A great many opinions have been expressed in recent months by a great many people about the breakup of the Bell System, and candor compels me to acknowledge that most of them have been unfavorable. History will judge whether, on balance, the AT&T divestiture serves the public interest. But history, and the public, can judge properly only if the facts are presented accurately. Last Sunday's column by Joseph Kraft, "Fixing the Phones" stands out in that almost every single factual assertion made is either incorrect or unduly simplistic.
Thus, Kraft accuses the Ford administration of trying to look like Goody Two Shoes and for that reason not daring to arrest the proc breaking up the Bell System. The Ford administration did not arrest the process because there was nothing to arrest: it was that administration that brought the lawsuit in the first place. Next, Kraft notes that the action languished in my court for seven years like Dickens' famous and interminable case of Jarndyce and Jarndyce. While that allusion should win Kraft plaudits among the literati, there is one small problem: I was not even appointed to the court until the case had already been pending there for four years.
These mistakes are relatively trivial, and they can well be excused when made by a man who must wrestle every day with the far more important issues of war and peace, the state of the economy and the national political scene. But what cannot be so easily overlooked is Kraft's statement that, because Justice Department officials were somehow busy, the terms of the settlement of the AT&T case were left up to the court. A settlement, as any first-year law student knows, is an agreement between the parties to a lawsuit. The AT&T case, as widely reported in the press, was no exception: a very detailed, complex settlement agreement was negotiated between the Department of Justice and AT&T, and thereafter submitted to the court for approval. As the judge presiding over the case, I had only limited authority to vary the terms, and the very few changes I did make were designed to strengthen the regional companies and hence to reduce the rates of the local consumers of telephone service. There is, therefore, not the slightest basis for the Kraft statement that because others were otherwise engaged, "the exact terms of settlement . . . were left up to Judge Greene."
Kraft makes two proposals for changes in the AT&T consent decree: first, that it be amended to permit the regional companies to sell phones and similar equipment and, second, that these companies be allowed to enter the long-distance business in addition to continuing with their local operations.
As regards the first proposal, it comes a little late. One of the few changes I insisted on when the proposed consent decree was submitted to me in 1982 was a clause permitting the local and regional companies to sell telephones and similar equipment, and they have done so on a large scale for 20 months now, that is, since the first day after divestiture.
Kraft's second suggestion is more problematic. Long-distance companies can reach their customers only by passing through the "bottleneck" of the local switches. When one company sells both local telephone service (a market in which it has a monopoly) and long- distance service (a market in which it faces competition) it naturally has an incentive to favor its own long-distance operations over those of its competitors. In addition to the incentive, it also has the ability to crowd out the competition because it presumably can manipulate the local switches so as to benefit its own long-distance operations over those of others.
It was for reasons such as these that the Department of Justice, under the administrations of presidents Ford, Carter and Reagan, advocated the separation of the Bell System's long-distance network from its local operations: hence, divestiture. It was for the same reason that the department negotiated a consent decree that forbids the regional companies -- the heirs of the Bell local monopoly in their seven geographic regions -- from entering the long-distance market until such time as there was a showing "that there is no substantial possibility that (such a company) could use its monopoly power to impede competition in the (long-distance) market it seeks to enter."
One could argue that the regional companies already face so much competition, or soon will, that the prohibition on the regional companies' provision of long-distance services has outlived its usefulness. But it shows a limited perception of the large and complex issues involved to contend, as does Kraft, that the prohibition be casually set aside, because if the regional companies could engage in local, long-distance and overseas services, we would all receive only a simple monthly telephone bill.