AT&T; Allowed to Link Service and Equipment

WASHINGTON â€”  The Federal Communications Commission on Wednesday eliminated its requirement that American Telephone & Telegraph Co. operate its long-distance telephone service separate from its telephone equipment and computer businesses.

The unanimous decision means that AT&T; Communications, which provides long-distance telephone service, can market its services jointly with AT&T; Information Systems, which offers phone equipment.

AT&T;, which had sought the change, predicted that the move would save the company more than $1 billion a year and would allow it to more efficiently serve consumers by avoiding duplication between the two subsidiaries.

Consumers eventually will receive one bill instead of two for AT&T; long-distance service and phone equipment and will be able to dial one toll-free number for assistance on equipment and service matters.

Message Retrieval Exempted

The FCC said, however, that its decision does not apply to new telephone services such as message retrieval, which must still be handled separately.

The FCC said its decision reflected the fact that “significant changes� have occurred in the telecommunications industry in recent years, including the divestiture of AT&T; and the growth of competition in the long-distance and phone equipment sales markets.

It had imposed the rule several years ago in an effort to keep the service division, which is regulated, and the equipment division, which is unregulated, from subsidizing each other.

AT&T; Vice President Charles Marshall called the commission’s action Wednesday “an important step toward loosening regulatory restrictions that unfairly apply to us but not to our domestic and foreign competitors.�

Although Marshall said the company will streamline its operations, including facilities, computer systems and other equipment, he predicted no personnel reorganization or “downsizing of our force.�

The FCC also voted 4 to 0 Wednesday to reject a controversial new AT&T; long-distance pricing plan, saying that the company did not provide enough data to support its claims for the service.

Under the plan, called PRO America, customers would pay a $25 monthly fee and in return receive a 15% discount on all domestic long-distance calls. The company predicted that the proposal would be particularly attractive to business customers whose interstate long-distance bills average at least $167 a month.

While the FCC generally has supported measures that lead to increased competition and reduced telephone bills, the commissioners seemed reluctantly convinced by their staff’s conclusion that AT&T; had overestimated its potential revenue from PRO America and underestimated the costs.

“We are disappointed that the FCC once again has prevented AT&T; from offering price discounts that would lower the cost of long-distance calls, particularly for small businesses,� said Larry Garfinkel, vice president of marketing services for AT&T; Communications.

On another matter, the commission voted unanimously to amend its rules to implement the equal employment opportunity provisions of the 1984 Cable Communications Policy Act passed by Congress.

The FCC will require cable companies with more than five full-time employees to file annual reports that include statistics on the hiring and promotion of women and minorities. The law also requires the FCC to investigate each cable operation at least once every five years.