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House to require the Bell System to divest its equipment
manufacturing operations within three years and to interconnect with all other carriers. H.R. 13015, 95th Cong., 2d Sess.
1st Sess. (1979); H.R. 6121, 96th Cong., 1st Sess. (1979);
s. 611, 96th Cong., 1st Sess. (1979); s. 622, 96th Cong..
1st Sess. (1979); s. 2827, 96th Cong., 2d Sess. (1980).
example, H.R. 6121 was approved by the House Commerce Committee
in August 1979.
It would have required the Bell System to move
any research and manufacturing operations that supported
unregulated services or products to a separate subsidiary, and
would have prohibited Bell companies from providing any
information services that might compete with newspapers or
periodicals, such as "electronic" Yellow Pages.
In 1981, the Senate passed s. 898, which is the source
of several of the provisions of the Modification of Final
S. 898, 97th Cong., 1st Sess. (1981).
attempted to protect competing equipment manufacturers and
suppliers from abuse of the BOCs' bottleneck position by
ordering structural separation of the Bell System's research,
development and manufacturing operations and by imposing
restrictions on the Bell Companies. purchases of equipment from
its manufacturing affiliate.
S. 898 sought to protect
competing interexchange carriers by requiring the establishment
of "exchange telecommunications areas" within the states, and
further establishing a timetable for the phase-in of "equal
exchange access" by the BOCS.
These interexchange and exchange
access provisions of s. 898 were later incorporated directly
into the Decree.
See Modification of Final Judgment,
Sections II(A), IV(G), and Appendix B, S A.
After s. 898 passed the Senate, legislation was
introduced in the House in November of 1981 (H.R. 5158,
97th Cong., 1st Sess. (1981)) that adopted radically different
solutions to the threats of competitive abuses by Bell exchange
The FCC pursued similar regulatory solutions. *
The Bell System thus was confronted not only with the
claims in United States v. AT&T and the private antitrust
suits, but also with a host of proposed and actual FCC
regulations and several legislative proposals.
sought to limit the Bell System's ability to abuse its
exchanges through such devices ranging from structural
requirements, to procurement quotas, to information flow rules, to interconnection standards, to pricing regulations.
See, e.ge, Amendment of Section 64.702 of the Commission's
As the District Court found in 1982, the resulting
uncertainty over industry structure and ground rules threatened
the entire industry and the legitimate interests of all its
See United States v. AT&T, 1982-2 Trade Cases
64,726 at 71,526 (D.D.C. 1982).
For while the regulatory,
legislative and antitrust initiatives were pending, the
industry participants had to wait, month after month, year
after year, to learn what the "rules" and industry structure
While they waited, industry participants often could
not move forward with new services and new investment, for fear
of having to backtrack when the new "rules" were determined.
Worse, industry participants bent their efforts toward
prosecuting or defending the litigation (or agency or legislative proceedings) in order to influence the resulting
"rules" to each participant's best advantage.
Department of Justice contended, the mere existence of the
integrated Bell System and its potential to abuse its
bottleneck position inhibited many firms from entering the long distance and equipment manufacturing markets in competition
In short, the costs of dispute dragged down all
large and small companies, actual and
potential investors, and customers of all sizes.
Under the bottleneck leveraging theory, there was only corresponding line of business injunctions that would prevent
one antitrust remedy that could end the crippling uncertainty
and incessant controversies:
AT&T's divestiture of the local
exchange monopolies of the BOCs and the imposition of
the divested BOCs from reentering related competitive
The Department sought this precise remedy in its
1974 case, both in the pret.ial proceedings and at trial through three different administrations and the tenures of five
different Attorneys General.
The fact that this antitrust
remedy was dictated by the Government's antitrust theory is vividly illustrated by the cover note that the then Assistant Attorney General for Antitrust (William Bakter) attached to the
Although the Decree was not AT&T's idea, AT&T decided
that it was the best of the available alternatives and the only
way to end the turmoil and the industry's paralysis.
January 8, 1982, AT&T consented to entry of the Department's
Thus, the Department contended that divestiture and the
Before this Decree could be entered, however, the Tunney Act required Judge Greene to conduct extensive proceedings to determine whether the proposed relief was in the public interest and to make explicit findings as to the appropriateness of this remedy. Over 600 entities submitted written comments on the Decree, including competitors in each of the relevant markets, the FCC, state utility commissions, public interest groups, and members of Congress. The commentors almost uniformly agreed that divestiture was a good idea. They also broadly agreed with the concept of line of business injunctions on the divested BOCs, although some commentors challenged some of the injunctions that the
Department had proposed.
On the basis of this record and the voluminous trial record, Judge Greene found that AT&T's divestiture of the BOCS was "plainly in the public interest." United States v. AT&T,
552 F. Supp. at 223.
Judge Greene similarly approved the line
of business injunctions that would prevent the divested BOCS from reentering the interexchange and manufacturing markets that had been the subject of so many years of litigation.
The Court found that the interexchange services
injunction was necessary because access to the BOCs local
exchanges is "essential" for interexchange carriers and any BOC that provided these services could disadvantage interexchange carriers in a variety of ways so long as the local exchanges
Id. at 188.
The Court concluded that the
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