TELEPHONES: Reach Out and Rake It In

The telephone titan, AT&T, was blessed last week with the prospect of a regulatory windfall. The Federal Communications Commission proposed scrapping the system of controlling AT&T's profit margins, which the agency has done for more than two decades as a means of limiting long-distance prices. Instead, the FCC aims to protect consumers by another method: setting price caps, which would freeze long-distance rates at current levels but could adjust them upward to account for inflation and other factors. AT&T rejoiced at the decision, which Wall Street analysts say could allow the company's profits to jump by an estimated 50% by 1990. But consumer advocates blasted the proposal and claimed it would bring an end to the slide in AT&T's long-distance prices, which have fallen some 34% since the company's divestiture in 1984.