Communications: The Toil & Turmoil of Ma Bell

From an unpretentious Manhattan headquarters, the American Telephone & Telegraph Co. runs a prodigious organization. The Bell System operates more than half of the world's 208 million phones, reaps more revenue ($13 billion last year) than the Canadian government, is the biggest private customer in the U.S. capital market. A.T. & T. chiefs preside over a 22-man top-management group traditionally—and aptly —known as "the cabinet.''

Lately, A.T. & T.'s cabinet has been about as troubled as the one in Washington. For more than two years, the regulatory Federal Communications Commission has been digging into Bell rates and procedures in the...