The AT&T Consent Decree: In Praise of Interconnection Only

"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. This article examines the consequences of the Bell consent decree of 1982. In the short run, the decree sought to end the AT&T's Corporate domination of the telecommunications network. But it did so in an overambitious way that chose to break up the basic system into constituent parts even though the preferred remedy was a more modest initiative that would have opened the network up to interconnection by rival carriers.

In charting the wrong path, the consent decree set the course to the 1996 Telecommunication Act, which magnified the original error by forcing elaborate sales at below-market prices of unbundled network elements in addition to allowing for the interconnection remedy. The absence of a competitive solution for telecommunications markets makes it all the more important to design the proper set of public interventions, where once again simple rules dominate more complex remedial arrangements.