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Re: [telecom] What scratches your personal itch?

Well, when I got started in the telecom industry, one of the things

> that got me moving was my impatience and disgust with the rigid rules > that the phone company had put on everyone over the years and the > monopoly that it put upon us. This was back in the late seventies.
[snip]

The book, "Heritage and Destiny: Reflections on the Bell System in Transition" by Alvin Von Auw offers a different perspective on this issue.

A key item was that the monopoly and telco policies were established by government regulators. Their goal was to provide universal service by cross subsidization. The very basic entry level telephone service was purposely priced below cost to make it as affordable as practical, while optional service items, such as extension phones and long distance, were priced at a premium to offset that loss.

Divestiture was, in essence, a court ordered end to those policies.

Technology improvements over the years has rendered some of the above book moot. But I still recommend it as it gives us a good history of the times and a different perspective.

Reply to
HAncock4
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I don't think that divestiture was ordered by the court, and even if it was "ordered" on paper, the change was ordered by forces outside the legal system.

As you describe, Congress wanted cheap rural phone service. They achieved the goal by requiring businesses to pay more (in fact, a LOT more) than the actual basis of Long-Distance calling. The rates were exorbitant, and they were the major cause for the "Blue Box" fraud of the Sixties and Seventies.

However, the prime mover for divestiture wasn't Blue Boxes, but mutual funds: in the 70's, mutual-fund managers accumulated enough of AT&T's stock to force the board to accept the infamous consent decree which spelled the end of Mother Bell. Thus, they brought about an end to the long-distance charges which were affecting the fund managers' other investments, and (as a by-product) the end of local phone subsidies in rural areas.

I don't think the Congress minded very much: all the farmers already had their phones, and Western Electric built cables and instruments to such high standards that the bill for that subsidy's end didn't come due for decades.

YMMV.

Bill

Reply to
Bill Horne

It wasn't just cheap _rural_ service, but cheap basic phone service for everyone. In the 1970s, one could get a basic city line for about $3.50 a month TOTAL, including the telephone set and full maintenance.

In my opinion, long distance rates by the 1970s were not exorbitant--they had been declining for years. In the 1970s AT&T introduced one minute minimum and deep discounts for late night and weekend calling. Businesses with heavy long distance volume (and they did not have to be that big) could get inward or outward WATS lines, and quite a few did.

In my opinion, the Blue Box fraud was inspired more by people wanting the technical challenge, a desire to put something over the "big phone company", and a desire to get something for nothing.

In my opinion (based on talking to many Bell and corporate telecom managers at the time and dealing with the transition on the job), Bell recognized that its old business model of building phones that lasted forever and renting them was obsolete and no longer profitable nor wanted by the public. That is, Bell realized the rental from extensions no longer covered the cost of sending a man and a truck out to fix them when the phone or its wiring failed. Bell was also hurting from a high amount of churning--customers moving. By not sending someone out to install or disconnect service it would save a lot of money.

Reply to
HAncock4

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