JUDGE HAROLD H. GREENE'S proposed changes constitute important improvements in the rules for breaking up the American Telephone and Telegraph Co. With the collapse last month of Rep. Timothy Wirth's valiant attempt to enact telephone legislation, only Judge Greene can now impose safeguards on this gigantic divestiture. The immediate question is whether AT&T and the Justice Department will accept the judge's modifications. He's given them 15 days to make up their minds.

The breakup of AT&T is being forced by technology. The fields of communications and data processing are converging, and, since the government does not want to regulate the computer industry, it has to find a way to deregulate large parts of the communications system. At the beginning of this year, the Justice Department worked out an agreement with AT&T to separate the two kinds of its business entirely. AT&T was to keep the competitive lines -- long distance service, computer services and the production of equipment. In return for this opportunity to get into the computer business, AT&T agreed to get out of local telephone service and set up the local companies, like C&P Telephone, in new and wholly separate corporations. Unfortunately, the Justice Department did not do a terribly careful job of protecting the public interest.

Judge Green proposes adding crucial conditions to the terms of divestiture, particularly in regard to the division of the phone system's debt between AT&T and the new companies. He would improve the terms of competition in selling phone equipment. He would return the Yellow Pages to the local companies, meaning that their very considerable revenues would subsidize local phone rates rather than AT&T's competitive position in the long distance market. He would order AT&T to stay out of electronic publishing for at least seven years.

Here we have to remind readers that this newspaper and the company that publishes it are competitors of AT&T. We are both in the communications business, and, since this company has applied for licenses to provide mobile phone service, we may shortly be competitors in that business as well. Newspaper publishers have been arguing that AT&T ought not be allowed to provide news and advertising over its own wires. We shall not comment further here on the issue, except to say that people who are customers both of this newspaper and the phone company need to be aware of it.

Over the past century, AT&T, as a regulated monopoly, has built the finest phone system in the world and made it available to nearly every home and business. There is probably no other company that, alone, occupies as central a position in this country's life and its economy. The consequences of this reorganization are incalculable. Judge Greene's recommendations would not meet all the doubts and fears in the minds of the phone company's customers and competitors. But they would impose crucial safeguards on the present inadequate agreement.