The T-1000 of Corporations
By Phil Downing
In 1974, the United States won one of the largest anti-trust lawsuits in the country’s history when it declared AT&T a monopoly. The courts found that AT&T’s extreme levels of verticle integration classified them as a monopolistic business and mandated that AT&T divest its assets into smaller independent companies to create more competition in the telephone service market.
The Majority of AT&T was split up into seven separate companies: Ameritech, Bell Atlantic, Bell South, NYNEX, Pacific Telesis, Southwestern Bell and US West. While AT&T was stripped of many of its local service arms, it was able to keep control its long-distance service systems and its manufacturing subsidiary, Western Electric.
Although the government did what they could to divided AT&T, the companies that AT&T was broken up into eventually started to acquire one another. Southwestern Bell, which renamed itself SBC Communications in 1995, began to diversify horizontally and bought up many companies that used to form AT&T. SBC Communications purchased Pacific Telesis for $16.5 billion in 1996 and Ameritech for $62 billion in 1998. SBC Communications then bought its former owner AT&T for $16 billion in 2005 and absorbed the name AT&T. The new AT&T then purchased Bell South for $86 billion and united the ownership of Cingular, the largest US service provider, under the name AT&T.
Thanks to its horizontal integration AT&T is once again the largest telephony corporation in the United States. Despite their past anti-trust actions, the FCC and the Department of Justice approved all of the mergers that allowed AT&T to reform the majority of their previous holdings.
Interestingly, a partnership of former AT&T subsidiaries, Bell Atlantic and NYNEX went on to become Verizon, AT&T’s largest competitor.