The breakup of the Bell telephone system -- officially under way as of the new year -- constitutes the largest corporate restructuring ever undertaken in the United States. Much is at stake. The US enjoys the world's finest telephone service. More important, the nation has been virtually linked together by telephone -- a factor that has been crucial in furthering personal and business communications for a nation as ethnically and regionally diverse as the US.
For these reasons, state and federal regulators have a special responsibility to maintain the nation's high standards of telephone excellence -- while ensuring that phone rates are affordable for all Americans.
Will the breakup of American Telephone & Telegraph Company actually lead to the development of new alternative communications services sought by the US Justice Department in its seven-year antitrust suit against AT&T? The answer, of course, will not be known for several years at best. What is clear is that major changes would have come to the US phone system even without the court-ordered divestiture. Breakthroughs intechnology, such as use of satellites and inexpensive computer systems that can be purchased by most Americans, had made AT&T's longtime monopoly over telephone service more and more obsolete.
The old AT&T system has now been replaced by eight separate systems -- the parent "Ma Bell" (AT&T) and seven "Baby Bells" (the seven regional operating companies). In effect, AT&T will now concentrate on long-distance service and equipment, such as phones, as well as go into computers and other new aspects of the electronics industry. The local companies will provide the day-to-day local phone service and, for now at least, handle billing for AT&T's long-distance service. Regulatory agencies and Congress should make every effort to ensure that the transition to the new system goes assmoothly as possible during the next several years.
Rates will have to be monitored closely by regulators. There is a special need to reconsider residential "access charges" to AT&T's long-distance service now planned by the regional companies. Formerly, AT&T's profitable long-distance revenues subsidized more expensive local service. That subsidization now ends. The US House has passed a bill that would kill the $2-a-month access charge that is scheduled to take effect April 3. The Senated should examine the issue quickly to see if there are not alternatives to access charges. Families and individualsshould not be priced out of phone service.
Finally, regulators should insist on strict standards for service quality. That means ensuring that competitors to AT&T not only have access to consumers, but that the services are equal to those of AT&T.