THE WHOLE PURPOSE of breaking up AT&T as the national telephone monopoly is to open the road for rapid progress in a crucial technology. But communications and data processing are high tech at its most esoteric, requiring very large investments in basic research. The new communications industry is to be much more competitive, the government has decided. Competition is good for commercial efficiency and for product development--but not for basic scientific research. Most of that kind of work is done in laboratories run by universities, government agencies and, in rare cases, industrial monopolies.
AT&T, in its present form, is one of those rare cases. Its Bell Telephone Laboratories is the most distinguished, and productive, research operation of any business corporation in the world. All of AT&T's present management earnestly swears that the company will continue to uphold the great traditions at Bell Labs. The new, lean, deregulated AT&T of the future--divested of its local operating companies--knows that its fortunes depend on its technology, its executives say. But it's necessary to ask how well those good intentions will hold up when the company's revenues are no longer protected by regulation and the accountants begin to rake through the research proposals.
R&D is expensive. Bell Labs' budget last year was $1.6 billion. By way of comparison, the total budget of the Massachusetts Institute of Technology, including not only its teaching programs but Lincoln Laboratories and all its other research facilities, is $525 million--one third as much. More than half of Bell Labs' budget goes into product development and design for Western Electric, AT&T's manufacturing subsidiary. But the spending on advanced research and systems engineering runs to nearly half a billion dollars a year.
Bell Labs is in no danger of suddenly being cut adrift. In the divestiture that will shortly take place, AT&T will keep both Western Electric and Bell Labs. But much of the basic research money has come from the operating companies from which AT&T is now separating itself. Bell Labs' budget amounts to 90 cents a month for each phone in the present Bell system. The regulators, sucking their pencils in the interminable rate hearings, have generally concluded, wisely, that it was a good investment. It is very much an open question whether future AT&T directors will consistently agree, as the company moves into the highly competitive businesses now to be open to it.
The Justice Department, overseeing this reorganization, is guided by a faith in the benefits of competition that verges on the simplistic. Rep. Timothy Wirth's bill is written chiefly to protect the economic interests of the Bell system's customers and competitors. Both the administration and Congress seem to assume, without giving it much thought, that continued support for Bell Labs is ensured. In view of the importance of these extraordinary laboratories to American science and engineering, that assumption deserves far more careful consideration than it is getting.