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UNITED STATES v. WESTERN ELEC. CO.

March 23, 1984

United States of America, Plaintiff
v.
Western Electric Company, Inc., and American Telephone and Telegraph Company, Defendants. United States of America, Plaintiff v. American Telephone and Telegraph Company, et al., Defendants



The opinion of the court was delivered by: GREENE

AT&T has filed a motion to require Pacific Bell to grant it access to its lines for services originating from AT&T's coinless public telephones. The motion is opposed, among others, by Pacific Bell, the State of California, the California Public Utilities Commission, and GTE Sprint. It is supported by the Department of Justice and the Airport Operators Council International. *fn1"

 I

 Coinless public telephones have been in use for some time at locations such as airports, hotels, and truck-stops. The Operating Companies themselves own "Charge-a-Call" coinless public telephones which can be used for credit card, collect, and other similar calls. *fn2" Interexchange carriers have recently begun to install their own coinless public telephones. *fn3" AT&T has installed such telephones in a number of places around the country, *fn4" but when it sought to install them in several locations in California, *fn5" Pacific Bell refused to provide the necessary access lines. *fn6"

 It is AT&T's position that Pacific Bell is required by the decree to furnish it with the required access; Pacific Bell, on the other hand, claims that this is a matter over which the California Public Utilities Commission has jurisdiction, and that it will not provide the necessary access to AT&T unless it is instructed to do so by the Commission. *fn7"

 II

 The decree requires *fn8" the Operating Companies to grant nondiscriminatory exchange access to all interexchange carriers. *fn9" That provision was designed to make it impossible for a "bottleneck" monopoly to prevent competitors from providing service by refusing to provide the necessary connections. If such an entity; i.e., an Operating Company, had the authority to determine when it would or would not provide access and to whom, it would become the arbiter of future inter-LATA services; it could shape the inter-LATA competition to suit its needs or interests; and it could frustrate such competition altogether. *fn10" In short, it could act as the Bell System was alleged to have acted prior to divestiture.

 Pacific Bell's assertions of authority to refuse to grant access to its lines to AT&T thus not only violate the decree; they strike at its heart. As will now be explained, the procedural and other defenses asserted by Pacific Bell and by others with respect to the extraordinary action of this Operating Company *fn11" are entirely unpersuasive.

 Pacific Bell asserts that jurisdiction with respect to the coinless telephone issue lies with the California regulatory commission because that issue raises many public interest problems -- problems which the California regulatory authorities are claimed to be in the best position to resolve. In fact, according to those supporting Pacific Bell, *fn12" this Court has recognized that disputes such as this should be decided, at least initially, by local regulators.

 Congress determined by its enactment of the Sherman Act that the public interest lies in the removal of artificial restraints on competition, and that congressional direction was given content for purposes of this litigation by the decree which requires Pacific Bell to provide nondiscriminatory access. Under the Supremacy Clause *fn13" local jurisdictional and other interests must, of course, give way.

  As concerns Pacific Bell's reliance on such doctrines as primary jurisdiction and the recognition that some controversies having both a regulatory and an antitrust dimension should be decided locally, it misconceives what is here involved. The instant controversy is not an inchoate dispute involving possible federal antitrust jurisdiction, *fn14" but it concerns a judgment already entered by a federal court. *fn15" Whatever may be appropriate in other circumstances, when, as here, a party is in violation of the terms of such a judgment, the Court would not be justified in deferring to a state regulatory body.

 Substantively, too, the California public interest argument is not well taken. The refusal of bottleneck monopolies to provide the necessary connections potentially stifles competition, and for that reason alone it cannot be said to be in the public interest. As the Airport Operators Council International correctly points out, if Pacific Bell is not required to provide access, the result could be, inter alia, to emasculate the growth of competitive interexchange facilities at airports; to hold back the development of innovative long distance telephone facilities and service; and otherwise to deprive the public of benefits. Memorandum at 2.

 It is contended by some that the proliferation of exclusive access telephones would be confusing to the public and would for that reason not be in the public interest. *fn16" There is no doubt that some find confusion in the mushrooming of service and equipment options that have become available in the wake of divestiture; others may regard such proliferation as healthy in that they give the consumer greater choice at potentially lower prices. In any event, that policy dispute, too, is resolved by the antitrust laws and the decree.

 AT&T has claimed, without contradiction, that it plans to provide the public with new and improved features and conveniences, and that these will give consumers the ability, among others, to charge calls simply by the insertion of magnetically-encoded cards, *fn17" to use American Express cards for telephone charging purposes, and, if they are non-English speaking, to take advantage of multilingual instructions. MCI, among others, has been similarly ...


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