on memories of those days thread that ran through the whole fabric of competition was that hey this is gonna be a last shot to do it as AT&T and let's go out and show them that we can go out a winner and let's develop a type of posture that says hey okay you know this is how we were in 82 and 83 but watch out for you for because we're gonna be competitive for Al cast in this summer there will be no California unless he puts together a team to represent his new corporation Bell Atlantic 1984 18th he was gonna send the team out there and I'm not gonna be part of it and that's gonna affect me at 48 Caston is a grandfather he's an installation methods manager for New Jersey Bell he's worked there 29 years all his working life and his feelings about the breakup of the Bell System go way beyond track and field well from a very personal point of view it's very emotional and very traumatic and I guess I could liken it to perhaps a divorce separation from friends very close friends or a loved one that you may never see again it's more than perhaps just changing a job or going with another corporation it's it's a way of life that's literally changing New Year's Day 1984 was a Sunday people went back to work on Tuesday the third at the headquarters of the New Jersey Bell company in Newark the morning began with a birthday party it was day 1 in the life of a new parent company Bell Atlantic for two years everyone in the Bell System had been pointing toward this day and a lot of preparation had gone into it throughout the country signs had been pulled down logos had been scraped away enormous amounts of office equipment and files had been moved new logos had gone up all as part of the largest corporate reorganization in history now the moment had arrived and in New Jersey they were eating cake at ten o'clock on a Tuesday morning the week before these people that worked for the largest corporation in the world today Exxon was the largest corporation in the world the president of New Jersey Bell tried to strike an upbeat note part of its new corporation Bell Atlantic but on this morning people were subdued and although it was billed as a birthday party they never did sing happy birthday I think it's unfortunate for the people who do not understand it and that includes even some of us who work for the company we can't understand why the government wanted to break us up since we were doing such a good job why did the government break up a perfectly good telephone system it's a question a lot of people have been asking I'm Michael Aaron and in this hour we'll try to answer that question but the focus of our program is what the breakup meant to the people of the bail system we're not going to talk about your phone bill or getting a phone repaired the consumer side of the story has been well told what we will do is take you inside the telephone company show you what an enormous task it was to break it up and how wrenching it was for many of the people involved towards the end of the hour we'll sit down with the man who reluctantly set it all in motion the chairman of the board of AT&T Charles Brown Charlie Brown as he's known but first the basics and a little history 22 Bell operating companies cover the continental United States companies like New Jersey Bell Illinois Bell Pacific telephone they still exist but instead of belonging to AT&T they have been split off and consolidated into seven new completely independent companies regional holding companies they're called for example Bell Atlantic is composed of New Jersey Bell Bell of Pennsylvania diamonds state Bell and the Chesapeake and Potomac telephone companies the other regional holding companies are 9x Bell South Ameritech Southwestern Bell US West and Pacific Telus it began of course with Alexander Graham Bell who was trying to help the deaf but ironically invented something that would help everyone but the deaf annex railroad man named Theodore Vail really built AT&T it was vales vision that one telephone company should serve the entire nation and independent companies sprang up he'd often buy them over the years AT&T linked up the nation and established a virtual monopoly it invented its own products developed them manufactured them and sold them sold them mostly to itself it also asserted itself technologically it launched the first communication satellite it ran phone lines beneath the ocean that linked up the world its scientists invented the transistor and the laser meanwhile it grew by the late 1970s it had more assets than Exxon General Motors and Mobil combined one out of every 110 working people in America worked for AT&T it employed 7800 Smith's and 3,600 Browns one of whom ran the empire organizationally it looked like this at the top the AT&T general staff headquartered in lower Manhattan and basking ridge new jersey then the 22 Bell operating companies the long lines Department which tied together the 22 local networks into one national network operating out of bed Minster New Jersey Western Electric the manufacturing and purchasing arm of the system that supplied it with telephones and 50,000 other items operating out of New York and Bell Laboratories the research and development arm of the system headquartered in Murray Hill New Jersey it was big but we have a distrust of bigness in this country and almost since the beginning the federal government has worried about the size of AT&T in 1913 the government forced Theodore Vail to give up the Telegraph side of the business and almost nationalized the company altogether in 1949 the Justice Department filed an antitrust suit against AT&T that was resolved seven years later when AT&T agreed to stick to telephone communications and stay out