Ma Bell Tolls Again

August 18, 1993

Ten years is a lifetime in the constant technological churning of the electronics world. That might also prove to be the life span of the legal decree that dismantled AT&T, the communications giant known as Ma Bell, in 1984. This country's laws against monopolistic dominance over key industries haven't changed in the last decade, but technological advances may have overtaken them to the point they are irrelevant.

AT&T's proposed acquisition of McCaw Communications, the largest cellular phone network in this country, has as many legal and competitive implications as it does technical opportunities. AT&T is the largest U.S. long-distance carrier and McCaw is a major customer of local telephone companies. If the two join their facilities directly, the regional phone companies that were once AT&T's cousins in the old Bell System could find themselves on the sidelines in their own markets.

Merger of the two communications companies, each giants in their fields, is what the securities analysts call a good fit. They complement each other's strengths, duplicate none of them, to make for a much more efficient operation. McCaw has been a leader in developing cellular networks but has so burdened itself in debt that it can't show a profit. AT&T has tremendous financial resources and was able to buy McCaw in a stock swap.

That brings the regulatory authorities back to the "is bigger better?" quandary which led to the anti-trust action against the Bell empire in the early '80s. The decision then was "no," and the Bell System was broken up. Regional phone companies, the so-called Baby Bells like Bell Atlantic in this area, were given exclusive domain over local service, and AT&T was left with long-distance, manufacturing and research. Each was to stay out of the other's turf. But each has been nibbling at the other's turf, and now AT&T is threatening to take a huge bite.

The dismantling of the old Bell system has produced a mixed bag of results. Some competition has kept costs down, but in other cases it may have allowed new companies to go after only the most lucrative customers. How well it has served the average residential customer is arguable. If McCaw can get an advantage over other cellular networks by hooking directly into AT&T's long-distance network, McCaw's competitors will follow suit with MCI or USSprint. The local telephone companies would need relief, or their basic services would suffer. And the giant Bell would loom again.

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