The Federal Communications Commission yesterday concluded, after a six-year study, that American Telephone & Telegraph Co. rates are reasonable and that the company does not engage in unfair practices to prevent competition.
AT&T's overall performance "has been and continues to be excellent," and there is "no substantial record" to support proposals to break up the nation's largest regulated utility and its manufacturing and reseach arms, Western Electric Co. and Bell Telephone Laboratories respectively, the agency concluded.
At the same time, the FCC said the national telephone giant could be "even more responsive both to consumer needs" and technological innovations and it ordered AT&T to submit proposals this year to give local Bell System firms a bigger say in ordering new equipment.
Abbott M. Washburn, a member of the commission, said in an interview last night that this requirements is the "most important" part of the agency's unanimous decision because it means "Bell operating companies will have a better chance" at buying the cheapest equipment from Western Electric or its competitors.
The agency's own trial staff and Bell System competitors has argued that a divestiture of Western Electric would increase competition in the telecommunications industry. That view is shared by the Justice Department, which is seeking such a breakup of AT&T in a major antitrust case, [WORD ILLEGIBLE] in preliminary stages in federal court here.
AT&T Chairman John D. deButts, for whom the FCC decision is a major victory, was unavailable for comment last night. Executive Vice President Thomas S. Nurnberger said, however, that his firm is "delighted."
Nurnberger said AT&T will comply with the FCC request for a proposal that would allow local operating subsidiaries, such as the Chesapeake & Potomac Telephone companies based in Washington, to "buy the best and most economical equipment from whatever source."
In another development, Capitol Hill sources said last night that Sen. Gary Hart (D-Colo.) and Rep. Timothy E. Wirth (D-Colo.) plan to introduce legislation today designed to uphold the thrust of the Federal Communications Act in support of telephone industry competition.
AT&T launched a massive lobbying effort in the last session of Congress for support of a Consumer Communications Reform Act, which critics charged was designed to prevent new competition and to thwart the Justice Department's antitrust suit.
The legislation being offered today has been drafted as an alternative to the so-called Bell bill, which would encourage maintenance of its monopoly position. AT&T has argued that small telecommunications firms are attracting industries which are the Bell System's most profitable business, and that consumers will end up paying higher telephone bills to support an existing nationwide system that must be maintained for less profitable residential service.
In its decision, the FCC upheld its 1976 order permitting AT&T to raise from 8.74 per cent to 9.5 per cent its rate of profit on investment in telephone facilities and equipment. Partially because of that question and subsequent interstate rate increases, AT&T became the first corporation in U.S. history to earn profits of more than $1 billion in a three-month period.
The record profits were reported for the two final quarters of 1976, and AT&T recently increased its quarterly dividend rate after listing total 1976 profits of $3.8 billion, up 21.6 per cent from 1975, on revenues of $32.8 billion. AT&T is the nation's largest private employer, and has the largest number of stockholders.
Yesterday's decision upheld AT&T's practice of including in its costs of business - the rate base on which tolls are based - charitable contributions and institutional adveritising. Chairman Richard E. Wiley and Commissioner Joseph R. Fogarty dissented on these two points and Commissioner Benjamin L. Hooks abstained. The agency has seven members.
Washburn said last night that, "in the 20th century, it is good business practice to make contributions . . . it builds goodwill and acceptance in the local community." The total of AT&T contributions nationwide is $3 million a year, he said, "certainly not unreasonable in any way."