(FORTUNE Magazine) – THE TELECOMMUNICATIONS equipment market totals over $10 billion a year and is growing fast, but AT&T's share has shriveled from 75% to 35% since 1980 -- and not just because Ma Bell had to divest its local telephone companies last year. Since the breakup the local phone companies have stopped routinely buying telephone equipment from Bell's Western Electric subsidiary (now known as AT&T Technologies). But AT&T has also been bashed by tough competitors like IBM and Northern Telecom and by government rules that prevent it from offering corporate customers complete packages, from telephone service to switchboard systems and personal computers. Now the Federal Communications Commission is proposing to ease the rules, and AT&T's competitors are crying foul. ''AT&T will be able to offer one-stop telephone shopping again,'' says an alarmed lobbyist. AT&T says that the FCC's rules have added perhaps $1 billion a year to overhead, through duplication of sales forces and the like, putting it at a severe competitive disadvantage. IBM recently acquired Rolm, a major telephone equipment manufacturer, and it also controls Satellite Business Systems, which provides long-distance services. Nothing prevents IBM from cooking up package deals. Unless the FCC rules are lifted, concludes James Olson, AT&T president, ''we can't hope to compete with IBM.'' AT&T's rivals, including IBM, Honeywell, Xerox, and Hewlett-Packard, are members of the Computer and Business Equipment Manufacturers Association, which is working the phones overtime to resist the change. The pitch to the FCC: if the restrictions are lifted, AT&T could subsidize the unregulated equipment business with profits from the regulated long-distance business. The FCC expects to rule on the issue by summer's end. AT&T's competitors fear it'll get what it wants. Chairman Mark Fowler is deregulation-minded, and his commission usually goes along. Concedes a competitor: ''AT&T is on a roll.''