AT&T

Definition

AT&T, or American Telephone and Telegraph Company, is a telecommunications conglomerate that was originally founded in 1885 as a subsidiary of the Bell Telephone Company. It became a major player in the telecommunications industry, notably known for its role in providing telephone services across the United States. The company faced significant scrutiny and regulatory challenges related to antitrust laws, particularly during the mid-20th century when it was found to be monopolizing the telephone market.

5 Must Know Facts For Your Next Test

1. AT&T was originally established to provide long-distance telephone service and quickly grew into one of the largest telecommunications companies in the world.
2. In the 1950s and 1960s, AT&T was accused of maintaining a monopoly over telephone service, leading to multiple government investigations and regulatory scrutiny.
3. The Justice Department filed an antitrust lawsuit against AT&T in 1974, which eventually led to the landmark breakup in 1982, dividing the company into seven regional 'Baby Bells.'
4. AT&T's monopoly not only controlled local phone services but also had stakes in manufacturing equipment and research and development for telecommunications.
5. The breakup of AT&T is often cited as a crucial moment in antitrust history that reshaped the telecommunications industry and opened up competition for other companies.

Review Questions

• How did AT&T's business practices lead to antitrust investigations during the mid-20th century?
  • AT&T's dominance in the telecommunications market raised concerns about its monopolistic practices, as it controlled both local and long-distance telephone services. The company had a significant market share, which stifled competition and innovation in the industry. Regulatory bodies began to investigate AT&T's practices, ultimately leading to antitrust lawsuits that aimed to dismantle its monopoly and promote fair competition.
• What were the implications of the breakup of AT&T for the telecommunications industry in the United States?
  • The breakup of AT&T in 1982 had far-reaching implications for the telecommunications industry. It led to increased competition as several regional companies emerged from the split, known as 'Baby Bells.' This shift not only lowered prices for consumers but also spurred innovation as new companies entered the market. Additionally, it paved the way for advancements in technology and services within telecommunications.
• Evaluate the long-term effects of AT&T's antitrust case on corporate regulations and business practices in America.
  • The antitrust case against AT&T set a precedent for how monopolistic practices are treated under U.S. law, influencing future corporate regulations across various industries. The breakup highlighted the need for vigilance against monopolies and encouraged lawmakers to promote competition to protect consumers. This case has been referenced in subsequent antitrust actions against other large corporations, shaping how businesses operate today by fostering an environment where competition is prioritized over monopolistic control.

Related terms

Monopoly:

A market structure where a single seller controls the entire supply of a product or service, restricting competition.

Sherman Antitrust Act:

A landmark 1890 federal statute aimed at prohibiting monopolistic business practices and promoting competition.

Breakup of AT&T: The legal process initiated in 1982 that resulted in the breakup of AT&T into several regional companies, marking a significant moment in U.S. antitrust history.