ATT <T> MAY FACE STRUGGLE OVER DEREGULATION
American Telephone and Telegraph Co
may have a hard time convincing U.S. regulatory authorities
that lifting controls on its long-distance business will
benefit consumers, industry and congressional analysts say.
    "There's clearly going to have to be an effort (by ATT) to
say that deregulation will not have an adverse effect on the
consumer," said Gerry Salemme, a policy analyst for the House
telecommunications, consumer protection and finance
subcommittee.
    Salemme said that if the Federal Communications Commission
eased restrictions on ATT, Congress probably would consider
taking legislative oversight action to protect consumers'
interests.
    ATT has about 80 pct of the interstate long-distance
market. It asked the FCC to cut back price and rate regulations
that have control its long-distance phone business.
    ATT spun off its local telephone services operations into
the seven regional Bell companies in 1984 as part of the  court
ordered breakup of the telephone giant.
    The regional companies have been prohibited from
manufacturing equipment and from offering information services
and out-of-region long-distance service.
    But some of them want to move into those areas,
particularly the provision of long-distance services, which
would compete directly with ATT.
    ATT's request came in response to an FCC notice issued in
January that proposed to streamline regulation of certain parts
of its long-distance business.
    The FCC will closely examine the potential effects of the
proposal on consumers, said FCC spokeswoman Mary Beth Hess.
    "That would be foremost in our mind," Hess said.
    Hess said she expected the FCC to respond in a few months.
    Congressional aides said they were concerned that if
regulation is reduced, ATT will use its dominant market
position to raise consumer rates.
    Consumer groups say ATT's concern for its business clients,
its most lucrative market, underscores a danger that, without
full regulation from the FCC, any increased costs will be
passed onto the consumer rather than big business.
    ATT, however, says deregulation would benefit consumers.
    The company would become more competitive because it would
not have to wait for FCC authorization before introducing new
services, spokeswoman Edith Herman said.
    However, Gene Kimmelman of the Consumer Federation of
America, which represents more than 200 consumer groups
nationally, said, "When ATT offers new services, they tend to be
geared toward the high volume business market rather than the
average consumer."
    ATT proposed that in addition to lifting profit regulation,
the FCC allow new rates to go into effect in 14 days instead of
the current 45 days.
    The company also called for a reduction in the amount of
documentation it must file with the FCC each time it introduces
or changes long-distance services.
    "With this filing, we're suggesting that regulators replace
a blanket approach to regulating ATT with a more finely-tuned,
targeted approach," said Lawrence Garfinkel, AT&T's vice
president of marketing services, in a statement.
    "We believe that by using a scalpel instead of a meat axe,
the public interest can be protected and all consumers will
benefit," he added.
    MCI Communications Corp, also asked the FCC to ease
restrictions on ATT, saying this would encourage competition.
    Some industry analysts said the MCI proposal was an effort
to halt FCC-mandated price cuts that have forced ATT and its
rivals to cut prices, eroding profits in the industry. MCI lost
448.4 mln dlrs on sales of 3.59 billion dlrs last year.
    The analysts said the proposal would benefit MCI because
ATT would no longer impose price cuts that MCI would have to
follow when costs fell in the industry.
    "I'm sort of mystified by those comments," retorted Herman, a
district manager for ATT.
    "ATT (if deregulated) has no intention of not passing on
cost reductions," she added.
    Kimmelman, legislative director of the Consumer Federation,
said he opposed deregulation because it left no alternatives
that would ensure against overcharging by ATT.
    He said the FCC had in the past instructed ATT to reduce
prices when the company was benefitting from lower costs from
increased use by consumers of long-distance services.
    Without full regulatory authority this may no longer
happen, he added.
 Reuter
