The Federal Communications Commission, in what was heralded as the significant decision of the information age, yesterday freed the American Telephone & Telegraph Co. from a long history of regulatory and judicial restraint and placed the giant Bell System in direct competition with the computer industry.
The commission, in approving the so-called "Computer II" decision, will force AT&T, the nation's largest company, to revamp its entire corporate structure to enter the computer field, which it must do through a separate subsidiary. That restructuring will mark the first entrance by the Bell System into unregulated business.
In essence, the phone company wants to position itself to take advantage of; the merging of telephone and computer technologies so that it can build and market computer-telephone hookups, for example, that would move data, advertising and other printed matter rapidly across the nation and around the world. Previously, AT&T had been limited to providing transmission lines and manufacturing and installing conventional telephones.
The most controversial facet of the FCC decision would lift the requirements of a 1956 consent decree between the Justice Department and AT&T. That agreement has barred the company from entering unregulated businesses.
Already, a preliminary decision issued by the FCC last spring has been challenged in the appeals courts by some representatives of the computer industry and is expected to be tied up in litigation for several years to come. i
But AT&T, which has for four years sought either in Congress or at the FCC to get into the comuter field, praised the FCC decision, while calling for some continuing "fine tuning."
The company has already begun the planning for setting up the new subsidiary. It acted even though legislative efforts to bring about a similar restructuring of the nation's telephone industry have been bogged down by lobbying from AT&T competitors and opposition to telecommunications legislation based on antitrust concerns.Although the FCC is deregulating the telephone industry, the Justice Department is seeking to break up AT&T in a massive antitrust case scheduled to go to trial early next year.
This is a landmark decision which will profoundly affect telecommunications and data communications services for the nation," said James Billingsley, an AT&T vice president. "We are pleased that the FCC has reaffirmed its decision to allow the Bell System to offer sophisticated data communications services and customer premises equipment through a separate subsidiary and to compete in the rapidly developing information marketplace."
In addition, the FCC decision will deregulate telephone equipment, thereby forcing the company to sell or lease consumer telephone equipment from the separate entity. Thus, customers when signing up for new telephone service will be forced to call both the equipment supplier and the Bell System, which supplies the communications link between more than 90 percent of the nation's telephones.
"Today's action reaffirms one of the most significant deregulatory actions this commission has ever taken," said Charles Ferris, the FCC chairman. "We have sent a clear signal that the innovative products of the new information age will not be slowed down or made more expensive by needless regulation."
However, Jack Biddle, president of the Computer and Communications Industry Association, which had filed the suit against the initial decision, said the commission in altering its initial action yesterday had moved toward his group's position, but he still condemned the FCC for placing the Bell System in direct competition with smaller computer firms.
"It is a shame that an industry that has been developed by innovative entrepreneurs is needlessly made into a deep-pockets game in which only the Exxons of the world can play," Biddle said, alluding to the advantages the new Bell operation would have in its access to the billion-dollar scientific operations of Bell Laboratories. Exxon, the oil giant, has already set up a burgeoning computer company.
The FCC, in an occasionally stormy 5 1/2-hour meeting yesterday, demonstrated that the controversy about the thrust of the decision is not limited to private industry.
Led by Joseph Fogarty, an FCC member, the commission has asked the staff for additional clarification on several key issues, for presentation to the commission by the end of the year.
Further, the commission bitterly debated a proposal by AT&T that would allow the company's new subsidiary to own its own transmission facilities. Ultimately, Ferris charged Fogarty with "raping" the FCC's deregulation efforts and wound up accepting a proposal to adopt a waiver suggestion if Bell's new subsidiary wants to maintain transmission facilities.