Telecommunications History & Policy into the 21st Century

4 Postdivestiture through the Beginning of the Internet Age

79 CHAPTER 4 Postdivestiture through the Beginning of the Internet Age The year 1984 was truly a time of new beginnings. The seven newly formed Regional Bell Operating Companies (RBOCs) were born of AT&T via the MFJ and AT&T was reborn as a slimmed-down company now unencumbered by its former high-cost, low-profit local operating companies that composed the seven RBOCs. AT&T continued to enjoy its large long-distance revenue stream, but now this market was much more competitive, and AT&T’s revenue was destined to decline. In addition , the long-distance interexchange industry was born again into a fairer system called equal access. Both business and residence consumers were faced with new-found opportunities and challenges that, while confusing partly due to the fact that they now had choices, promised to offer better pricing of long-distance services. Would this savings be offset by increases in local telephone service? It was also a time prior to what is often referred to as the Internet Age, which, for the purposes of this book, will be defined as the post-1996 timeframe–a time when the majority of Americans started using browsers like Netscape or Internet Explorer to access the Internet, and a time when online commerce, communities, and communications began to gain traction. This chapter will exam each of these postdivestiture but pre-Internet, coming-ofage issues. Regional Bell Operating Companies The Regional Bell Operating Companies, or RBOCs as they were called, were formed from the Bell System’s twenty-two wholly or principallyowned operating telephone companies and were, by mutual agreement, organized into seven geographical regions. The MFJ did not specify that there be seven regions, but rather that AT&T and the operating 80 Telecommunications History & Policy companies decide on the best structure. It turned out to be seven principally geographic regions. The following is a list of the original seven RBOCs and changes that occurred to them over time including up through today. Figure 4.1 provides a nice pictorial of the original and current structure. The Original RBOCs and Their Evolution NYNEX, originally composed of New England Telephone & New York Telephone • NYNEX was acquired by Bell Atlantic in 1996 Bell Atlantic, originally composed of Bell of PA, Diamond State, C&P Telephone, and New Jersey Bell • Acquired NYNEX in 1996 and GTE in 2000 and changed its name to Verizon Bell South, originally composed of South Central and Southern Bell • Bell South was acquired by (the new) AT&T in 2006 Ameritech, originally composed of Illinois Bell, Indiana Bell, Michigan Bell, Ohio Bell, and Wisconsin Telephone • Ameritech was acquired by SBC in 1999 Southwestern Bell, originally composed of Southwestern Bell • changed its name to SBC in 1995 • Pacific Telesis was acquired by SBC in 1997 • Ameritech was acquired by SBC in 1999 and AT&T was acquired by SBC in 2005 and SBC changed its name to AT&T • Bell South was acquired by (the new) AT&T in 2006 U.S. West, originally composed of Northwestern Bell, Mountain States and Pacific Northwest Bell • U.S. West was acquired by Qwest in 2000 PacificTelesis,originallycomposedofPacificTelephoneandNevadaBell • Pacific Telesis was acquired by SBC in 1997 Postdivestiture through the Beginning of the Internet Age 81 Figure 4.175 Regional Bell Operating Companies Many areas receive phone service from non-RBOC carriers; for clarity, these carriers are not shown. Qwest originally USWest AT&T originally Pacific Telesis AT&T originally SNET AT&T Verizon originally Southwestern Bell originally BellSouth originally Bell Atlantic originally Nynex originally Ameritech 82 Telecommunications History & Policy Recall that Chapter 3 provides a list of services that these RBOCs and AT&T could and could not provide. Paramount was that the RBOCs could provide local telephone service in the newly established Local Access and Transport Area, a.k.a. LATA, of which there were 196 nationwide. AT&T could not provide service within the LATAs, but could provide interLATA long-distance service. Generally, the RBOCs were forbidden to provide interLATA service, but they were allowed to provide long-distance service outside their home territory where they had little or no facilities and where they were not a dominant player. For example, NYNEX could have provided interLATA long-distance service in California, where it would either have had to build facilities or lease them from Pacific Telesis. This opportunity did not appear to be particularly enticing or lucrative for them. Of interest may be the fact that AT&T initiated the first commercial cellular mobile service in Chicago in 1983. Some say that Charles Brown and AT&T felt that cellular would “stay with” AT&T, but, in fact, all cellular franchises passed to...