Here Came the Judge

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Telecommunications experts quickly called the proposals a major victory for local telephone customers as well as for the operating firms, which would be allowed to sell everything from fire-protection systems to computer terminals through telephone stores. The income from those activities and from the Yellow Pages will help hold down local phone rates, which analysts had expected to increase by perhaps one-third under the original agreement. Said Paul Gioia, chairman of the New York State public service commission: "Greene is sticking up for the little guys in this battle of the titans."

Some of the loudest applause came from Representative Timothy Wirth of Colorado, who last month conceded temporary defeat in a battle to pass legislation that included many of the changes Greene has now demanded. Said Wirth: "I am pleased that Judge Greene shares the view that while the settlement will significantly enhance competition in the telecommunications industry, it also needed major changes."

Even Wall Street joined in the general enthusiasm for the order. Said Ernest Liu, a senior vice president at Goldman, Sachs & Co.: "Greene stopped short of full approval, but his acceptance of the general framework is the green light we've been waiting for." AT&T shares finished trading at 52⅞ last week, up 2⅛.

Most analysts believe that the company and the Justice Department will agree to swallow Greene's changes. One possible question mark is the attitude of William Baxter, chief antitrust prosecutor, who would strongly prefer to keep the regulated operating companies from competing in unregulated areas like equipment marketing.

AT&T Chairman Charles Brown said last week that the firm was "pleased" that Greene was satisfied with the basic settlement and predicted that the modifications would be accepted. Said he: "After all we have been through, to have the thing run aground at this late date would be very frustrating." The loss of the Yellow Pages will clearly hurt the main company, however, as will the possible surrender of the local telephone stores where phone equipment is sold. AT&T had been planning to use the shops as a marketing arm for American Bell, the subsidiary that was created in June to develop and sell computer services.

AT&T and the Justice Department have until next week to respond to Judge Greene's changes. If, as expected, both accept them, it will at last be time to break out the bubbly.

— By John Greenwald.

Reported by Gisela Bolte/ Washington and Bruce van Voorst/ New York