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AT T Divestiture

AT T Divestiture The AT&T Corporation, formerly known as the American Telephone and Telegraph Company is the largest telecommunications company in the United States, and a worldwide leader in communications services. Its main businesses include long-distance services, AT&T Wireless Services, AT&T WorldNet services, AT&T Solutions consulting services, and the AT&T Universal Card. Until divestiture, January 1, 1984, AT&T was the parent company of the Bell System. From 1984 until 1996, AT&T was an integrated provider of communications services and products, network equipment and computer systems. On September 20, 1995, AT&T announced that it would be splitting into three companies over the subsequent fifteen months. These companies are: today's AT&T, which provides communication services; Lucent Technologies, a systems and technology company, which provides communications products; and NCR Corp., in the computer business. Lucent became an independent company on October 1, 1996, and NCR became an independent company on December 31, 1996. AT&T was incorporated on March 3, 1885, in New York as a wholly owned subsidiary of the American Bell Telephone Company. Its original purpose was to manage, and expand the burgeoning toll, or long distance, business of American Bell and its licensees. It continued as the "long-distance company" until December 30, 1899, when in a corporate reorganization, it assumed the business and property of American Bell and became the parent company of the Bell System. In 1982, the United States district court for the District of Columbia announced its decision in the United States versus AT&T, ordering the divestiture of AT&T as delineated in the Modified Final judgment. The divested Regional Bell Operating Companies are now seeking legislation, which would effectively place enforcement of the MFJ into the hands of the Federal Communications Commission. On January 1, 1984, AT&T was divested of its exchange telecommunications operations, which were then divided into seven Regional Bell Operating Companies also known as RBOCs. The divestiture of AT&T and the Modification of Final Judgment created a non-competitive marketplace through the obligation of line of business restrictions, which in effect prevent the RBOCs from competing with AT&T. The MFJ Granted a monopoly over local service areas to the newly formed operating companies, provided that they give equal access to all telephone service carriers, especially AT&T’s competitors. Other terms of the MFJ are, the provision of inter-exchange services, the provision of information services, the manufacture of telecommunications products and customer premises equipment and the marketing of such equipment and directory advertising. The court justified the restrictions because they said it was necessary in order to prevent the newly formed operating companies from subsidizing prices in competitive markets with profits earned in monopoly markets. Up until this point there have been many bills passed. Provisions in House Bill 3626 to lift MFJ restrictions on BOCs would have allowed local telephone companies to effectively compete in the growing telecommunications industry without compromising concerns about protecting American consumers from anticompetitive behavior. Enactment of similar measure in the next Congress would further the development of the NII and increase competition for communications services, resulting in lower prices and better service for consumers. In conclusion the house Bill 3626 would have given the FCC and the Attorney General the power to review any authorizations for antitrust and public policy concerns, fully empowering them to deny authorization to requests that do not satisfy these standards. Further, the bill would have taken control of telecommunications policy away from the decree court’s triennial review and appeal process, and replaced it with more efficient and immediate review by agencies qualified to consider antitrust and communications policy issues. Congress should use the House Bill 3626 as a model when proposing telecommunications reform. Bibliography:

Word Count: 613