The AT&T breakup became effective January 1, 1984. Prior to then, ATT was a regulated monopoly. The breakup allowed others to enter their territory and allowed them to enter other territories. AT&T agreed to divest its local exchange service operating companies (the Baby Bells) in return for a chance to go into the computer business (AT&T Computer Systems - which was involved with Unix System 5 and AT&T PCs).
So what's happened in the past 25 years? Technology has changed in ways not imagined at that time, affecting the breakup in a multitude of ways.
The breakup led to multiple types of telephone handsets and new technologies.
Long distance became much cheaper - partially because AT&T's higher long distance prices had previously subsidized local land service, and partly because of competition from companies such as MCI and Sprint. Today, the long distance market is shrinking dramatically due to cell phones and Voice over IP.
The billions of dollars AT&T hoped to make from the computer business didn't happen.
Another part of the breakup of course was the creation of the seven Baby Bells. These were:
None of which exist today! Local landline service never became competitive or terribly profitable. Instead, it became a good buyout target since it was never that strong financially. Hence the seven babies are now three:
Today landline business is down due to cell phones and Voice over IP.
The question is then, was the breakup worth it? Yes, although just not in ways that were envisioned at the time.
During the Microsoft DOJ case, a suggested remedy was splitting it into "Baby Bills," a comparison to the AT&T breakup. However, the two companies were not the same. AT&T was a regulated monopoly; Microsoft was not - it gained a large market share due to its market success (some may say for other reasons, but it definitely was never a regulated monopoly). If you want to read more about the Microsoft case, you may want to check out the paperback edition of Winners, Losers, and Microsoft by Stan Liebowitz and Steve Margolis (http://www.amazon.com/Winners-Losers-Microsoft-Stan-Liebowitz/dp/0945999844). Its appendix has a discussion of the DOJ case and suggested remedies.
Also check out this slideshow: Ma Bell’s 25-year odyssey
and this related article Does the AT&T breakup still matter 25 years on?
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Kerrie Meyler, a Microsoft MOM MVP, is an independent consultant and trainer with more than 15 years of Information Technology experience. A previous senior technology specialist at Microsoft, she focused on infrastructure and management solutions, presenting at numerous product launches. More recently, she presented on Operations Manager 2007 and gave several podcasts at TechEd 2007.
Kerrie has worked with Microsoft Learning to develop Microsoft Official Curriculum (MOC) for several courses, including the Implementing Microsoft Operations Manager 2000 course, and did the beta teach for that course.
Kerrie is the lead author of Microsoft Operations Manager 2005 Unleashed and Microsoft System Center Operations Manager 2007 Unleashed
Check out an excerpt from System Center Operations Manager 2007 Unleashed, Chapter 3: Looking Inside OpsMgr.
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Goverment STUPIDITY
The Goverment Can't even Figure out what is going on in washington Much Less Wall Street and they wanted to try and break up Microsoft!!!! PLEASE GET A GRIP. Sorry Politicians no hand out or payoffs to you political blackmail is against the law. I Have an Idea I think as a taxpayer the Goverment Should Try. Let them try to end the stupidity they dish out everyday i hear todays politicians talk and don't know if i should turn off the TV or get some toilet paper for the politicians to wipe their lips after hearing the CRAP that comes out their mouths
Baby Bills?
I actually was not suggesting a microsoft breakup as a remedy in the DOJ antritrust case against it. That would have made Microsoft an extremely inefficient organization. Not to mention the fact that the DOJ case was extremely political in the first place.
I'm not sure the Baby Bell breakup made much sense either. AT&T apparently wanted the deregulation so they could get into other areas such as computers - which didn't do them much good. I'd say in the long run deregulating Ma Bell made sense, although the telecommunications world is very different now from how it looked in the early 1980s. I'm not sure having 7 regional phone companies was particularly worthwhile though.
One thing to remember in all of this is Microsoft is/was not the same animal as AT&T was. AT&T was a regulated monopoly - courtesy of the government, which became unregulated and broken up. Microsoft was never regulated - it was a business that became very successful selling software. But even in the 10 years or so since the DOJ case, Microsoft's world has changed. In the late 1990s, it was Novell, Netscape, and Sun. Now its more about social networks and Google. Microsoft's long term success will depend on how it responds to change. ... which is what happens in all unregulated industries!
Kerrie Meyler
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