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over the mouthpiece of the telephone, blocking out extraneous noise and providing a degree of privacy to the person using the phone. It had no electrical component to it; it was merely a box. Hush-a-Phone won the case, and the District of Columbia Court of Appeals ruled that AT&T could not prohibit people from making money from devices that did not electrically connect to AT&T s network. In 1949, the Justice Department filed an anti-trust suit against AT&T and Western Electric. The result was the consent decree of 1956, which enabled AT&T to keep Western Electric, but restricted them to the delivery of common carrier services. In the early 1960s, inventor Tom Carter created a device called the Carterphone, shown in Figure 3-6. The Carterphone enabled mobile car radios to connect to the telephone network and did require electrical connectivity to AT&T. Initially, AT&T prohibited Carter from connecting his device under any circumstances, but when he appealed to the FCC, he was given permission, opening the Customer-Provided Equipment (CPE) market for the first time. AT&T s concerns about possible damage to the network were well founded, but by the time AT&T vs. Carter came to trial, the device had been in use for several years and clearly hadn t done any damage whatsoever.
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Figure 3-5 Hush-a-Phone.
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Figure 3-6 Carterphone.
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In 1969, the very next year, the FCC gave MCI permission to offer private line services between St. Louis and Chicago over its privately owned microwave system. Then in 1971, the court extended its 1956 Consent Decree mandate, ordering AT&T to allow non-Bell companies such as MCI to connect directly to their network, ending AT&T s stranglehold on the private line market. The decision was based on a far-reaching FCC policy designed to create nationwide, full-blown competition in the private-line marketplace. It didn t end there, however. In 1972, the FCC mandated that satellites could be used to transport voice and compete with AT&T, and that value-added carriers could resell AT&T services. In 1977, in the now famous Execunet decision, MCI won a legal battle that allowed them to compete directly with AT&T in the switched long-distance services market, AT&T s bastion of revenue. In 1974, they extended their attack, filing an anti-trust suit against AT&T and charging them with unfairly restricting competition and dominating the marketplace. That same year the Justice Department filed an anti-trust suit of their own, signaling the beginning of the end for the Bell System. In 1980, another crack appeared in AT&T s armor when the FCC consciously recognized the difference between basic and enhanced services. Computer Enquiry II stipulated that basic services would be regulated and therefore tightly controlled. Enhanced services, including CPE, would be deregulated and made completely competitive. AT&T was told
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that it could sell enhanced services, but only through fully separate subsidiaries to ensure no mixing of revenues between the two sides of the business. In 1981, the United States vs. AT&T came to trial in Judge Harold Greene s court. In the months that followed, it became painfully clear to AT&T that it would not win this game. On January 8, 1982, the two sides announced that they had reached a mutually acceptable agreement. The agreement, known as the Modified Final Judgment, stipulated that AT&T would divest itself of its 22 local telephone companies, the Bell Operating Companies. The company would retain ownership of Western Electric, Bell Laboratories, and AT&T Long Lines and would be allowed to enter non-carrier lines of business such as computers and the like. Meanwhile, the BOCs were gathered into seven Regional BOCs (RBOCs), tasked with providing local service to the regions they served. The RBOCs were further subdivided into Local Access and Transport Areas (LATAs) that defined the areas they were enabled to provide transport within. A state like California, for example, is very large, and the transport of traffic between San Francisco and San Diego, even though the traffic never leaves Pacific Bell territory, clearly travels over a long distance and must therefore be handed off to a long-distance carrier for transport between LATAs. Although the best-known impact of divestiture was the breakup of AT&T, one result of which was the liberalization of the telecommunications marketplace in the United States, a second decision that was tightly intertwined with the Bell System s breakup was largely invisible to the public, yet it was at least as important to AT&T competitors MCI and Sprint as the breakup itself. This decision, known as Equal Access, had one seminal goal: to make it possible for end customers to take advantage of one of the products of divestiture, the ability to select one s long-distance provider from a pool of available service providers, in this case, AT&T, MCI, or Sprint. This, of course, was the realization of a truly competitive marketplace in the long-distance market segment. To understand this evolution, it is helpful to have a high-level understanding of the overall architecture of the network. In the pre-divestiture world, AT&T was the provider for local service, long-distance service, and communications equipment. An AT&T central office therefore was awash in AT&T hardware: switches, cross-connect devices, multiplexers, amplifiers, repeaters, and a myriad of other devices. Figure 3-7 shows a typical network layout in the pre-divestiture world. A customer s telephone is connected to the service provider s network by a local loop connection (so-called twisted-pair wire). The local
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