From 1983 through 1998, I was a “Bell-head,” i.e., I worked for AT&T (briefly) and the newly-spun off “Baby Bell” for California and Nevada “Pacific Telesis Group.” I was reminded of this the other day since this month marks the 40th anniversary of one of the most remarkable events in American corporate history: The “Break-Up.”
The American Telephone and Telegraph Company evolved into a de facto national monopoly on voice telephony early in the 20C and was effectively sanctioned by the government. It provided reliable service across the country (serving over 80% of the country’s consumers and businesses) and globally. AT&T employed well over 1M people in its heyday. Technological developments in many fields were accelerated by WWII and some of these started to nibble away at the monopoly by the late 1950s and into the 1960s. By 1974, the Ford Administration’s Justice Department decided that “Ma Bell” was abusing its power and stifling competition and sued under the antitrust laws to change the situation.
Meanwhile, beginning in the 1970s, the Federal Communications Commission was exercising its regulatory authority to put limits of a different sort on what the phone company could do, but was only tangentially involved in the antitrust litigation (the issue of intra-governmental policy coordination is a treatise in itself). In 1982, I was the Special Assistant to the General Counsel of the FCC when we got a call from Justice asking for an urgent meeting later that day. We convened an emergency meeting of the relevant senior staff of the FCC, Justice Department attorneys came over and said: “Tomorrow, we will announce…”
We were a bit agog. The plan devised by DoJ and the Company was to split AT&T into 8 parts: seven regional “Baby Bells,” each retaining a monopoly of local phone service over a chunk of the country and A&T would remain just in the “long-distance” and international businesses. Under the plan, this would be implemented two years hence, on January 1, 1984. This was, among many other things, a “field day” for investment bankers and corporate consultants. Consumers would henceforth be getting two phone bills; there were huge technological complexities, legal issues, organizations to be restructured, not to mention creating a bunch of new corporate names and arranging seven completely new “C-suites.” Two years was not too much.
Amid all the shuffling and hiring, I leveraged a contact from Michigan to see if I could work for what became the local company for the upper Midwest: “Ameritech.” But they had already hired their Washington government relations team, so I was handed-off to the guy in charge of the “Pacific Telesis Group’s” DC office. He hired me to be the lead lobbyist for regulatory matters. I did that job for four years until they twisted my arm and was forced (forced, I say!) to move to headquarters in San Francisco in 1987. (So, whatever might be said of this event and its (continuing) reverberations from either an antitrust, telecommunications, technological, or other perspectives, I am grateful for it since it did generate a job opportunity.)
By the 1980s, computer technology was starting to have a big impact on how phone systems worked. There was no Internet yet, of course, but by the early 1990s, we could see that even bigger changes were coming. At the same time, cell phones burst on the scene (One of my first assignments for PacTel was to secure the license to offer cell phone services in Los Angeles in time for the 1984 Olympics), competition for long-distance service intensified (MCI/Sprint/etc.), and cable companies were starting to figure out how to compete for local phone service. It was a bewildering time (although much seems archaic by now).
By the late 1990s, it was apparent that the regulatory/antitrust premises of the “Break-Up” were already becoming outdated. Over the following ten years or so, the industry heaved and shifted again. The Baby Bells re-merged into two principal groups and what was initially seen as the sexy, high growth long distance segment became commoditized and financially dull. Southwestern Bell (which had bought PacTel in 1998 and set me free) scooped up a bunch of others, as did Verizon. Then they each bought the old long-distance companies (AT&T and MCI, respectively). Southwestern couldn’t resist taking AT&T’s brand (and it’s cell-phone business); so now we have two main companies, plus a few large cable companies which are comparable in scope if not in scale (and a gaggle of little local independents). Lots of clever ideas (mostly about tech guys getting into “content” failed. From a distance it all looks like a lot of churn and not much to show for it.
As I say, the investment bankers and lawyers made out very well in all of this corporate shape-shifting. Consumers had choices and changing service providers and meanwhile the technology and usage patterns for voice calls, information, video, mobile, gaming, streaming, and other services continued to spin into new companies, services, and patterns.
As a participant, I certainly benefited from all this. As a user, my industry knowledge makes me a little smarter than average (although this lead is certainly fading). As a historian, the story gives a great example of the deep differences between experience, memory, and historical perspective. These changes, whether legal/regulatory, corporate, or technological were each implemented by folks (mostly) in good faith, responding to the particular circumstances that they faced in an environment that doesn’t digest change well.
Typical historical questions—Was this all well done? Was it worth it? Is anyone to blame?—seem largely irrelevant. Few, if any, at the time predicted the current configuration; they were mostly just chasing opportunities or solving the problems at hand and letting the future take care of itself. Big retrospective questions have little to no applicability going forward since circumstances have changed so much. Certainly, no single person or group was sufficiently “in charge” to be assigned “blame” or credit.
