But long distance rates for both switched and private line service were both on the way down well before actual divesture. Also, faster and faster digital lines were being installed before divesture.
I maintain it was mostly technology -- cheaper terminal equipment and carrier media followed by higher call volume and greater economies of scale -- that caused and still cause long distance rates to fall.
As Pat noted in his comments, in the early days MCI had a big advanage serving only the high profit markets with no obligation to handle the expensive stuff or provide support services. Any time a phone call had trouble they dump it into AT&T's lap.
Are you sure they weren't? I'm not that familiar with private line tarrifs, but as mentioned my own employer's network went down in price and up in speed before divesture. Private networks, such as owned and run by railroads, were shifted over to AT&T since it was cheaper for AT&T to provide it than doing it themselves. Considering they already had a network in place, there must be have been good cost savings to dump it for AT&T.
I'm not sure "months of collapse" is an accurate characterization.
The Internet boom did not happen suddenly overnight. Remember that since the 1960s people used dial-up to communicate with computers and this traffic continued to grow. Hobbyists with early home computers began to talk to each other then BBS's came along. The RBOC were serving this growing traffic all along; and it was well recognized and expected it would increase greatly. There were the early services such as Compuserve and Prodigy.
Remember too that many users got a second telephone line for their computer use. At the same time, the real (inflation adjusted) cost of local phone service went down and more people got second lines for their kids. The phone companies were planning and responding to this all along -- expanding switch and local loop capacity.
Is the U.S. really "beh> The No. 1ESS was basically a No 5XBAR with stored program control
Well, basically every switch was an advancement on the basic Strowger unit which itself was to eliminate manual operators.
But I suspect the ESS offered more benefits than you suggest. I believe it took up less floor space and operated faster, so it could handle more calls in the same building. I believe it was more reliable and more flexible.
Also, since the Bell System's rates were based partly on cost, cost savings would be passed along to the customer which they were. In a time of great inflation local rates remain nearly level.
But isn't that what EVERY business does? Any large business has teams of engineers figuring out ways to do things cheaper. Then the marketing people tell us something that is more inconvenient is actually an "improvement".
When airlines buy new jet planes, they do so because the planes are more fuel efficient and need less crew to fly, rather than making flying better for the passenger.
Indeed, in many telephone service has gotten worse for us end users because of cost savings. Instead of a live PBX operator serving us, we get a machine and phone mail jail. Ironically, the old Bell System constantly implored its business customers to provide excellent service on their PBXs -- it offered training and guides and support services.
[Telecom Editor's Note]
Another major reason for the system rebuild was to protect the network itself. The "phone phreaks" were using 'blue boxes' to take control of the network and lock up long distance trunks. While mostly used to save money, it was potentially very dangerous.
As to the issue of not interested in providing the customer with advanced features, I'm not sure I agree. According to Bell Labs Record and the history books, advanced service features (especially for business users) were important.
The Bell System did not have to retrofit Step-by-step exchanges with Touch Tone converters -- it didn't save them any money. But they still developed four models for various SxS situations.
The Bell System didn't have to develop the Princess or Trimline telephone sets. But they did. And we know they put a heck of a lot of effort into optimizing the design for user comfort.
The entire history of the Bell System has been one of improving the economies of scale to lower the cost to get more traffic and make more money.