MCI and AT&T; Square Off in $5.8-Billion Damage Suit
MCI Communications’ $5.8-billion claim against AT&T; for antitrust damages is excessive, unfair and wrong, an attorney for American Telephone & Telegraph said Monday.
“If the Chicago Cubs played to a full house every home game for the next 290 years, their gate receipts would approach what MCI is asking,” attorney H. Blair White told a federal jury as proceedings began to determine damages in the antitrust case.
AT&T; and MCI presented opening arguments Monday before U.S. District Judge John Grady.
The first witness was MCI Chairman William McGowan, who testified that AT&T; destroyed MCI’s business plan by dragging its feet in negotiations to allow MCI to lease parts of the AT&T; network.
“We needed one thing,” McGowan said. “We needed them to supply us with local connections. We were building the long distance. We needed the local (AT&T-owned;) companies for ‘the last mile’ to the customer.”
By the time the Federal Communications Commission forced AT&T; to complete a deal, MCI was on the verge of bankruptcy, McGowan said.
“We went from an operating company to one that was trying to survive,” he said. “We could not expand the business. We could not build what we’d planned. It had the effect of freezing us.”
A 1980 federal jury found that industry giant AT&T; had monopolized the long-distance telephone market, violating antitrust laws by refusing to supply intercity connections for MCI’s private network.
MCI won a $1.8-billion judgment--the biggest ever--against AT&T; 15 months ago. But the award was thrown out by a federal appeals court, which reduced the counts on which AT&T; was liable and sent the case back to Grady. The U.S. Supreme Court refused to hear the case.
The $5.8-billion sum would be trebled under antitrust law, as was the original award of $600 million.
AT&T; contends that it is liable for no more than $10 million in damages for delays that occurred when MCI was beginning operations and seeking to use AT&T-owned; local telephone connections.
“They want to manipulate history in order to present a giant damage claim,” White said.
He argued, for example, that MCI’s Execunet service could not have been delayed by AT&T; because it had not been started during AT&T;’s liability period, which ended in April, 1975.
White said MCI had difficulty with serious cost overruns, late deliveries, failure to get appropriate federal permits and “plain old bad weather” in installing relay towers.
In MCI’s opening statement, attorney Chester T. Kamin said that after months of delaying tactics by AT&T;, “the sky fell on MCI.”
“You can imagine what it was like opening up your offices and having the customers to connect and not having the connections,” Kamin said.
MCI Chairman McGowan “had to cut expenses to the bone, . . . to stop all other construction (after completing half of its start-up network) . . . and to lay off a third of his employees--over 200 of 700 employees,” Kamin said.
He said operations halted abruptly in September, 1973, because of stalls in talks with AT&T.;
The most notable change since the two telecommunications companies went to court in 1974 is the breakup of AT&T;, which began in January, 1984.
AT&T; remains the undisputed long-distance leader. It controls about 50% of the relevant market by its own estimation and as much as 90% by MCI’s.
AT&T; serves 87 million business and residential customers, while MCI serves 2 million.
