AT&T; Reaches Out to Public and Apologizes for Breakdown : Telecommunications: The firm suspects that a ‘bug’ in computer software caused its system’s collapse. It may offer restitution to some and a day of discounted rates to all.

NEW YORK —  American Telephone & Telegraph, embarrassed and apologetic after its biggest long-distance breakdown ever, suggested Tuesday that it might make restitution to some victims and may offer all customers one day of discounted rates.

Company Chairman Robert E. Allen further admitted that AT&T; operators compounded the problem during the early hours of the system collapse Monday by refusing to give customers the phone numbers they needed to gain access to competitors’ long-distance systems.

Ultimately, he said, operators were instructed to “offer those numbers to our customers in the event they asked for them.”

The problem is particularly embarrassing to the company because it has made reliability the cornerstone of its effort to win back market share from its smaller competitors. Although it is not yet clear how much, if any, long-distance business AT&T; might lose, the breakdown will prompt AT&T; customers to reassess their phone needs and possibly use competitors’ systems as backups, analysts said.

The breakdown also has boosted awareness among phone users that the nation’s increasingly sophisticated telecommunications systems are not invincible.

AT&T; said late Tuesday that the 9-hour nationwide breakdown--which affected about half of the firm’s long-distance calls--was triggered by a software problem in New York connected to equipment installed at its 114 telephone switching facilities nationwide.

The company spent much of the day Tuesday getting in touch with its largest users to reassure them that the system was back in order and to assess what damages businesses might have suffered from their inability to make or receive long-distance calls.

Allen asserted that AT&T; has no legal responsibility to reimburse for these losses, but added: “We have to look at each customer’s condition on a case-by-case basis and determine what we can and should do, within the constraints of our tariff and our own moral obligations, and our willingness and interest in maintaining valuable, long-term customers.”

The chairman said AT&T; will also be seeking permission from the Federal Communications Commission to offer a day of discount service, but he did not specify the day or size of the price cut.

AT&T; carries about two-thirds of the nation’s long-distance phone traffic, or about 80 million calls a day. Although calling volume was somewhat lower than normal Monday, the Martin Luther King Jr. Day holiday, the breakdown still prevented millions of calls from getting through.

“We didn’t live up to our own standards of quality. We didn’t live up to our customers’ standards of quality. And it’s as simple as that,” Allen said at a news conference.

Experts say software malfunctions like these are inevitable as the nation and world grow more dependent on giant computers to handle everything from banking to national defense.

“We’re vulnerable,” says Leonard Kleinrock, a UCLA computer science professor and president of a consulting company specializing in seminars for computer firms. “That’s not to say this technology should not proceed, but it’s not without its price.”

AT&T; said the problem was caused by a “software bug” in computer equipment that processed signals. The problem spread to the remaining switches, causing congestion that ultimately spread throughout the system and forced the system to think it was busy when it wasn’t.

A software bug is computer industry jargon for an incorrectly written part of a program, the set of instructions telling computers how to handle the various situations they confront. These bugs may sometimes be dormant for years, springing to life only when a computer is forced to deal with a situation that its programmers did not anticipate.

The foul-up occurred in the same computer network that has made it possible for AT&T; to offer its customers a wide array of new services in the past few years and to carry new kinds of information over its lines. However, as the system has expanded, it has also grown more complex, programmed with hundreds of thousands of lines of computer code.

“In a very complex system, it is virtually impossible to test all situations that might arise,” said John Hertzog, deputy vice president of computer information systems for RAND Corp., a Santa Monica-based research organization.

Ironically, Allen said, the software glitch that triggered Monday’s breakdown appears to have been located in a new feature that was designed as a backup, adding redundancy that was supposed to make the entire network more reliable.

Although AT&T;’s competitors, US Sprint and MCI Communications Corp., have not experienced a similar catastrophe, their executives conceded that their systems are not invulnerable.

“Speculating about what can happen in a network is risky. Every network has a certain amount of hardware and software, and you can never tell what might happen to any of the components,” said Michael J. Furtney, director of corporate relations for US Sprint.

Bahar N. Gidwani, an analyst who follows software companies for Kidder, Peabody & Co., said AT&T;’s programmers are some of the most experienced and skillful at writing software.

With virtually everything from air-traffic control to medical systems being run by computers, he added, “the scarier thing is that all around us are other software systems written by people who don’t have the same expertise.”

Times staff writers Linda Williams and Carla Lazzareschi contributed to this story from Los Angeles.