The Bell System Divestiture: Background, Implementation, and Outcome

"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. By 1982, the Bell System had operated an integrated telecommunications network connecting almost everyone in the United States for almost 100 years. That system had been designed and operated as a monopoly, but by the 1960s, new technologies were being developed which led to pressure to allow competitive entry. After many incremental changes, the Bell System divestiture--complete separation of long-distance service and manufacturing fiom local service provision-was finally adopted as a way of implementing this transition.

Divestiture was complex and costly. Although service levels were largely maintained, much litigation ensued as competitors jockeyed for market position. In the end, additional new technologies finally allowed competitive markets to develop.