The Break-Up and its shake-out generated lots of work and angst; but we have (most of us) moved on. It was the meat of many lives for a long time; now it’s just (increasingly) ancient history
The American Telephone and Telegraph Company evolved into a de facto national monopoly on voice telephony early in the 20C and was effectively sanctioned by the government. It provided reliable service across the country (serving over 80% of the country’s consumers and businesses) and globally. AT&T employed well over 1M people in its heyday. Technological developments in many fields were accelerated by WWII and some of these started to nibble away at the monopoly by the late 1950s and into the 1960s. By 1974, the Ford Administration’s Justice Department decided that “Ma Bell” was abusing its power and stifling competition and sued under the antitrust laws to change the situation.
Meanwhile, beginning in the 1970s, the Federal Communications Commission was exercising its regulatory authority to put limits of a different sort on what the phone company could do, but was only tangentially involved in the antitrust litigation (the issue of intra-governmental policy coordination is a treatise in itself). In 1982, I was the Special Assistant to the General Counsel of the FCC when we got a call from Justice asking for an urgent meeting later that day. We convened an emergency meeting of the relevant senior staff of the FCC, Justice Department attorneys came over and said: “Tomorrow, we will announce…”
We were a bit agog. The plan devised by DoJ and the Company was to split AT&T into 8 parts: seven regional “Baby Bells,” each retaining a monopoly of local phone service over a chunk of the country and A&T would remain just in the “long-distance” and international businesses. Under the plan, this would be implemented two years hence, on January 1, 1984. This was, among many other things, a “field day” for investment bankers and corporate consultants. Consumers would henceforth be getting two phone bills; there were huge technological complexities, legal issues, organizations to be restructured, not to mention creating a bunch of new corporate names and arranging seven completely new “C-suites.” Two years was not too much.
Amid all the shuffling and hiring, I leveraged a contact from Michigan to see if I could work for what became the local company for the upper Midwest: “Ameritech.” But they had already hired their Washington government relations team, so I was handed-off to the guy in charge of the “Pacific Telesis Group’s” DC office. He hired me to be the lead lobbyist for regulatory matters. I did that job for four years until they twisted my arm and was forced (forced, I say!) to move to headquarters in San Francisco in 1987. (So, whatever might be said of this event and its (continuing) reverberations from either an antitrust, telecommunications, technological, or other perspectives, I am grateful for it since it did generate a job opportunity.)
By the 1980s, computer technology was starting to have a big impact on how phone systems worked. There was no Internet yet, of course, but by the early 1990s, we could see that even bigger changes were coming. At the same time, cell phones burst on the scene (One of my first assignments for PacTel was to secure the license to offer cell phone services in Los Angeles in time for the 1984 Olympics), competition for long-distance service intensified (MCI/Sprint/etc.), and cable companies were starting to figure out how to compete for local phone service. It was a bewildering time (although much seems archaic by now).
By the late 1990s, it was apparent that the regulatory/antitrust premises of the “Break-Up” were already becoming outdated. Over the following ten years or so, the industry heaved and shifted again. The Baby Bells re-merged into two principal groups and what was initially seen as the sexy, high growth long distance segment became commoditized and financially dull. Southwestern Bell (which had bought PacTel in 1998 and set me free) scooped up a bunch of others, as did Verizon. Then they each bought the old long-distance companies (AT&T and MCI, respectively). Southwestern couldn’t resist taking AT&T’s brand (and it’s cell-phone business); so now we have two main companies, plus a few large cable companies which are comparable in scope if not in scale (and a gaggle of little local independents). Lots of clever ideas (mostly about tech guys getting into “content” failed. From a distance it all looks like a lot of churn and not much to show for it.
As I say, the investment bankers and lawyers made out very well in all of this corporate shape-shifting. Consumers had choices and changing service providers and meanwhile the technology and usage patterns for voice calls, information, video, mobile, gaming, streaming, and other services continued to spin into new companies, services, and patterns.
As a participant, I certainly benefited from all this. As a user, my industry knowledge makes me a little smarter than average (although this lead is certainly fading). As a historian, the story gives a great example of the deep differences between experience, memory, and historical perspective. These changes, whether legal/regulatory, corporate, or technological were each implemented by folks (mostly) in good faith, responding to the particular circumstances that they faced in an environment that doesn’t digest change well.
Typical historical questions—Was this all well done? Was it worth it? Is anyone to blame?—seem largely irrelevant. Few, if any, at the time predicted the current configuration; they were mostly just chasing opportunities or solving the problems at hand and letting the future take care of itself. Big retrospective questions have little to no applicability going forward since circumstances have changed so much. Certainly, no single person or group was sufficiently “in charge” to be assigned “blame” or credit.
The Break-Up and its shake-out generated lots of work and angst; but we have (most of us) moved on. It was the meat of many lives for a long time; now it’s just (increasingly) ancient history
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