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CHASTAIN v. AT&T

September 30, 1975

PAUL Y. CHASTAIN, PATSY P. CHASTAIN, CUSTOM COMMUNICATIONS, INC., RICHARD GOLDENBERG, HAL ENTERPRISES, INC., A. FRANK HARRISON, III, d/b/a ATTACHE PHONE OF COLUMBIA INTERNATIONAL FINANCE CORPORATION, DEERWOOD, INC., PASSPOINT CORPORATION, formerly RON PASS AND ASSOCIATES, LTD., RICE CLEVELAND COMPANY, INC., BENJAMIN ROSENBERG, BYRON C. VANN, OSCAR M. HUTCHESON, JR., d/b/a HUTCHESON AND VANN, a partnership;, VIKING COMMUNICATIONS CORPORATION, L. A. WENZLER, JR. d/b/a WENZLER ENTERPRISES, ROBERT B. DANEK, HERMAN BLOCK
v.
AMERICAN TELEPHONE & TELEGRAPH CO.



The opinion of the court was delivered by: GASCH

ORDER

 Upon consideration of the Plaintiffs' Motion for Summary Judgment, the affidavits, memoranda and exhibits in support thereof and in opposition thereto, and for the reasons set forth in the attached Memorandum it is by the Court this 30th day of September, 1975,

 ORDERED that the Plaintiffs' Motion for Summary Judgment be and it is hereby denied.

 Oliver Gasch / Judge MEMORANDUM

 This matter came before the Court on plaintiffs' motion for summary judgment and defendant's opposition thereto. In their memoranda and in the oral arguments of this motion, plaintiffs have urged the Court to find that AT&T violated sections one and two of the Sherman Act *fn1" by participating in a group boycott of plaintiffs' mobile telephone product and by attempting to monopolize the mobile telephone market. For the reasons set forth herein, the Court must deny plaintiffs' motion.

 I. Factual Background.

 The affidavits, stipulations, exhibits, and answers to interrogatories submitted in connection with this motion establish the following facts relevant to the period at issue here, i.e., January, 1968, to July, 1970, when the complaint was filed (hereinafter called the "complaint period.").

 Plaintiffs are fifteen unaffiliated individuals or business entities that engaged in distribution of a mobile telephone device called "Melabs Attache Phone" *fn2" during the complaint period. Plaintiffs' places of business were located throughout the United States, with each plaintiff's distributorship region encompassing a limited geographical area. These areas ranged in size from single counties to several states. Approximately six of the plaintiffs terminated their distributorships during the complaint period.

 Defendant AT&T and its operating company subsidiaries (collectively referred to as the "Bell System") provide, directly and through interconnection with other telephone companies, common carrier communication services throughout the continental United States. Within the Bell System the parent company, AT&T, provides long distance interstate common carrier communications services by interconnecting the territories of local telephone companies within the United States and with foreign countries. AT&T also provides various technical, commercial and legal services to its subsidiaries. AT&T's operating company subsidiaries and other telephone companies provide local telephone services. The conditions attached by AT&T and its operating companies to their provision of mobile telephone service gave rise to this lawsuit.

 The mobile telephone service provided by defendant's operating companies and other telephone companies combines the use of radio frequencies and telephone lines to permit telephone users to call to or from, or receive calls placed to or from, points not physically connected to telephone wires. The mobile telephone service subscriber transmits or receives calls placed to or from telephone company "base stations" by means of a "mobile telephone." Mobile telephones may be obtained from the telephone company that agrees to provide the mobile telephone service, or from other sources, such as the plaintiffs.

 Mobile telephones are designed to communicate with telephone-company-operated "base stations" by means of radio signals sent over certain radio "channels" (i.e., pairs of frequencies) that are reserved by the FCC for the use of mobile phones. *fn3" The base stations function as intermediaries between mobile telephones and the landline telephone network. Base stations transmit landline calls to mobile telephones over the appropriate available radio channel and, conversely, switch calls from mobile telephones into the landline telephone network.

 The affidavits filed by both sides in this case establish that an additional type of mobile telephone service was provided by radio common carriers ("RCC's") during the complaint period. AT&T's answers to interrogatories define radio common carriers as "communications common carriers which are not engaged in the business of providing either a public landline message telephone service or public message telegraph service." *fn4" The record does not clearly explain the nature of the service afforded by RCC's and the manner in which that service differs, if at all, from the mobile service provided by telephone companies.

 The Attache Phone marketed by plaintiffs during the complaint period was a mobile telephone contained in a brief-case-like case and designed to be completely portable. The mobile phones provided by AT&T's operating companies during that period, however, were designed solely for installation in cars or trucks. Both portable and vehicular mobile phones were produced and/or marketed during the complaint period by companies other than plaintiffs and AT&T's operating companies. The mobile phones provided by AT&T's operating companies were manufactured by companies not affiliated with the Bell System. *fn5"

 FCC regulations *fn6" require that persons who wish to use a mobile telephone in connection with mobile telephone service provided by telephone company base stations must first obtain a license from the FCC. *fn7" An individual license need not be obtained by mobile telephone users who obtain their equipment from the Bell System operating companies, however, since company-supplied equipment is covered by licenses granted to the operating companies that own and maintain the equipment. Mobile telephone users who provide their own equipment must present to the FCC at the time of applying for a license evidence that mobile telephone service will be furnished to them. This requirement may be satisfied by ...


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