of related fields such as data processing then in the late 1960s the Federal Communications Commission started opening up the telephone industry to competition among other things it ruled that would be long distance firms such as MCI must be allowed to wire themselves into the Bell Network the officers of AT&T tried to thwart the competition for example by making you dial 14 digits to get a line and the new firms cried unfair so in 1974 the Justice Department filed another suit against AT&T this for failing to give other companies a fair shot at the long-distance market the lead attorney on the case at the time was a young lawyer in the Antitrust Division named Philip verveer by the time I became involved with the matter it was September of 1973 and there were very serious complaints lodged by both long distance companies that were trying to compete with a tnt's long lines department who could not obtain adequate or connections with the local Bell operating companies to compete and also from terminal equipment manufacturers the people who manufacture telephone handsets and things of that nature who felt that they were being deprived of an opportunity to sell or lease their products and interconnect them to the lines of the Bell operating companies now there's factual complaints were the things that I think in the first instance motivated the Justice Department but simultaneously with the concerns about the factual anti-competitive acts was a set of theoretical concerns that led the department people in the department to believe that a company structured the way AT&T was presently structured with three monopolies long distance local exchange and equipment could not operate as dynamically as efficiently as much in the public interest as as if it were restructured in other words the trust Busters wanted to break up the biggest monopolies in the world some people speculate that Watergate played a role in this that the Nixon White House with its pro-business orientation probably would have blocked the lawsuit if everyone there hadn't been so distracted by Watergate I think there's little reason to doubt that the consequences of Watergate made it easier for that Antitrust Division to get approval to file the suit but this isn't there's no question this was a very major step directed in an infrastructure industry and it is quite possible that except for the fallout of Watergate the White House might well have decided that this is something that should not go on forward but go forward it did after seven years of pretrial maneuvering a trial finally began this in essence was the government's case against AT&T this was a TNT's reply the trial was held here at the US courthouse in the District of Columbia judge Harold Greene presiding look at the number of antitrust attorneys who worked on the case for the Justice Department AT&T had nearly twice as many attorneys the trial had been going ten months and had produced 92 witnesses when it was suddenly interrupted by a surprise announcement the two parties had agreed to settle this is a historic decision without any question I believe we've chosen the right course it was not the solution that we sought charles lee brown the chairman of AT&T who began his career climbing telephone poles whose mother and father both worked for the phone company was announcing that he had agreed to break it apart his emotions almost got the best of him and we're going to continue to do that we look forward to getting out of court and back to business the agreement called for AT&T to keep its manufacturing arm its research arm and it's long-distance business but to divest itself of the 22 operating companies in return AT&T would be deregulated and become free to compete in virtually any business it wanted to including computers why did Charlie Brown give in that was the question on everyone's mind Alfred Kahn an economist at Cornell was President Carter's chief inflation fighter he's the man who deregulated the airlines and he's been a consultant to AT&T off and on since 1968 first of all I think he saw the handwriting on the wall that it looked as though judge green was going to find them in violation of the antitrust laws now that's of course speculation and judge green himself has said you mustn't be misled by the violence of some of my language at the point when I rejected the application of ATT for a summary dismissal of the case and he wrote some language that certainly looked as though he was prepared to find him in violation of the antitrust laws and he may not have after having her at a TN t--'s defense the fact is that Charlie Brown saw that it was going to drag on a long time success was by no means assured I think that if you had to bet you'd bet that they would be found in violation and he thought while competition is coming in and we are being subjected to this erosion of our market position let's see if we can get a settlement that'll end this thing a second reason was that AT&T wanted badly to get into the computer business in the 40s when bell scientists invented the transistor that would form the basis of computer technology telephones and computers were two different fields but the lines between them have blurred today telephones can process data and computers can transmit information over long distances and it began to Gaul AT&T that it had to stay out of the field that had contributed so much to no one contemplated 25 years ago that a revolutionary a revolution in modern technology has largely erased the difference between computers and communications from using the fruits of its own technology still the news of the settlement surprised nearly everyone Don Van Linton was a public relations officer at