Today marks the 27th anniversary of the divestiture of AT&T into a long distance company and 7 Regional Bell Operating Companies (RBOCs). This was probably the single most important decision in our industry. It not only allowed for competition in the long distance realm (Sprint and MCI), but it allowed AT&T to compete in the computing industry (and indirectly in the OS market with System V UNIX). While the new at&t is almost the same as the old AT&T now, a great deal of innovation happened as a result of the government initiated divestiture.
This is one of those decisions where even hindsight isn't 20/20. Consumers saw their overall telephone bills increase in the years immediately following the divestiture because local rates were often subsidized by long distance rates in the AT&T monopoly era. Another result was that the competition required the long distance carriers to build out, improve, and innovate on their long haul networks. Eventually, those long distance networks would become the fiber optic networks of the commercial Internet. All in all, I don't think we have the kind of competition, particularly in broadband, that this divestiture envisioned, but I can easily trade that off for the kind of telecommunications infrastructure that we do have in this country today.
I remember talking to a couple of people several years ago about this. Both -- one was a libertarian and the other was a former AT&T employee -- thought this was a case of the government overreaching. Without the divestiture, I told them in my cynical manner, if we had an Internet at all today, it would be strung together with copper wires and 300 baud modems.
Tell that to your friends who say the government never does anything good...
This is one of those decisions where even hindsight isn't 20/20. Consumers saw their overall telephone bills increase in the years immediately following the divestiture because local rates were often subsidized by long distance rates in the AT&T monopoly era. Another result was that the competition required the long distance carriers to build out, improve, and innovate on their long haul networks. Eventually, those long distance networks would become the fiber optic networks of the commercial Internet. All in all, I don't think we have the kind of competition, particularly in broadband, that this divestiture envisioned, but I can easily trade that off for the kind of telecommunications infrastructure that we do have in this country today.
I remember talking to a couple of people several years ago about this. Both -- one was a libertarian and the other was a former AT&T employee -- thought this was a case of the government overreaching. Without the divestiture, I told them in my cynical manner, if we had an Internet at all today, it would be strung together with copper wires and 300 baud modems.
Tell that to your friends who say the government never does anything good...
When done right, government can do good. The problem with government is there are not enough wise people involved, just a lot of politicians with an agenda.
I think that's a valid point Jeff. The AT&T anti-trust case began in 1974 and was settled in 1982 (spanning Justice Departments of Presidents Nixon, Ford, Carter, and Reagan), so it was carried on from administration to administration by career staff. I think the key was that staff moved it forward not the political appointees of the DoJ. Note that this is in contrast to the Microsoft anti-trust case where the political DoJ did intervene.