Monday, March 06, 2006

Its Back

I see from the paper today that AT&T is re-forming despite its breakup in 1981.  At the time I was in the telecom industry at the time and thought that this state of affairs would be the ultimate result.  The rationale for breaking up the Bell System was flawed.  The underlying reason was a good one.  The public reason was to encourage competition and to break up monopoly power.  The real reason was to accelerate technology development and introduction..

In 1981 the Bell System dominated telecommunications in the United States; similar situations existed around the world, the difference being that the Bell System was publicly owned while most others were government owned.  Because of their dominance the Bell Companies preferred to amortize their multi-billion dollar investments over a long period and so were not inclined to rapidly introduce technology that would make their investments obsolete.  MCI changed all that.

The prosperity of the 1990s can not be ascribed to any politician (Bill Clinton) or party (Democrats); the 1990s were a technology boom started by  of all people Richard M. Nixon, or at least his justice department which filed suit in 1974.  Today anyone can start a telephone company; and many are.

The latest refinement of voice over IP is just that; the latest not the last.  Already it is possible to do almost everything over a wireless phone, and with WiFi work can be done almost anywhere.  These things would not be happening at this juncture were it not for the 1981 breakup of the Bell System.  AT&T still owns Bell Laboratories but has little interest in regaining Lucent Technologies, at the time known as Western Electric.  AT&T was, and I emphasize was, the world’s greatest technology company, even now it is hard to miss senior engineers and executives who at one time or other worked for the Bell System.  They are going away to be sure, but they’re still around.

The new AT&T will never again be the force it was and that’s a good thing.

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