On January 1, 1984, the world’s biggest company at the time, AT&T, broke up its “Bell System” of operating companies into seven “Baby Bells.”The divestiture was a result of a decade-long federal antitrust lawsuit against the company. AT&T was a “regulated monopoly,” meaning it had no serious competitors in providing telephone service in the United States. AT&T’s monopoly was achieved through vertical integration—the control of both supply and distribution of a product (in this case, telephone service).The supply was provided largely through a subsidiary of AT&T, Western Electric. Western Electric developed communications equipment, such as the telephones themselves as well as cables and microchips.The distribution was provided by 22 organizations called “regional Bell Operating Companies” (RBOCs). These companies provided infrastructure that allowed people to make local telephone calls.The lawsuit wanted AT&T to divest itself from Western Electric. Instead, AT&T divested itself from the Bell Operating Companies. The 22 RBOCs became seven regional, independent “Baby Bells”: Ameritech (which served the Midwestern region and was later acquired by AT&T); Bell Atlantic (now Verizon): Bell South (later acquired by AT&T); NYNEX (which served New York and New England, now Verizon); Pacific Telesis (later acquired by AT&T); Southwestern Bell (later acquired by AT&T); and US West (which served the western Midwest and is now CenturyLink).In divesting itself from the Baby Bells, AT&T redefined itself as a communications company not limited to the “telephone and telegraph” originally indicated by its acronym. In addition to maintaining control over long-distance telephone operations, AT&T gained two important victories in the breakup. First, it kept control of Bell Labs, which developed sophisticated communications equipment. (Bell Labs continues to do groundbreaking research, although AT&T sold it in 1996.) The second victory was more far-reaching. Although AT&T lost millions of dollars in the breakup, the company looked to the future—it secured permission from the government to develop and sell technology in what was then a much smaller industry: computers.
Term Part of Speech Definition Encyclopedic Entry acquire Verb
to get or take possession of.
word formed from the first letters of each of the words in a phrase.
opposing monopolies and supporting competition in business.
strong set of cords or wire ropes.
device designed to access data, perform prescribed tasks at high speed, and display the results.
the way something is spread out over an area.
Encyclopedic Entry: distribution divest Verb
to get rid of or sell off.
tools and materials to perform a task or function.
having to do with a nation's government (as opposed to local or regional government).
system or order of a nation, state, or other political unit.
innovative or pioneering.
to display or show.
activity that produces goods and services.
structures and facilities necessary for the functioning of a society, such as roads.
legal action brought by one person or organization against another.
small semiconductor with electrical circuits that carry information.
exclusive control of a good or service.
authorization to do something.
any area on Earth with one or more common characteristics. Regions are the basic units of geography.
Encyclopedic Entry: region secure Verb
to guarantee, or make safe and certain.
knowledgeable or complex.
company owned or controlled by another company.
the science of using tools and complex machines to make human life easier or more profitable.
system of communication involving devices connected through electrical wires.
electronic tool and system for communication by sound or speech.
vertical integration Noun
ownership or control of different points of production, such as manufacturing and distribution.