By Samuel A. Simon
January 1, 2004, is exactly 20 years from the day the 'switch' was thrown and the AT&T Bell System monopoly came to an end. On this anniversary date, it is appropriate to pause and ask: Am I better off as a telephone consumer today than I was then? What if the break-up hadn't taken place? Was it the right thing to do? Could it have been done better or differently?
To be sure, the last two decades have been a rocky road. The good news is that the once widespread fears of skyrocketing local rates never materialized. In most states, local rates were stabilized by proceedings that set caps for pricing purposes. Long distance rates plummeted after a time, especially when the Federal Communications Commission agreed to shift costs from the long distance companies (access charges) to the consumer (subscriber line charges).
The truth of the matter is that those of us who worked and advocated on this important issue didn't really - indeed could not know what was going to happen. We certainly did not have a crystal ball that would tell us how a digital revolution would change everything. At that time, the 'personal computer' was owned by a few thousand Americans, not many millions of us. The then tiny volume of 'on line' communication was conducted at the glacial pace of 300 baud - unless you were wealthy and could afford a scorching-fast 1200 baud modem!
Looking back, it now seems to me that the divestiture got it wrong. We broke up the telephone company into the wrong parts - local on one end, long distance and equipment on the other. The market, with the reluctant concurrence of the government, has spent 20 years re-aligning that break-up into a number of fully-integrated national competitors. While we aren't quite there yet, we are getting close to having four or five giant companies with the economic clout to launch and maintain national and international communication systems with state-of-the-art technology available to all people.
As we cross the 20th year of the break-up, the world looks and is entirely different. The changes that are taking place today are many times more dramatic than the changes forced on the telephone system a score of years ago. Consumers now benefit from a plethora of options on how to communicate, technology is exploding, options abound and the biggest changes seem yet to be ahead of us. In the final analysis, it probably really didn't matter what the U.S. government and the courts did. Despite all the rules and laws strewn in its path, the consumer-driven market has ended up largely finding its own path over the last 20 years. That outcome may have been as inevitable as it was unforeseeable.
There are of course valid concerns about concentration of control of the media old and new. There will always need to be appropriate government oversight of what is a national strategic asset - the telecommunications infrastructure. However, if there is a lesson of the last 20 years it is that the government needs to get out of the business of micro-management of telecommunications regulation. The focus should be on setting broad national policies that encourage investment and deployment of new services and to then keep a watchful eye out for possible abuses. I believe that we would have seen some of the most powerful technologies of the last 20 years - such as wireless and high-speed broadband - emerge even faster if the market had been calling the shots instead of regulators and lawmakers protecting special interests. Here's hoping that we learn the lessons of the last 20 years and put them to work in the next two decades!
ABOUT SAMUEL SIMON
Samuel A. Simon, 58, is a nationally-recognized authority on consumer and public affairs, with 33 years of experience at the highest levels of his profession. He is founder and President of Issue Dynamics, Inc., and public affairs firms in Washington, DC, which includes local and wireless phone companies and technology companies as clients. Until 1986, he served as president of the Telecommunications Research and Action Center, the nation's oldest and largest consumer group concerned exclusively with telecommunications issues. (He remains TRAC's chairman of the board today.) Simon is a lawyer, graduating with honors from the University of Texas School of Law in 1970. He entered the public interest movement immediately following law school, working as one of the first lawyers for Ralph Nader. In addition to his position as president of Issue Dynamics, Inc., Simon has maintained a major presence in the national consumer movement. He serves as chairman of the board of the 103-year-old National Consumers League. Simon also is a commissioner of the Fairfax County (Va.) Consumer Protection Commission. The views expressed in his statement are those of Mr. Simon, and not of any organization with which he is affiliated.
Today, Simon is one of the few key players in the "Bell System" break-up who is still alive to talk about it. U.S. District Judge Harold H. Greene, who oversaw the break-up of AT&T, died of a cerebral hemorrhage at his home at age 76 on January 29, 2000. Another prominent player in the AT&T divestiture process was law professor William F. Baxter, who died at home in Los Altos on November 27, 1998, at the age of 69, from the effects of emphysema and Parkinson's. Charles L. Brown, retired AT&T chairman, died on November 12, 2003, from a long illness. He was chairman for seven of his 40 years with AT&T.
