Breaking Up AT&T

December 16, 1983

Report Outline
AT&T's Reorganisation
Evolution of Phone System
New Policy Directions
What Next for Consumers
Special Focus

AT&T's Reorganisation

Enticipated Effects of AT&T Divestiture

New Year's Day will ring in a new era for the tele-communications industry. On Jan. 1, 1984, American Telephone & Telegraph Co. — the world's largest company — will be broken up into eight separate entities. AT&T will continue to provide regulated long-distance service and will be allowed for the first time to enter into new, unregulated fields. Local phone service will continue to be provided by existing local operating companies until Jan. 1. Then they will be grouped into seven regions, each controlled by a newly created, independent holding company.

The breakup of the “Bell System” — affecting nearly one million workers and $150 billion in assets — will be the biggest corporate reorganization ever undertaken. While it is bound to have profound effects on telephone service throughout the country, exactly what these effects will be is still — only days before divestiture — largely a matter of conjecture and confusion. Phone customers used to dealing with a single utility for all their equipment, local calling and long-distance needs now face a barrage of advertising from the companies that soon will offer these services on a piecemeal basis. One thing is sure. Phone users can expect to pay more for basic service, perhaps two to three times today's rates by the end of the decade.

Bell customers are not alone in feeling the effects of AT&T's breakup and deregulation of the telephone industry. Holders of “old” AT&T stock — some 3.2 million people — must make crucial investment choices. At the same time, Bell employees, who went on strike last summer to obtain greater job security in their changing industry, are being hit by early retirement plans, layoffs, plant closings and transfers as the newly competitive industry pares down its work force in the effort to enhance productivity.

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