Baby Bells - Breakup of American Telephone and Telegraph

The breakup of Bell Telephone (and Bell Telephone Laboratories), which led to the creation of the "Baby Bells," was a significant event in the history of telecommunications in the United States. Here's an overview of the key points:

Background

Bell System Monopoly: Before the breakup, AT&T (American Telephone and Telegraph Company) operated a monopoly on telephone service in the U.S. through its Bell System. This system included the Bell Telephone Company and Western Electric, which manufactured telephone equipment. Government Action: The monopoly status of AT&T led to concerns about anti-competitive practices. The U.S. Department of Justice filed an antitrust lawsuit against AT&T in 1974, aiming to break up its control over the telecommunications industry.

The Breakup

Settlement: In 1982, AT&T reached a settlement with the Department of Justice. This agreement, known as the Modified Final Judgment (MFJ), required AT&T to divest its local exchange service operations. Divestiture: On January 1, 1984, the Bell System was officially broken up. AT&T retained its long-distance service, manufacturing arm (Western Electric), and Bell Labs, while its local exchange service operations were split into seven Regional Bell Operating Companies (RBOCs), commonly referred to as "Baby Bells."

The Baby Bells

The seven Baby Bells created from the breakup were:

• Ameritech: Operated in the Midwest, serving states like Illinois, Indiana, Michigan, Ohio, and Wisconsin.
• Bell Atlantic: Served the Mid-Atlantic region, including New Jersey, Pennsylvania, Delaware, Maryland, Virginia, and West Virginia.
• BellSouth: Covered the Southeastern U.S., including states like Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee.
• NYNEX: Operated in New York and New England.
• Pacific Telesis: Served California and Nevada.
• Southwestern Bell (SBC): Covered states such as Arkansas, Kansas, Missouri, Oklahoma, and Texas.
• US West: Operated in the Western and Northwestern states, including Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming.

Aftermath and Consolidation

Re-Consolidation: Over time, the telecommunications industry saw significant mergers and acquisitions among the Baby Bells and other companies. For example:

• SBC Communications acquired AT&T Corp. in 2005 and rebranded itself as AT&T Inc.
• Verizon Communications was formed through the merger of Bell Atlantic and NYNEX in 2000.
• BellSouth was acquired by AT&T Inc. in 2006.
• Qwest (which had acquired US West) was acquired by CenturyLink in 2011.