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Show --! r it-1 -mil i.mu, LMi TELECOMMUNICIATION-STILL TELECOMMUNICIATION-STILL GROWING Man's ability to communicate has come a long way since Mr. Bell's invention in-vention of the telephone in the late 1800s. Though covering a broad range of devices and media, however, telecommunications is still largely devoted to voice and data transmission by conventional telephone, but with great flexibility. While not via landline, one of the most spectacular voice "hook-ups" was that between the earth and its moon ten years ago, when extremely clear, almost instantaneous communications enthralled the world. THE CHANGING SCENE As the telephone sector of telecommunications telecom-munications has made enormous technical advances, what had been a total monopoly in the corporate scope of telephone activities has been gradually thawing. The monolithic core of the industry has for years been the Bell System-now providing 80 percent of U.S. telephone service--with its wholly owned Bell Laboratories and Western Electric subsidiaries providing research and manufacturing support respectively, mostly for System companies. The remaining 20 percent of service is supplied by non-Bell or "independent" "in-dependent" companies covering about one-half the country's geographical area. This was once rural and suburban territory, more auap'auie 10 sm?.:;. remote telephone operating units. As ' the country developed, the trend was to merge the smalls with larger independents in-dependents able to provide financial resources rid insulation from area economic diversities. Today the independents in-dependents ai a distinct competitive element. COMPETITIVE ENVIRONMENT Since 1934 the telephone industry has operated under a Communications Act governing competition, regulation, and consumer protection. The statute is now being widely revised on Capitol Hill, albeit at a snail's pace. The revamp zeroes in on areas largely dominated by AT&T and the larger independents. Key provisions of a new Act would prohibit phone companies from manufacturingithereby divesting Ma Bell of, Western JZlec trie ),optn up, private line communications to media such as satellite and microwave connections, con-nections, and allow phone companies to offer broader computer and television services. The Federal Communications Commission would be replaced by less stringent and cumbersome regulatory uouies. t new uunimuinoauuns aci would be only one segment of regulation, with complementing judicial rulings serving to restructure the industry. Within the communications group, the gradually changing rules and regulations are resulting in a not unhealthy competitive climate, particularly par-ticularly in terms of equipment and interconnections. For example, additional ad-ditional phone sets and "interconnect" devices may now be purchased, owned, installed, and maintained by users, a privilege that was once only within the purview of the Bell system. Competitive advertising for various types of equipment has proliferated, offering a constantly wider range of products and services not previously obtainable, with even the once-conservative once-conservative Ma Bell joining in this marketing-oriented thrust for new business. DIVESTITURE Looking ahead, there is concern as to corporate divestiture. In the case of AT&T, turning subsidiary Western Electric adrift would probably induce competition from new suppliers seeking business from the Bell System uniLs. However, it would also give Western Electric access to non-Bell companies and lucrative foreign markets, thus far untapped. Divestiture of AT&T component companies could create financial problems owing to loss of the parent's quality debt rating. But, as noted, divestiture proposals and other proceedings arc only inching along and may lx; years in gestation. Hence, current investor altitudes toward the telecommunications group need not 1h weighted too heavily by consideration of pending re alignments. |