IT'S BEEN 20 months since the familiar Bell telephone system broke itself up. There can't be many of the company's customers who haven't plaintively asked, as they pondered their seven-page phone bills, why it ever happened. You have a rich variety of explanations and theories from which to choose. The columnist Joseph Kraft offered one of them in a spirited commentary published in this newspaper Aug. 25, and the federal judge in the case, Harold H. Greene, provided an equally spirited reply a week later. We offer here a couple of historical observations to serve as program notes for readers trying to sort out the lessons of that extraordinary divestiture.
The decision to dissolve the original AT&T structure was driven by technological development. AT&T, a regulated monopoly, had always defended vigorously the technical integrity of its network -- by which it meant that only the equipment that AT&T itself made and sold could be connected to its lines. By the 1960s, other electronics manufacturers were pointing out to the Federal Communications Commission that the concept of network integrity would mean an extension of AT&T's monopoly into a vast range of office equipment soon to be attached to phone lines -- from answering devices to copiers and computers. In 1968, the FCC ruled that AT&T was going to have to allow customers to connect other companies' products to the network.
Similar decisions followed, putting AT&T in an anomalous position. It was legally a monopoly, but it was now legally required to compete.
Neither the FCC nor the courts ever undertook the crucial job of defining the limits of this new competition for an established monopoly, or to set rules for it to follow. Sometimes AT&T operated like a conventional competitor, but more often it followed its long and engrained tradition of operating like a monopoly. In late 1974, the Justice Department charged AT&T with violating the antitrust laws.
The case went to trial in 1981, and, by the end of the year, it seemed pretty clear that AT&T was going to lose. An adverse verdict would have exposed it to suits for punitive damages that, even by AT&T's standards, would have been gigantic. That's the point at which AT&T decided to settle out of court. The present AT&T has retained the competitive businesses. Local service remains a monopoly run by new and independent corporations such as Bell Atlantic, which serves the Washington region.
But does this divestiture serve the national interest? The central questions are still open -- whether the new structure is more efficient, whether it will develop communications technology faster, whether it will strengthen the computer industry. AT&T's and IBM's businesses are converging, and each is the only company in the world that can offer serious competition to the other. But to arrive at clear answers will require more than 20 months.