AS THE divestiture of the country's dominant telephone company gets closer, the focus of public anxiety is shifting. The decision to break up AT&T is now irrevocable, and, understandably, there is increased attention to the issues of quality of service under the new decentralized system, and especially its price. How much will local phone calls cost--or, more precisely, how will the cost be divided among the many categories of users?
Judge Harold Greene, presiding over this monumentally complex reorganization, has addressed that question in his latest order. The local AT&T subsidiaries--the components of the future independent operating companies--have generated much alarm with their recent petitions for rate increases and, even if you make the usual allowance for exaggeration in rate petitions, there is in truth much to be alarmed about. If you believe that cheap local service brings important social benefits, and access to a phone is an advantage to which everyone is entitled, you need to pay attention to the terms on which the AT&T system's vast assets are being divided between the parent company, which will continue to provide long-distance service, and the local companies. Judge Greene's order is intended to strengthen the local companies and give local customers a little more protection from what's coming.
Within the AT&T system, long-distance rates have always subsidized the local phone service. How much? Among the many people who have studied it, no two have ever come up with quite the same answer. But it's pretty clear that when the two kinds of service are severed, there will be an unavoidable impact on the local companies.
There is, as always, a growing inclination in Congress to pass legislation. But that is a temptation to be resisted, precisely because of the gaping uncertainties. No one can say with any reasonable precision how this divestiture will actually affect rates over the next several years. If rates begin to go haywire, there will be a strong case for congressional intervention--but at this point it's not clear what form any intervention ought to take. Judge Greene has demonstrated that he is well aware of the standards that most people will apply to the outcome. Having come this far, he is entitled to continue, not without close congressional surveillance, but for the present without congressional interference.