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8 The End of the Beginning: A New Beginning!
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155 CHAPTER 8 The End of the Beginning: A New Beginning! History tells us that communicating at a distance has been both a desire and a need of mankind since the beginning of human societies. Socalled modern telecommunications began with the invention of the Telegraph in 1838 or the invention and highly successful patenting of Bell’s telephone in 1876, depending on one’s perspective. Regardless of perspective, though, the decision by the U.S. government to not purchase the telegraph patents from Samuel Morse yielded an environment in the United States in which telecommunications developed in the private sector rather than the governmental or public sector of the economy. This was a global anomaly and one that enabled a unique telecommunications model to evolve and to remain unique for over one hundred years, while the rest of global telecommunications markets were also evolving. This unique attribute makes the U.S. model well worth study. Today’s and likely the future’s global telephone markets will grow and evolve in the private sector and perhaps someday be more regulated by the invisible hand of free trade market forces than by traditional regulatory bodies. In this regard, the United States and global telecommunications markets are converging. Telecommunications or entertainment and communications environments both in the United States and globally, are highly affected by technology, policy, market forces, and security. When Alexander Graham Bell invented the telephone in 1876 to address a communications desire and need, he also coincidently launched the telephone industry. This industry went from the early years of Bell’s company having little or no competition due to patent rights on the telephone to intense competition and chaos soon after those patents expired. There was then a period of over fifty years of a 156 Telecommunications History & Policy regulated monopoly model in which technological and market leadership , as well as much of basic telephone service, was provided by one large corporation called AT&T and which was often referred to as the Bell System. After some early years of noncooperation that was corrected by the U.S. government, the Bell System eventually interconnected with the large number of small, independent, non-Bell telephone companies and they all worked together to provide excellent nationwide telephone service and arguably the finest telecommunications service in the world. Considering telecommunications around the world, some would argue that the U.S. telecommunications excellence provided U.S. business and industry with an added advantage relative to their global competitors. Advances by others have since eliminated this U.S. competitive edge. Interestingly, approximately midway through the twentieth century and with little regard to having the best telephone service in the world, the U.S. government and many individuals and corporations began to challenge the concept of a single-source provider, as well as the concepts of protected markets and the resulting monopoly this provided the Bell System. From a global perspective, this challenge was unique to the U.S. telephone industry. At the time, the telephone industry was often characterized as a natural monopoly. Public opinion and public policy moved from that point in time when the provision of telephone service via a regulated monopoly was thought to be good to a point in time when the competitive model became king. The breakup of the Bell System , which is commonly referred to as “divestiture,” was a pivotal action aimed at moving the U.S. telecommunications industry toward a more competitive model. This consent decree was initiated by the U.S. Department of Justice (DOJ) and agreed to by AT&T and was effective on January 1, 1984. This action tore the Bell System apart by creating seven RBOCs directed to provide local and intraLATA telephone service and AT&T, which provided interLATA or long-distance service. The Bell System was separated in this manner in order to eliminate the “power and incentive” to discriminate, thereby ushering in a more competitive model for long-distance service and fostering the growth of the IXC marketplace in which the MCI Corporation became a significant competitor to AT&T. Divestiture was highly successful in bringing competition [3.229.124.236] Project MUSE (2024-03-28 20:32 GMT) The End of the Beginning: A New Beginning! 157 to the industry and in lowering long-distance rates to all consumers. While the long-distance telephone market became highly competitive after divestiture, the local service arena remained a closed marketplace . Local telephone exchange carriers pretty much had a monopoly over it through the 1980s and into the 1990s. After years of debate...