Click! Ma Is Ringing Off

COVER STORY

The breakup of giant AT&T sets the stage for a telecommunications upheaval

Time is running out for the largest company on earth. Ending too is a long era of inexpensive phone service that Americans have taken for granted. But just on the horizon, heralding its arrival with the attention-getting power of a jillion jangling telephones, is a revolution in telecommunications. Propelled by both marketing and technology, the coming changes will rank second in importance only to the establishment of the U.S. telephone system itself, acknowledged as the world's best.

It all starts happening on New Year's Day, just six weeks from now. Under the banner of promoting competition in the U.S. phone service, American Telephone & Telegraph, the Bell System, will die at age 107, shattered in the largest court-mandated breakup of a company since the split-up of Standard Oil in 1911. In place of the old Ma Bell will stand the "new" AT&T and seven regional telephone holding companies, all beginning life as giants and carrying such unfamiliar names as Nynex, Ameritech, U S West and Pacific Telesis. The eight new companies will immediately join the ranks of the 50 largest U.S. corporations in terms of assets.

The breakup will affect all of America's millions of phone users in ways large and small. Instead of receiving a single monthly bill for phone service, for example, consumers may now get three or more: one for local service, another from one of AT&T's proliferating competitors for long-distance tolls, and one from AT&T Information Systems for the lease of the telephone. Many people who previously rented their phones, though, may now buy them outright. Next week AT&T will launch the biggest private direct-mail operation in history. It will send brochures to 70 million customers telling them that under divestiture it will be taking over ownership of their telephone equipment. Consumers currently renting phones will be given options to buy them, continue leasing them, or purchase new equipment from AT&T or from non-Bell suppliers like Uniden or GTE.

For the moment the clearest thing about the breakup of AT&T is the confusion. As recently as last week, it was unclear, for instance, whether local phone companies had the right to offer phone services like weather and time of day after Jan, 1. The gigantic physical task of divvying the Bell System's assets among the new parts, from whole telephone exchanges down to trucks, repair equipment, paper clips and brooms, is still going on. Though phone service has not been hampered, companies trying to do business with Bell report that they sometimes have trouble finding out who is in charge of an office or division.

Much of the American public seems bewildered about the breakup. Polls show that only one in five people knows what is about to happen to their phone system. Says Cecil Woods, 33, a Chicago maintenance worker: "I think it's supposed to be a good thing for everybody, but I don't quite understand how. I just hope something good comes of it, and I think it will."

Even among those who are aware that something big is on the way, there is gnawing concern that telephone service will suffer. Says Yale Professor Stephen Ross, an expert on telecommunications: "We may be trading in a Cadillac for a Ford."