THE AMERICAN Telephone and Telegraph Company is, by many measures, the most important corporation on this continent. It is now in the process of being broken up, in a courtroom here in Washington. The success of this divestiture will heavily influence the future development of this industry and many others. The interests are too broad to be left solely to a judge--even an exceedingly able judge--working within the narrow context of the antitrust laws. Congress has a responsibility to legislate, and to set the broad principles for this enormous reorganization of the country's telecommunications system.
The famous HR 5158, the bill written by Rep. Timothy E. Wirth's House subcommittee and bitterly attacked by AT&T, provides a useful point of departure.ut the present version of the bill is excessively cumbersome. It remains to be seen whether Congress can listen to all the voices clamoring to be heard--AT&T's present customers, its competitors, the suppliers, the state regulators-- without creating an even greater tangle of legal restrictions than the past one from which divestiture is now supposed to free AT&T.
Breaking up AT&T is a rational answer to an increasingly urgent question. Technological development has rapidly increased the areas of overlap between the phone business and the computer business. It was necessary either to regulate companies such as IBM where they provide communications services, or to deregulate AT&T where it was doing, essentially, data processing. Meanwhile, the Justice Department was prosecuting AT&T for a range of antitrust violations. The Reagan administration decided to resolve all of these conflicts by one radical stroke--to split up AT&T, leaving it with its long-lines system but estab=lishing its local operating companies, such as the C&P Companies that serve this area, as seven or more entirely independent utilities.
The Justice Department is trying to follow the principle of leaving all the competitive aspects of the business with the new AT&T. Local phone service, by nature noncompetitive, would remain fully regulated. But, as it works out, that rule gives the new AT&T a disproportionate share of the most promising opportunities for profit. One immediate objection was that the local companies, stripped of these sources of income, would require large increases in basic rates. Another objection came from AT&T's competitors. This settlement, they said, would leave AT&T so well equipped to compete in long-distance communications that it could easily maintain its dominance of the field.
The Wirth bill was drawn to meet these concerns, and, while it goes too far in building its complex layers of protection, the concerns are valid. We intend to return, in this space, to examine some of these issues more closely. The form of this divestiture will not only set the course for a group of companies providing a vital service that nearly everyone uses nearly every day. It also will set the terms for the development of a technology on which, perhaps more than any other, the future strength of the economy will depend.