Monday, Jul. 18, 1983

Bell Wrung

The phone company's loss

Generations have grown up thinking of American Telephone & Telegraph (1982 sales: $65.7 billion) simply as Ma Bell. Last week Federal Judge Harold Greene took away the Bell. Greene ruled that the name as well as the company's blue-and-white telephone logo should belong to A T & T's local phone companies when they split off into seven independent units on Jan. 1, 1984. The judge also decreed that only A T & T's Bell Laboratories and foreign operations could continue using the name.

The order was part of a 159-page opinion that virtually completes the legal restructuring of A T & T. The mammoth undertaking, the largest breakup of a company in history, has been under way since January 1982, when AT&T agreed to divest its local units to settle a Government antitrust suit. "This decision in a sense is the final word on telephone reorganization," said Theodore Whitehead, a Washington attorney who specializes in communications law.

A T & T's competitors in the long-distance business welcomed the ruling. Said Mitchell Brecher, an attorney for GTE Sprint: "If AT&T and the operating companies were permitted to use the same logo, the public might think that they're part of a unified system." The rivals had argued that since AT&T will remain a long-distance carrier after the breakup, such identification would give it a competitive advantage.

The ruling means that the telephone giant will have to change the name of its American Bell subsidiary, which was formed a year ago to offer a full line of communications products. Apparently anticipating the loss of at least the Bell logo, AT&T has been using a globe, rather than the traditional telephone symbol, in American Bell advertisements since January. Though the company has 60 days to appeal the rulings, it seems resigned to living with them. Said an A T & T spokesman: "The order to drop the Bell name is the most troublesome part, but there is nothing we can do about it. We'll just have to come up with a new one."

Judge Greene also handed down rules that will affect the cost of local telephone service. Many groups fear that the breakup of the phone company will result in higher local rates since artificially high long-distance prices have traditionally subsidized artificially low local charges. Such financial support will disappear after January, when the long-distance service is separated from the local one. Said Greene: "One of the court's principal aims throughout the public interest process has been to ensure that divestiture would not bring about or contribute to local telephone-rate increases."

Greene, for example, ordered that AT&T must assign its telephone-equipment patents to the operating companies. This will enable the operating companies to order their communication components from other suppliers rather than just from the Western Electric unit of AT&T. The judge also directed AT&T to help local phone companies recover the estimated $2.6 billion that it will cost to provide equal-quality access to long-distance carriers like Sprint or MCI, which compete with A T & T. If the local companies are unable to pay off the costs by 1994 through fees charged to the longdistance companies, AT&T will have to pick up the remaining expenses.

The final word on restraining local telephone rates, though, may come from Congress. Legislators are already considering plans to provide subsidies to low-income customers or to telephone companies with high operating costs. Some action could be taken before the big breakup occurs next New Year's Day. This file is automatically generated by a robot program, so viewer discretion is required.