New Jersey Bell for 29 years now he's a vice president of Bell Atlantic in Arlington Virginia no I don't want any way for you to construe this mic as the kind of exercise we all go through people of our age where were you when FDR died or were you on the day JFK was killed I'm not trying to elevate it to that level of national catastrophe but for those of us who had been around 25 30 40 years the whole idea breaking up the belt system wasn't happen so for a couple of days after January 8th 1982 a lot of people were walking around in a state of shock if not Shock Trauma one group greatly interested in all this was the stockholders of AT&T 3.2 million of them making AT&T stock far and away the most widely held security in the world last fall Merrill Lynch held a seminar for these people in 58 cities by a closed-circuit television as AT&T goes for them the breakup meant that one of their most secure investments was suddenly a big question mark many of them were upset and didn't know what to do because AT&T stock was as good as gold it wasn't dependent on our currency it was gold now it's gone I think that it's totally bull well during and I'm here tonight to find out a little bit of what to do I don't think it's very good you know because it's it's a confucian now with all those different companies obviously another interested group is the customers of the Bell System little customers like you and me but also the biggest customer the Defense Department it's worried not only about its phone bill but about national security as well the department spends 1.3 billion dollars on phone service each year and some of that pays for special circuits that connect elements of the nation's nuclear defense system which is why defense secretary Caspar Weinberger argued against the breakup before judge green deputy undersecretary for communications Donald Latham now we will have to deal with the long distance entity which will still largely be AT&T however now we will have to deal with a local phone company or maybe phone companies at the end of the search point a and Maeby's phone companies at the end of the circuit the point to be so we'll have to deal with more people and more companies in order to make sure that we get the kind of circuits in that we want and that they can have the service that we need and so on so one of the circuits for example we want to make sure is absolutely there all the time is the SAC primary alerting Network that's the that's the name of the net and it's a network in which you pick up a phone at the psych headquarters and it immediately rings so to speak literally in a number of other places in the United States and we pay for that kind of service and we must have it and yes it uses the commercial telephone system we asked how divestiture might affect the famous hot line only to learn that the hot line is not a telephone at all today it consists of a low speed teletype writer in this building and a low speed teletypewriter in a building in moscow connected together through two diverse routes between here in the soviet union the president wants to make a phone call to the Soviet Union certainly do that but that's not what the hot line is still another interested group is the suppliers of the bell system 45,000 of them companies like general machine products in Treves Pennsylvania since 1936 general machine has supplied hundreds of outdoor products to Western Electric the purchasing arm of the Bell System Nelson fund is president of the company first off I thought from the beginning for a couple years now that the the break up of the best telephone system in the world is kind of kind of ludicrous I just thought that it was it didn't make sense to me to do this having traveled abroad and been in countries with with four telephone systems we had the world's best and we were going to now you know break it up and that seemed to me to be the wrong direction to go a machine called the cable Lasher is one of the mainstays of funds business it consists of 600 parts and sells for $1,100 funds father helped develop the machine and Norman Rockwell once painted one front does not relish having to sell it now to seven different companies of course it used to be centralized through the Western Electric Company a contract would be issued after after bidding through Western Electric on a specific product the low bidder would get get the award and you were dealing with with Western Electric who then in turn distributed it to all the operating companies and now you're going to have seven buying groups seven regions that are going to be purchasing individually and we're gonna have to travel a great deal more to each of the seven regions to the corporate headquarters of the seven regions but if divestiture posed problems for stockholders customers and suppliers the people that most affected were the employees of the Bell System nine hundred and ninety four thousand employees only the federal government has more once their jobs were about as secure as a job can be but now the toughest part of the last year or last year and a half has to be has been the uncertainty that we have faced that was a certain amount of uncertainty in terms of what I do most frustrating part at least for me personally has been the fact that the ground rules have not been certain there's a lot more uncertainty people's first concern was will I have a job and if so where my chief concern was to continue to make a living which I'm kind of fond of eating my first impression was where would I go from here but the office still be here I don't know if we're gonna go back to the old company I really didn't know what was gonna happen a lot of the old-timers were wrong well absently