Pac-Tel Wins Right to Stake in Pacific Cable
Regional telephone giant Pacific Telesis Group on Monday was granted the right to become the first U.S. company to take part in Japan’s overseas long-distance industry, receiving permission to become part owner of a fiber-optic cable to be laid across the Pacific.
In a separate decision, U.S. District Court Judge Harold H. Greene turned down a request by Nynex Corp., another regional, to take a 50% stake in a transatlantic fiber-optic cable.
The high-capacity optical technology is appearing for the first time on the world’s most heavily used transoceanic corridors of communications, and the regional phone companies have been eager to secure a stake in the growing business.
San Francisco-based Pacific Telesis was cleared to take a stake of about 8.5% in a Japanese consortium that will own and operate the western portion of a cable between Japan and the United States and market its lines in Japan. Another U.S. company will own the eastern part and market its lines in the United States.
Eight days ago, Reps. John D. Dingell (D-Mich.), and Edward J. Markey (D-Mass.), the ranking members of the House in communications policy, wrote to Atty. General Dick Thornburgh complaining that, due to delays by the Justice Department and the court, Pacific Telesis might miss a Feb. 23 deadline for joining the consortium.
Deadline to Be Met
As part of market-opening negotiations, U.S. officials had pushed Japan to allow foreign companies a major stake in the communications business, Dingell and Markey pointed out, and now attempts by an American company to follow up were being blocked from the U.S. end.
Monday’s decision means that the deadline will be met.
Greene oversees the court decree that broke up the Bell telephone system in 1984 and created the regional companies. It bars them from the long-distance business, on the grounds that their control of local telephone networks would allow them to discriminate against long-distance competitors.
In his decision, Greene said that because Pacific Telesis would take part only in the Japanese end of the project, it could not exercise monopoly power over the lines in this country. Noting that it was the only U.S. company able to take part, he said that turning its request down would miss for the United States a “possibly unique opportunity to penetrate the difficult Japanese market.”
Nynex of New York had asked for permission to own 50% of a U.S.-British cable and to market its lines in this country. Greene ruled that doing so might give it the ability to block business for its competitors. He also noted that other U.S. parties were willing to step in to replace Nynex.
