Ruling Deals Big Blow To At&T; Stock Order Applies Only To Us West And Sbc Communications

Although a federal court ruling won’t let all five regional phone companies jump immediately into the $80 billion long-distance business, AT&T took a beating on Wall Street on Friday amid worries the No. 1 long-distance company could be facing more competition.

The decision overturning a key provision of a 1996 telecommunications law also may spur a flurry of copycat lawsuits as Bell companies scramble to win free entry into the long-distance business.

There’s agreement among the Baby Bells and the federal government that Wednesday’s surprise ruling gives only two of the Bell telephone companies - SBC Communications and U S West - an unobstructed path to compete in the long-distance market, assuming the ruling withstands certain appeals.

The U.S. government will ask the Texas court on Monday to delay the decision from taking effect. AT&T and MCI also are expected to seek the same relief.

The remaining Bells are likely to seek the same relief, telecommunications experts said.

Meantime, the Texas decision is not expected to have any immediate impact for telephone customers.

The nation’s largest Baby Bell, Bell Atlantic, whose local phone territory spans from Maine to Virginia, attempted to piggyback onto SBC and US West’s case on Dec. 30 - the eve of the historic ruling.

If the Texas court grants Bell Atlantic’s request, “Then we’re hopeful it would apply to us,” said spokeswoman Susan Kraus. The company expects to find out in the next couple of weeks whether it will be given intervenor status in the case.

“If the other Bell companies think there is a chance the Texas ruling will be upheld, I expect them to file copycat cases throughout the country,” said Gene Kimmelman, co-director of the Consumers Union’s Washington office.

Kimmelman said such “me-too court filings” would be reminiscent of what happened in the early 1990s when the Bells sought to overturn a federal law barring them from providing cable TV service. After Bell Atlantic won the first court case in Virginia, a wave of similar lawsuits followed.

Representatives from Bell Atlantic, BellSouth and Ameritech agreed with FCC Chairman Bill Kennard’s assessment Friday that the Texas ruling “is not binding nationwide” and applies only to SBC and US West.

Kennard said he doesn’t foresee SBC and US West plunging into the long-distance business anytime soon. “There will not be an effort to get into long-distance until we get some clarity from the court,” he predicted.

On Wall Street, shares of AT&T Corp. fell 4.2 percent, down $2.56-1/2 to close at $58.75, in the first trading since Wednesday’s decision. It was the most active on the New York Stock Exchange with more than 10 million shares changing hands.

SBC Communications ended the trading up 2.3 percent, up $1.68-3/4, to close at $74.93-3/4. US West, closed up 2.2 percent, up $1, to close at $46.12-1/2.

Stunning the telecommunications industry, U.S. District Judge Joe Kendall in Wichita Falls, Texas, Wednesday ruled that a portion of the 1996 telecommunications law discriminates against the Bells because it does not apply to many other local phone companies, such as GTE Corp., Southern New England Telephone Co. and Frontier Corp.