Prepared by a consultant for the American Telephone and Telegraph Company (ATT), this memorandum contends that recent decisions by the Federal Communications Commission (FCC) have violated the provisions of the Communications Act of 1934 that assured the maintenance and improvement of the integrated switch telephone network managed by ATT and its affiliates in partnership with the independent telephone companies. Following a brief introduction to the subject, the first major section of the memorandum discusses the development of the telephone industry before 1968. Specific areas covered in this section include the telephone industry's "end-to-end" responsibility for service, the goal of universal service and its implications for rates, and the relation of Western Electric to the telephone network. The second section deals with the FCC's departure from the statutory rule of network unity and provides information on the first cases leading to this situation, restrictions on the competitive response of the general-service telephone companies, customer-owned equipment, and the economic consequences of the recent FCC decisions. The final section presents a summary of the key issues in the continuing debate concerning communications policy. (FL)