Pacific Tel Can Hold Stake in Overseas Cable
Pacific Telesis Group was granted permission on Monday to own up to 10% of a Japanese telecommunications consortium, allowing it to become the first of the seven U.S. regional phone companies to participate in a major foreign long-distance venture.
The decision by U.S. District Judge Harold H. Greene could make San Francisco-based Pacific Telesis the first U.S. company to have an ownership interest in the Japanese end of a transpacific telecommunications venture.
Both the Commerce Department and the Federal Communications Commission have strongly supported U.S. participation in the Japanese consortium, called International Digital Co., and no assurances exist that any other American company besides Pacific Telesis would be granted that opportunity, Greene said.
The decision is expected to stimulate competition and technological development among other American telecommunications companies seeking to invest in the fast-growing business of using high-capacity optical cable for transoceanic communications.
Significant Advance
If Pacific Telesis’ request was denied, “not only would an immediate foreign trade opportunity be lost, but the United States could also lose a long-term opportunity to influence policies that could open more Japanese markets,” Greene wrote in his decision.
“It’s an opportunity for Pacific as an American company to participate in the Japanese end of communications in competition with what was formerly a Japanese monopoly,” said Brian D. Kidney, a Pacific Telesis spokesman.
Greene’s decision represents a significant advance beyond the limitations imposed on Pacific Telesis and the six other “Baby Bell” regional phone firms when they were created in the 1984 breakup of American Telephone & Telegraph Co. The divestiture decree granted the Baby Bells monopolies over local telephone service in their assigned regions.
But under the decree, which Greene administers, the Baby Bells were prohibited from entering certain businesses where they could use their regional monopoly powers to gain unfair advantages over competitors.
In granting the waiver for Pacific Telesis to enter the foreign long-distance market, Greene ruled that the venture did not raise the monopoly powers issue. He noted that the transpacific cable would enter North America through Oregon, which is outside the territory controlled by Pacific Telesis and thus it would not have direct access to it.
However, while granting the Pacific Telesis waiver, Greene on Monday denied a similar one requested by New York-based Nynex Co. to take a 50% interest in a transatlantic telecommunications venture with Britain’s Cable & Wireless Co. Greene ruled that the transatlantic cable would have linked Europe to New York City, which Nynex serves.
