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AT&T Accuses MCI of Illegal Discounting

August 7, 1989

WASHINGTON (AP) _ American Telephone & Telegraph Co. on Monday accused its biggest competitor, MCI Corp., of offering large business customers illegally low prices to win their long-distance telephone business.

AT&T officials said they hope the complaint will lead to a reversal of a Federal Communications Commission policy that exempts AT&T competitors from having to file tariffs with the FCC detailing rates and other terms they offer customers.

In its complaint to the FCC, AT&T alleged that MCI has used unlawful discriminatory discounts the past two years to win contracts with the Pentagon, Merrill Lynch; Westin, Hilton and Vista hotels; United Airlines, the University of Colorado and Uniguard Security Insurance Co.

″The commission’s regulatory reforms have not kept pace with the fierce growth of interexchange competition,″ Francine J. Perry, AT&T’s vice president for legal affairs, said in a letter to the FCC accompanying the complaint.

To promote competition in long-distance and data transmission services with the then-impending breakup of the Bell System, the FCC in 1983 granted ″forbearance″ to non-dominant carriers on filing rate tariffs with the commission.

AT&T said it viewed that decision as a ″transitional, interim step″ that would lead to ″eliminating ... unnecessary regulatory restraints″ - such as disclosing its rate offerings to business customers - for all long-distance carriers, including itself.

Because AT&T alone has to file tariffs with the FCC, ″MCI and other competitors have gained unwarranted advantages in the marketplace by selectively providing services on an off-tariff basis,″ Berry said.

MCI, which filed a similar complaint against AT&T last year after AT&T won a contract for Holiday Inns’ long-distance and reservation system, called Monday’s complaint a ″smokescreen.″

″AT&T is merely trying to achieve its own deregulation through the complaint process,″ said Pam Small, an MCI spokeswoman. ″They’re essentially challenging the rules.″

Ms. Small said MCI maintains that AT&T should still be required to detail its rates through tariff filings with the FCC because, as the dominant carrier, it still holds 80 percent of the long-distance and interstate data transmission market.

Herb Linnen, spokesman for AT&T, said FCC figures show the company holds about 68 percent of the market, far less than the almost-total control it once held.

Generally, in telecomunications or other regulated industries, companies must adhere to tariffs filed with regulators.

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