AT&T; Victory : U.S. Stance on Long Distance Irks Regionals

NEW YORK —  American Telephone & Telegraph expressed satisfaction, but regional phone companies were disappointed Tuesday over a Justice Department proposal to continue restricting the regional companies from providing long-distance service.

The Justice Department pulled back from an earlier proposal to open the doors to the regional companies and said Monday that any waivers from the rule against the phone companies offering long-distance service should be granted on a case-by-case basis.

But the Justice Department said it would consider urging U.S. District Judge Harold H. Greene to grant waivers in certain cases. Greene oversees the consent decree that split the seven regional Bell companies from AT&T; in 1984.

In February, the Justice Department recommended that the regional companies be allowed to manufacture telephone equipment, provide specialized information services and provide long-distance service outside their operating areas.

The department’s new stand on long-distance service was seen a victory for American Telephone & Telegraph, which contends that letting its corporate offspring into long-distance would lead to a regulatory and legal mess similar to the one that led to the Bell System breakup.

‘One-Stop Shopping’ Desired

But the Bell companies, which provide local phone service in most of the nation, argue that the restrictions unnecessarily limit their flexibility to serve their customers.

“Customers are telling us they want integrated service, one-stop shopping,” said Mickey Sandlin, a spokesman for St. Louis-based Southwestern Bell Corp.

For example, he said, Southwestern Bell would be interested in offering big corporate customers private phone lines to offices in other parts of the country, something that is prohibited under the consent decree that broke up AT&T.;

“We are not planning as a business to jump into the long-distance market. Obviously AT&T; controls such a huge percentage of that, no one (regional company) is going to come in and bump them out,” said Daniel Purnell, a spokesman for Pacific Telesis Group in San Francisco.

But AT&T; spokesman Herb Linnen said it remained true that the regional companies had a monopoly over local phone customers within their territories. The fear that they would use that “bottleneck” to compete unfairly with long-distance rivals was one of the reasons they were barred from long-distance in the first place.

“We keep plowing over the same ground again,” Linnen said.