The 1982 Consent Decree (also know as the Modified Final
Judgment)
The 1982 Consent decree was signed after a 7-year legal battle pitting AT&T against the DOJ. The terms of the Consent Decree are as follows:
22 Bell operating companies detached from AT&T. In effect, AT&T was required to get out of the local telephone business. These affiliates were "spun off" into the 7
Baby Bells:
NYNEX
Ameritech
Bell Atlantic
Pacific Telesis
U.S. West
Bell South
Southwestern Bell
*The Baby Bells and their affiliates are regulated by state public service commissions.
Baby Bells prohibited from entering the long distance market and electronic publishing.
Baby Bells to allow access to local interconnections to long distance companies at uniform rates.
AT&T allowed to keep its Western Electric and Bell Labs subsidiaries.
AT&T loses "captive phone" market.
AT&T ordered to give up Yellow Pages to Baby Bells.
Terms of 1956 Consent Decree voided--AT&T allowed to enter any unregulated market.
Regulatory controversies in telecommunications:
Should the Baby Bells be allowed to enter the long distance market and complete head-to-head with AT&T, et
al?
If the answer to (1) is "yes," should the Baby Bells be stripped of their legal monopoly power in the local service market?
Has microwave transmission technology reduced the importance of economies of scale in long distance signal transmission? See
graph
Has wireless technology rendered the natural monopoly concept as applied to local service redundant?
Effects of the Modified Final Judgment
AT&T is still the dominant player in the long distance market.
Beginning in 1989, FCC loosened its regulatory reins in the long distance market.
Long distance rates have fallen considerably.