AT&T Company

Why did the government think it was necessary to break up AT&T?

On January 1, 1984, the local phone business, AT & T was split into seven regional companies, independent of each other, which became known as the "Baby Bells." It was established that local distributors (LEC) is devoted exclusively to providing local telephone services and prohibited their participation in long distance markets and information services, of which he had to order the new AT & T. Participants in these activities obtain the necessary local LECs based on the principle of nondiscrimination.

Finally, in 1996 Congress passed a new telecommunications law that was the most important amendment to the current regulatory status since 1934. (Guldman, 1989)

Its main feature is the pro-competitive and deregulatory character, whose primary objective will definitely open the local market and long distance competition. Thus, the breakdown of AT & T and Telecommunication Act of 1997 became symbols pragmatic skepticism about natural monopolies it had reached the academic debate over the last decades of the twentieth century. In 1984, AT & T Corp., the old U.S. telephone monopoly, was divided into regional companies a federal court decision, which thus settled a lawsuit ten years earlier by the Justice Department. Although in reality, the confrontation between AT & T and the government went back to the beginning of the century, since the company consolidated its monopoly on telecommunications services across the country. As everyone knows, AT & T came with the invention of the telephone by Alexander Graham Bell but the history of the industry would be very different if, in 1876, Bell had delayed few hours to process their patent. In this case, Elisha Gray, Western Union, would be known today as the father of telecommunications. (Armstrong, pp.80-83)

In any case, the real architect of the success of AT & T was not Bell, but Theodore Newton Vail, who built the Bell System - it was called a monopoly in its glory days - and became a business strategy in a sustainable mindset. In the 1880's, Vail absorbed hundreds of local exchanges to create the Bell System and Western Union defeated to win a lawsuit for violating the patent directly. In addition, the manager worked tirelessly to standardize and improve the technology directly, eliminating the maze of equipment and different systems have used local plants and improved long distance communication. Vail was concerned about the fact that the patent was set to expire in 1894 and by then, the company had to be ready to face fierce competition. But when that time came, Vail had left the company to move to Argentina, where, dedicated to manage public utilities. Without him in front, the flamboyant American Telephone & Telegraph Co. went through several difficulties: it was overextended, the quality of service was poor and the antitrust authorities were increasingly concerned about the practice that had AT & T to buy those independent companies that interested him and to crush others. (Dalton, pp. 296-305)

What were the government's objectives in ...