This research examines the break-up of AT&T in 1981. The issues leading to the antitrust case against AT&T, AT&TÆs objectives and motivations, the antitrust action that culminated in the break-up of the company, and implications of the break-up of AT&T for the contemporary period are addressed.
Issues Leading to Antitrust Action Against AT&T
Prior to the break up of AT&T, the telecommunications industry in the United States consisted of AT&T (the Bell System), and ômany franchised, independent telephone companies.ö Although franchised and independent telephone companies were in the telecommunications market in the United States prior to the break-up of AT&T, the Bell System controlled in excess of 80 percent of the telecommunications market.
The dominance of the existing telecommunications market in the United States by AT&T provided a central motivation for the Antitrust Division of the Justice Department to pursue the action to force divestiture on AT&T. The rapidly developing changes in the telecommunications environment provided a second strong motivation for the antitrust action, for the federal government did not desire for a single firm to dominate the new technology. AT&T management at this point had to decide how to respond to the situation. Especially to the changes in the long-distance telephone communications market.
The trend of telecommunications policy in the United States has been liberalization and competition since the late-1950s. The Above 890 decision in 1959 facilitated competitive transmission facilities which led in turn to the creation of a competing public facility in 1969 by MCI. Later, common carriers were permitted and the open skies policy allowed the establishment of satellite facilities to compete with wire facilities. Following a number of anti-trust suits being filed by competitors a major action was taken by the United States Department of Justice against AT&T. This action was...