Communications: Cutting In on the Line

Machines are becoming almost as communicative as people—to the delight of big communications companies. Computers chatter over great distances, exchanging complex data in whirring tones, and telegraph and teletype clatter with increasing volume across the oceans. Such conversations between machines offer the communications companies their most exciting prospects for the future. Thus it was doubly disappointing to American Telephone and Telegraph that the U.S. Government last week shut it out of most of this business on the busy transatlantic circuits.

Mother Bell's Designs. Climaxing one of the bitterest business battles in recent history, the Federal Communications Commission turned down A.T. & T.'s request for permission to transmit printed as well as spoken communications through its transatlantic cables, which are capable of carrying both. The combined service would have given a huge sales advantage to A.T. & T., since many companies now want combination telephone-teletype hookups in order to discuss deals, plans or formulas by phone, then record them in print.

More important, the FCC gave this advantage to A.T. & T.'s chief rivals— RCA, Western Union International and International Telephone and Telegraph. The FCC ruled that these competitors may go into transatlantic voice communication, offer a combined telephone-teletype service. They will thus break A.T. & T.'s monopoly on transatlantic phone calls. Said an FCC aide about the fortunate three: "They're the little boys, so they deserve the breaks."

The decision came in the complicated case of Transatlantic Telephone Cable No. 4—known as "TAT 4." The first effective Atlantic cable was laid in 1866 by the famed Great Eastern and still carries telegraph messages. Since 1956, A.T. & T. has laid three TATs that accommodate both printed and voice messages (previously, transatlantic calls were made by radiophone). A.T. & T. shares ownership of these cables variously with Canada, France, Britain and Germany. Each of the existing lines has as many as 84 channels, and A.T. & T. leases some of them to the U.S. telegraph and teletype companies for $102,000 a year per channel.

Until recently, A.T. & T. had limited its own ambitions to the transatlantic phone business. But last October, petitioning the FCC for permission to lay the fourth cable, A.T. & T. also asked to offer a combined voice and print service. The smaller companies howled, accused "Mother Bell" of monopolistic designs.

Shifting Pattern. The FCC decision permitted A.T. & T. to build its fourth cable—with Germany and France as junior partners—but also ordered that Mother Bell's competitors be given the opportunity to buy (not just lease) a part of it. Even more disconcerting to A.T. & T. was the implication in last week's decision that the Government wants to help out the company's smaller competitors. Some of Mother Bell's supporters feared that Washington might place so many restrictions on A.T. & T.'s combined voice-data communications service in the U.S. that the company might be priced out of this new business, which already brings the company $90 million a year.