Bell Units Win Greater Marketing Flexibility
The Federal Communications Commission moved Tuesday to allow the seven regional telephone companies created by the 1984 breakup of American Telephone & Telegraph greater flexibility to market telephone and computer equipment as a package with other telecommunications services.
By a 5-0 vote, the commission lifted rules that had required the companies to establish separate subsidiaries to sell telephone and computer equipment to customers.
The original requirements were adopted by the commission to keep some distance between the sales of telephone equipment and the other telecommunications services offered by the newly formed companies created from the 22 local Bell telephone companies that were separated from AT&T; in January, 1984.
The commission said it decided to ease the restrictions because “the costs of mandatory structural separation are high.”
It also said it believed that the public interest would be better served if the companies “had more flexibility” to organize their network services.
In comments filed with the commission, the regional companies generally have maintained that the requirement for a separate subsidiary for telephone and computer equipment is cumbersome because it prevents them from offering their business customers a single point of contact for creating a comprehensive telecommunications network.
“We think it’s going to be a real significant benefit for our customers,” Steven Harris, executive director for federal regulatory relations at Pacific Telesis, said of the FCC action. The San Francisco-based company markets its telephone equipment through its Pactel InfoSystems subsidiary.
While voting to eliminate the requirement for a separate subsidiary, the commission included several provisions to safeguard anti-competitive behavior by the companies and prevent them from discriminating against any other telephone companies or their customers.
Individual plans by the seven companies for implementing the changes would have to be approved by the commission, which must still approve some accounting and cost allocation guidelines before the companies can officially change their corporate structures.
As part of its action Tuesday, the commission approved a limited joint marketing plan submitted by Bell South that would permit the company to develop some joint marketing strategies. Other companies are expected to file similar plans with the commission soon.
The FCC said its action preempts states from imposing any requirements for the companies to maintain separate subsidiaries in this area. The FCC decision does not apply to other independent non-Bell telephone companies.
