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December 6, 1987

BABY BELLS: MANUFACTURING “INCLUDES DESIGN, R&D” – JUDGE GREENE

By CBR Staff Writer

Wielding all the power of an independent judiciary, Judge Harold Greene last week clarified the bar on manufacturing by the seven regional phone companies, and took the opportunity to sideswipe two government agencies, the Federal Communications Commission and the Justice Department. In response to a petition from AT&T that he clarify what is meant by manufacturing in the consent decree that led to the brak-up of the Bell System, Judge Greene ruled that the term included research and development and design – calling into question several of the moves already made by some of the Baby Bells. Identified as most exposed are an agreement between Ameritech and David Systems under which the Chicago regional has commissioned David to develop and produce a local area network system, with agreement that David will pay Ameritech royalties on sales; the formation by US West of a Research & Development Centre in Colorado planned to employ 1,500 people; and establishment 18 months ago by Nynex of a Department of Science & Technology. Appeals are being prepared. The judge also criticised the Justice Department for failing to investigate complaints that the Bells were violating terms of the consent decree – apparently in the belief that the alleged violations infringed terms of the consent decree that the Department believed might be altered or rescinded. He suggests that moves towards manufacturing may already have harmed competition. And he criticised Federal Communications Commission officials for making public statements that seemed to incite the Bells to break terms of the decree.

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