in which AT&T's competitors have, at present, 4 percent of the business? How to prevent cross-subsidies in a company with one regulated business, the long-distance network, and many unregulated businesses in data processing and equipment manufacturing? Those are the issues that the Wirth bill addresses.
The AT&T ads claim that the Wirth bill would give "foreign" competitors access to its technology. That's disingenuous. The bill would require the company to publish only sufficient specifications that its competitors could manufacture equipment compatible with the AT&T network. Otherwise AT&T's subsidiary, Western Electric, would retain a monopoly there.
But why the repeated emphasis on the word "foreign"? AT&T's strategists have evidently noted that the Commerce Committee, as it works on the Wirth bill, is also producing grossly protectionist legislation to shield the automobile industry from the Japanese increases; the chairman of the committee comes from Michigan. But AT&T is not Chrysler. AT&T, which has just reported a quarterly profit of $1.7 billion, at the trough of a recession, is not threatened by foreign manufacturers. On the contrary, one of the better arguments in favor of divestiture is to allow the company, with its superb technology, to compete abroad. Instead, seeing a glow of protectionism and anti-Japanese sentiment, AT&T is trying to fan it up to serve its own unrelated interests.
That's pretty shoddy. A company of AT&T's stature ought to be above that sort of thing.