THE DEAL OF THE CENTURY: The Breakup of AT&T by Steve Coll


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An admirably balanced and consistently engrossing recapitulation of the Byzantine events that culminated in the 1984 breakup of AT&T. Before getting down to blow-by-blow cases, Coll puts in clear perspective the post-WW II developments in the telecommunications industry that resulted in an antitrust suit against the Bell System late in 1974. The Justice Department's bid to divest AT&T of its operating telephone companies hung fire until 1979, when private complaints by Litton and MCI plus an activist judge (Harold Greene) helped revive the flagging federal case. Several settlement scenarios were discussed during President Carter's last months in office, but no accord was reached. In the event, the Reagan Administration became the unlikely prosecutor, and the smart money was betting on either a mutually agreeable resolution or an outright dismissal of the litigation. William Baxter, Justice's obdurate new antitrust chief, had his own agenda, however. To illustrate, he strongly believed that the coexistence of regulated and unregulated divisions within the Bell System ""skewed the otherwise pristine mechanisms of a free-market economy."" As one consequence, Coll reports, the courtroom drama continued to unfold despite official reluctance to put Bell's national switched network at risk. In the meantime, a jury found against AT&T in the Litton action, one of more than two dozen lawsuits filed against the colossus during the 1970's. Finally, in January of 1982, AT&T chairman, Charles L. Brown, acceded to a draconian consent decree that left the company with a long-distance operation, Bell Labs, and Western Electric, plus leave to enter the computer business, from which it had been barred since 1956. Coll leaves hanging the issue of whether public interests were served by what one AT&T insider characterizes as ""the destruction of the company."" He does, though, reach a number of conclusions about the judicially endorsed dismemberment, e.g., that residential subscribers are paying appreciably more for local phone service. A near-definitive reconstruction of this consequential conflict.

Pub Date: Nov. 1st, 1986
Publisher: Atheneum