AT&T: A Persistent and Dangerous National Monopoly
[From Wikipedia, http://en.wikipedia.org/wiki/American_Telephone_&_Telegraph]
A national monopoly
As a result of a combination of regulatory actions by government and actions by AT&T, the firm eventually gained what most regard as monopoly status. In 1907, AT&T president Theodore Vail made it known that he was pursuing a goal of "One Policy, One System, Universal Service." AT&T began purchasing competitors, which attracted the attention of antitrust regulators. To avoid antitrust action, in a deal with the government, Vail agreed to the Kingsbury Commitment of 1913. The terms of the agreement allowed AT&T to purchase independent phone companies as long as it sold an equal amount of telephone devices. G.W. Brock says in Telephone:The First Hundred Years, "This provision allowed Bell and the independents to exchange telephones in order to give each other geographical monopolies. So long as only one company served a given geographical area there was little reason to expect price competition to take place." AT&T focused on purchasing companies within specific geographic areas that increased its effective control of the telephone system market, while selling its less-desirable and previously acquired companies to independent buyers. Also included in the Kingsbury Commitment was the requirement that AT&T allow competitors to connect through its phone lines. Economists point out that this reduced the incentive of these companies to build competing long-distance lines. …
Break up, spinoffs and restructuring
The rest of the telephone monopoly lasted until final settlement of a 1974 United States Department of Justice antitrust suit against AT&T on 1982-01-08, under which AT&T ("Ma Bell") agreed to divest its local exchange service operating companies, in return for a chance to go into the computer business (see AT&T Computer Systems). AT&T's local operations were split into seven independent Regional Bell Operating Companies known as "Baby Bells".
With the American consumer's new ability to purchase phones outright, AT&T and the Bell System lost the considerable revenues earned from phone leasing by local Bell companies. Forced to compete with other manufacturers for new phone sales, the aging Western Electric phone designs still marketed through AT&T failed to sell, and Western Electric eventually closed all of its U.S. phone manufacturing plants. AT&T, reduced in value by about 70%, continued to run all its long distance services through AT&T Communications (the new name of AT&T Long Lines), although it lost some market share in the ensuing years to competitors MCI and Sprint Corporation.
A sign that hung in many Bell facilities in 1983 read:
There are two giant entities at work in our country, and they both have an amazing influence on our daily lives. . . one has given us radar, sonar, stereo, teletype, the transistor, hearing aids, artificial larynxes, talking movies, and the telephone. The other has given us the Civil War, the Spanish-American War, the First World War, the Second World War, the Korean War, the Vietnam War, double-digit inflation, double-digit unemployment, the Great Depression, the gasoline crisis, and the Watergate fiasco. Guess which one is now trying to tell the other one how to run its business?
On 2001-07-09 it spun off AT&T Wireless Corp. in what was then the world's largest initial public offering (IPO). Later that year it spun off AT&T Broadband and Liberty Media, which comprised its cable TV assets. AT&T Broadband was subsequently acquired by Comcast in 2002, and AT&T Wireless merged with Cingular Wireless LLC in 2004.
In 2004, the U.S. government eliminated equal access regulations that allowed long-distance phone companies to access the networks owned by the regional Bell carriers at fixed rates. This ultimately caused AT&T to move away from the residential telephone business — declaring in the process that it would no longer market residential telephone service. Instead, its residential focus shifted to offering a voice service over a broadband Internet connection called AT&T CallVantage.
Acquisition by SBC
Main article: AT&T
On January 31, 2005, Baby Bell SBC Communications announced its plans to acquire "Ma Bell" AT&T Corp. for $16 billion. SBC announced in October 2005 that it would shed the "SBC" brand and take the AT&T brand along with the "T" NYSE ticker symbol.
Merger approval concluded on 2005-11-18; SBC Communications began rebranding the following Monday, November 21 as "AT&T Inc." and began trading as AT&T on December 1 under the "T" symbol. The original AT&T corporate entity, founded in 1885, became a subsidiary of the new AT&T Inc. However, this is not the first time it has existed as a subsidiary; in its founding it was a subsidiary of the American Bell Telephone Company.