AT&T; and MCI Settle Theft, False Ad Suits : Communications: The two firms are locked in a war for customers. They want the FCC to set up guidelines on switching phone users.

American Telephone & Telegraph Co. and MCI Communications Corp. said today they had reached an out-of-court settlement on lawsuits and countersuits that had alleged theft of customers and false advertising.

Terms of the settlement were not disclosed.

As part of the agreement, the two companies agreed to propose adoption by the Federal Communications Commission of industrywide standards to protect consumers from being switched to other long-distance companies against their will.

The proposed standards would permit long-distance carriers to switch a customer’s service only by one of the following means:

- A customer-initiated call to an 800 number of the carrier to which the customer is switching.

- Independent third-party confirmation.

- Signed letter of authorization.

- A call placed by the customer to their local or long-distance telephone company.

The two companies, along with US Sprint, have been locked in a fierce battle for customers. AT&T; and MCI, or their agents, have been placing calls to millions of phone users each month trying to get them to switch their long-distance service.

State and federal authorities and local phone companies have received tens of thousands of complaints about unauthorized switching.

Since the breakup of the old Bell System in 1984, AT&T;’s share of the long-distance market has eroded to below 70%. MCI, the nation’s second-largest long-distance carrier, now has about 15% of the market.

AT&T;, which had claimed that it was losing customers because of unauthorized switching by MCI and its telemarketing agent, had asked the FCC to require a customer’s written authorization before a change could be made.