Deregulating Telecommunications: The Baby Bells Case for Competition

In 1984, the Department of Justice settled its antitrust caseagainst AT&T. The agreement, embedded in the Modification ofFinal Judgment, led to a divestiture of the local telephoneexchanges from AT&T to the Regional Bell Operating Companies(known as the Baby Bells ). This agreement gave unprecedented powerover a major US industry to one man, Judge Harold Greene of the USDistrict Court of the District of Columbia. The Baby Bells couldnot enter any line of business without approval from Judge Greene.With technological change it became increasingly desirable for theBaby Bells to enter different lines of business, but each attemptwas subject to legal challenge and lengthy, costly litigation. In1994, the Baby Bells mounted a major legal challenge to theModification of Final Judgement (MFJ). As part of their strategy,they asked leading scholars in the field to examine the costs andbenefits of the MFJ and provide evidence in the form of affidavitsregarding its effect. Using a cost-benefit framework, theconclusion of the analysis is that the MFJ should be vacated andcompetition should be allowed in the industry. DeregulatingTelecommunications draws together a group of leading practitionersand academics in the fields of regulation, industrial organisationand antitrust to explore:

• A cost-benefit analysis of the 1984 AT&T antitrust settlement
• Theoretical and empirical studies that analyse the results of thesettlement from its inception in 1984 to 1994
• An explanation for the recent policy decisions to reduce theamount of regulation in telecommunications
• Analysis vital to predicting the results of any deregulation intelecommunications in the future

This book will prove invaluable to economists interested intelecommunications, as well as those interested in antitrust and in regulation.