I wouldn't call this a "lack of truthful internals" or "inflated cost". I would call it the problems of transition as technology changed.
As a monopoly in electro-mechanical technology for the U.S., it made sense for AT&T have a strong staff for planning. This is what made the U.S. telephone network so reliable and robust compared to the rest of the world. Both internal and customer equipment were tested, re-test, field tested extensive before going out the door. AT&T had very few "Edsels" over its history.
But with the coming of widespread electronics coupled with divesture coupled with customer owned equipment, this staff was simply no longer necessary.
IBM went through the same thing. In its heydey, IBM computers were not a commodity, they needed difficult set up and programming so that a computer with 128K of memory could serve an entire moderate enterprise, 1 Meg for a big enterprise. Youngsters today with unlimited cheap gigabytes of RAM memory simply can't imagine what it was like to run complex business problems on such limited hardware.
Anyway, that took a lot of people. As technology and the marketplace changed, customers could do their work right out of the box and those people were no longer necessary. IBM went through painful layoffs as well.
In a sense, both at IBM and AT&T the technologists automated themselves out of a job. Cheap fibre-optic cable eliminated the need for detailed math analysis of calling and traffic patterns to optimize cable construction; cheap computers eliminated the need to precisely control the content of every bit at all times.
Some critics blame the mgmt of AT&T and IBM for allowing the companies to be top-heavy. I don't agree. At the time the people were hired, there was a need for their skills. At the time they were hired, they still had a to support a network antiquated by today's standards.
It's really like this in any industry. The use of new technology in electronics and materials allows my automobile to run further between maintenance work -- this has cut jobs for car mechanics. Also, cars last longer, cutting jobs for auto makers. (The flip side is that we drive much much more nowadays which offsets those savings.)