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January 12, 1987

JUSTICE DEPARTMENT “BACKS BID BY LOCAL PHONE FIRMS FOR PERMIT TO MANUFACTURE”

By CBR Staff Writer

The pressure on Judge Harold Greene for a major relaxation of the terms he set for the break-up of the Bell System is growing, and following strong suggestions from the Federal Communications Commission that he should remove himself from his regulatory role, the Justice Department, on whose behalf he decided the terms, is now expected to ask for much greater freedom for the seven regional phone companies spun off from AT&T. According to the Wall Street Journal, Justice is expected to ask the judge to abandon the restrictions that prevent the regionals from manufacturing telephone equipment, and from offering computer services. The Department, which may also suggest that the regionals be allowed to compete in long-distance service, is expected to lodge its proposals with the judge later this month, but he is not likely to make a ruling before the summer. There is a strong groundswell for allowing the regionals to start manufacturing on the grounds that it would alleviate a little the enormous US trade deficit on manufactures – but AT&T is strongly opposed to the move, saying that the regionals would be more likely to manufacture outside the US in partnership with foreign firms than to set up their own US plants.

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