New competitive role for Ma Bell's famous research lab

When Ma Bell agreed to divest itself of its 22 local telephone companies last year, some feared the process would kill the goose that had laid so many golden eggs.

The goose was Bell Research Laboratories Inc. of Murray Hill, N.J. The golden eggs were the ideas, inventions, and innovations that had poured out of American Telephone & Telegraph's (AT&T) mighty research and development arm.

Now, less than six months before the January 1984 divestiture, Bell Labs is in transition.

By court order, it is diverting nearly 25 percent of its nearly 26,000 employees to two new laboratories - one for the operating companies and one for AT&T's new subsidiary, American Bell. Bell Labs will only have limited contact with its offspring.

Observers warn that AT&T, having been clipped of its operating companies and thrown into a newly competitive telecommunications market, may be tempted to scale back Bell Labs' basic research program, which has included seven Nobel Prize-winning scientists and has produced radar, the transistor, and the laser. The emphasis of research, analysts say, might swing toward market-oriented development, as is done in most industrial labs.

The concerns have not been limited to outsiders. At the time of last year's divestiture agreement, these worries prompted one Bell Labs scientist to remark, ''Oh well, no more transistors.''

Yet after thwarting an attempt to separate the labs from AT&T, Bell officials insist they will maintain the labs' preeminence in fundamental scientific research, pointing to the modest growth planned for next year.

But while many observers agree that the labs should be able to maintain their strengths over the next few years, they question AT&T's will to continue such a legacy over the long run.

''The 'D' in R&D will have to be emphasized much more heavily than in the past,'' says David DeSimone, former director of the federal Office of Technology Assessment and president of Innovation Group, a telecommunications consulting firm. ''Bell will become more like ordinary industrial labs.''

And at a time when the United States is facing increased competition in international markets from Europe and East Asia, it appears that a swing at Bell Labs from long-term basic research to short-term product development will hurt Uncle Sam far more than Ma Bell.

The labs have nearly 20,000 patents to their credit, and are adding to them at the rate of one a day. Under the terms of a 1956 antitrust decree, they were required to license these patents to other companies. In this way the labs' pioneering research on the silicon chip spawned an entire microelectronics industry.

''Bell Labs is a national treasure,'' says William Carey, executive director of the American Association for the Advancement of Science. He warns that if heavy cuts in Bell's basic research effort are made, ''it would apply a very severe jolt to the American research system - a lot of slack would not be taken up.''

Bruce Merrifield, assistant secretary for productivity, technology, and innovation in the US Commerce Department, says the Reagan administration is so concerned about the disappearance of this ''unbelievably effective national resource'' that it is already exploring ways to encourage industry to fill gaps that might occur.

''Antitrust laws have prevented laboratories from pooling their resources,'' observes Mr. Merrifield. A revision of those laws, coupled with tax incentives for industrial investment in basic research, he adds, might balance any slackening in basic research from Bell Labs.

But Arno Penzias, vice-president for research at the labs, dismisses doubts about Bell Labs' ability to maintain its basic research programs as ''the wishful thinking of our competitors.''

Lab administrators maintain that AT&T has supported a strong basic science program for sound financial reasons. ''AT&T is not a charity,'' says C. Kumar Patel, executive director of physics research at Bell. ''Our basic research is supported because it's a good investment and has paid back handsomely.''

''With our labor costs as high as they are, the only way AT&T can compete internationally is with superior technology,'' says Dr. Patel. That is where the labs' basic research effort comes in: ''If we shorten the focus of our research, in five years we'll be in deep water.''

In that area, many see Bell Labs as having had the best of all possible worlds. Basic research - the quest for undiscovered scientific principles and new ways of doing things - consumes little more than 10 percent of Bell Labs' $2 billion annual operating budget. But that is what Bell has traditionally done best, garnering fame and Nobel prizes through its efforts for the telephone company.

Martin Bloom, associate director of the Brookhaven National Laboratory on Long Island, explains that Bell scientists have always enjoyed close contacts with engineers, fostering a healthy sense of direction in their research.

''Bell has always been able to do things that Brookhaven just can't do,'' says Dr. Bloom, ''because they have an end result in mind.''

As a regulated monopoly, AT&T could comfortably afford the long-term funding that has maintained the labs' success. Thus, it was able to attract and keep a dazzling corps of scientific and technical talent with first-rate salaries and equipment. ''I came to Bell Labs because it is Bell Labs,'' says Mr. Penzias. ''We get the best because we have the best.''

But a critical question is whether they will be able to keep the best. Until recently, Bell researchers have published scientific papers as freely as their campus counterparts. That, along with AT&T's liberal licensing policy, has attracted researchers who might not work in the semisecrecy shrouding many industrial labs.

Now that AT&T is assuming the competitive posture of most other corporations, lab officials admit that papers will be studied for possible company secrets before being cleared. Under last year's consent agreement, Bell is no longer required to license its technology to all comers.

''The question,'' says Exxon Research and Engineering president Edward E. Davis, ''is whether the brilliant technical people at Bell will be given the freedom they're used to having (in order) to push back technological barriers.''

With a greater share of the labs' money coming from AT&T's market-oriented Western Electric, Bell may come under new pressures to bring out products on short timetables - something that has not been one of Bell's strong points, analysts say.

Shifts in funding sources might also affect the labs' working environment. In the past, ''if Bell had a really creative person, they'd let him do anything as long as he'd be happy,'' remarks Mr. DeSimone of Innovation Group. ''That's going to change - they won't be as creatively permissive.''

But Penzias insists that Bell remains true to its traditions. ''If you're smart enough, you can work at Bell Labs on anything.'' Rumored personnel changes have yet to materialize at the Murray Hill workshops. ''There's no mass exodus, '' observes Penzias. ''We're still wooing top theoretical physicists like movie stars.''

With 1982 net revenues of $7.3 billion, some analysts say AT&T will be able to afford to maintain its $200 million-a-year basic research program no matter how tight the market gets. ''Bell Labs is a very expensive hobby,'' says Charles Bosomworth, president of International Resource Development Inc., a telecommunications consulting firm in Norwalk, Conn. ''Whether AT&T is going to afford it will be their choice - they won't be forced.''

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