IP: Judge Greene and Humpty Dumpty

[David Farber <farber () cis upenn edu>]

    By Roger Fillion
    WASHINGTON (Reuter) - The judge who oversaw the dismantling
of the old Ma Bell is worried that a corporate marriage
involving the new AT&T Corp. could create the kind of
"monolith" the historic breakup was supposed to do away with.
    Federal Judge Harold Greene in 1982 ordered that the Bell
system monopoly be split up. For more than a decade he then
presided over the consent agreement that created the seven
regional Baby Bell phone companies and the new AT&T, the
nation's No. 1 long-distance carrier.
    AT&T now is in talks to merge with SBC Communications Inc.
-- currently the largest provider of local phone service -- in
what would be an estimated $50 billion-plus transaction. It
would by far and away be the biggest such deal in history.
    "The basic assumption of the breakup was that you couldn't
have competition, fair competition, as long as there was this
massive company that encompassed all areas of the country and
all types of service," Judge Greene told Reuters.
    "And the same theory that led to the breakup," he added,
"could lead one to be suspicious at least of the reemergence of
the same monolith."
    Judge Greene -- now more of an observer of the telecom
business rather than an overseer -- frets that market
conditions have not changed that much since the breakup of the
Bell monopoly and the consent decree that took effect in 1984.
The decree set limits on how the phone industry operated.
    He believes competition has yet to take full root, despite
last year's telecommunications act that tore down decades-old
barriers and let the local and long-distance phone companies
and cable-television operators enter each other's business.
    "There are lots of things that need to be done yet -- both
to get the long-distance companies into local service, and
local companies into long-distance service. Nothing is
perfected yet," Judge Greene said.
    "It seems kind of surprising that they would now
reconstitute the AT&T empire, at least in one part," he added.
    "I would hope that regulators -- the Federal Communications
Commission and the antitrust division of the Department of
Justice -- will be very cautious in approving something like
that.
    Judge Greene's policing duties in the telecom business
ended with the new communications act. Since the law's passage,
there has been an explosion in merger activity.
    SBC recently acquired former Baby Bell Pacific Telesis
Group. Bell Atlantic Corp. is in the process of acquiring NYNEX
Corp. And British Telecommunications Plc is in the midst of
buying No. 2 long-distance carrier MCI Communications Corp.
    It's reported that a merger of AT&T and San Antonio,
Texas-based SBC would have combined revenues of some $80
billion and a workforce of 240,000.
    SBC's regional phone system includes California and Texas,
following the carrier's purchase of PacTel.
    "I'm surprised that somebody wants to put Humpty Dumpty
back together," said Judge Green, adding that any new corporate
monolith would run counter to the intent of the new telecom
law.
    "Certainly I think it was the spirit of the act that there
not be a return to monopoly conditions," he said.
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