Did AT&T Die in Vain? An Empirical Comparison of AT&T and Bell Canada

"The Enduring Lessons of the Breakup of AT&T: A Twenty-Five Year Retrospective."' Conference held at the University of Pennsylvania Law School on April 18-19, 2008. Did the Divestiture of AT&T achieve its purpose? It is helpful to turn to Canada, whose telecommunications industry and regulation were similar but which did not experience a divestiture. Since AT&T was split up in 1982-4, national telecom market concentration in the U.S. has bounced back to a national duopoly structure, with an HHI concentration index of 2,986, higher than for Canada's similar national duopoly with an HHI of 2,463.

Local telecom wireline competition is greater in Canada, as are broadband and wireless penetrations. Real revenue for all of AT&T's successor companies grew only half as much as in Canada. AT&T successors' combined market capitalization rose only one third as much as did Bell Canada. U.S. telecom prices are more favorable to business, low-use consumers, and mobile users, but less favorable to high-use consumers, especially those making long distance calls.

AT&T's research development sector was decimated while Canada has preserved some reduced in-house research. Employment in the U.S. declined slightly after 1997, whereas in Canada it rose over 20%. Taken together, this comparison does not indicate that the AT&T divestiture created advantages relative to Canada.