Long Distance Telephone Industry & Market

The telephone is a ubiquitous instrument found in nearly every American home and business. It has transformed the world, effectively making it a smaller place with instant communication available between continents. Local phone service is a given for telephone customers, and residential and business customers have access to longdistance service.

Longdistance service is provided on a pay-as-you-go system with customers paying for each call they make: the more calls (or the more minutes), the greater the charge. However, the various longdistance companies have expanded this concept to include complicated pricing schedules that take into account the time of day, day of week, duration of call, type of call (business or personal) and monthly call volume. Customers can therefore be confused as to which plan actually offers the greatest advantage to them.

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s supported by an advertising campaign that cost more than $369 million during the first half of the year (Lefton "Ma Bell," 40). Nature of Competition Until the mid-1980s, AT&T was the only provider of local and long-distance telephone service in the country. AT&T worked hard to protect its large capital investment. It persuaded Congress that a competing parallel telecommunications network would be wasteful, and the government effectively made AT&T a government sanctioned monopoly. However, the government, having agreed that telephone service is a natural monopoly, then set about regulating it to prevent abuse by AT&T. Under legislation passed by the government, AT&T's rates and profits were kept at levels set by regulation. In 1968, a federal judge ruled that AT&T could no longer prohibit non-AT&T equipment from being used on AT&T networks. MCI, which had been exploring telephone technology, brought suit against AT&T under anti-trust statutes, and in 1974, the government ruled that AT&T would no longer be able to operate as the sole source of long-distance service. Because AT&T dominated the long-distance market, new longdistance companies were designated Other Common Carriers (OCC) and AT&T was still subject to a lar
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Approximate Word count = 1459
Approximate Pages = 6 (250 words per page)

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