into whether they were coming and going the anxiety was building up over quite a long period of time I think among employees and most of us had a lot of time to think about what we were going to do if we had an option 2/3 of the workforce is unionized and many of those people sought help from their unions now I for one in one year did 65 membership meetings in my district of Dell locals and that one year I saw 20,000 members more members came out to these meetings than any time in our history in order to minimize the confusion of this whole breakup has caused when not worrying about themselves they worried about the company the phone system and their ability to perform the other thing is it 18 even as an outsider I have to say down to the last lineman or operator in the system had an incredible esprit de corps you know they really thought of themselves as a family people would devote their lives and careers to AT&T I mean I know that that's true and that was connected with the service mentality whether our critics like did or not there was something that brought down system people together and what brought them together was the sense of doing a public service and doing it very well and make sure they understand how to do business with you and how you can help them through this period there's no question that customers are confused out there so it was like breaking a family apart 50,000 operators would be shifted from local Bell companies to the new AT&T so would 50,000 installers and repair men executives would be relocated friends and colleagues would be separated in medical departments throughout the Bell System company doctors worried about the stress all this would cause it's almost like losing a member of your family so many of the people here have you worked for the Bell System for 25 and 30 years they grew up with the Bell System they were used to the Bell System and now suddenly they're told that the Bell System is dead meanwhile at AT&T headquarters somebody had to be in charge of divestiture somebody had to plan and execute the whole thing that person was William char well the senior vice president and a 30 year veteran of the Bell System actually the agreement of January the 8th really described the end process the end point of a process it said what we had to do to conform to the agreement it didn't say how to get there so we spent virtually the whole year of 1982 and planning this 1982 was a year planning 1983 was a year of implementation 1984 is a year living with it but breaking it up wasn't easy for starters 18t owns 24,000 buildings they had to be divided up ownership of cable had to be clarified and switching equipment hundreds of buildings were transferred millions of circuits were transferred millions of telephones the ownership was transferred the word gets sticky is inside of one cable sheath you will have some pairs that are AT&T and some pairs that are New Jersey Bell so then what do you do with the whole thing buildings housing both local and long-distance equipment sometimes had to be split in half and there it was a matter of negotiation about where you were gonna draw the line and we have a lot of joint use buildings and you will see these if you go into them the local company area is often partitioned off sometimes it's marked by tape on a floor the trick was in doing all this without inconveniencing the customer I'll give you an analogy of my own okay you're in a 747 right and you're the chief engineer you're up there 33,000 feet closer to God than you want to be and you get an order from the ground change the engines but do not disturb the passengers to keep from disturbing the passengers most Bell employees stuck to their jobs only about 1% work directly on divestiture of course in the Bell System 1% was 10,000 people they didn't necessarily believe in what they were doing but they did it sometimes they argued it's amazing how one Bell system for a hundred years the parent company signs a consent agreement with the Department of Justice that gave the broad outlines of a split in the family and almost overnight there was the beginnings of some adversary feeling not in the nasty sense but in terms of what we're gonna have to work with and what you're gonna have to work with and what legitimately should go with you and what legitimately should stay with us one divisive issue was the yellow pages a three billion dollar a year business both sides wanted it and neither would give in so they took the matter to judge green who decided in favor of the operating companies the judge also awarded the Bell name and logo to the operating companies except that AT&T could keep the name Bell Laboratories another flap concerned this 230 acre tract in Chester New Jersey where outdoor telephone equipment is tested Bell Labs owned it but the operating companies felt they deserved a stake in it we had a lot of position papers written on this we had a lot of conferences on this and eventually the top officers of the business went to look at the facility and we made a solomon-like decision that it would be divided physically customer billing raised another sticky question with AT&T send its own phone bill 290 million long-distance customers every month where would it pay the operating companies to continue to collect the money the decision at least temporarily was to contract the work out to the operating companies Charles Buckley a 40-year veteran of the system handled those negotiations for AT&T in 1 Bell System everybody had two co-equal responsibilities and objectives and were proud of marching together in the past two years since divestiture was announced the objectives of the people that I've been working with are not necessarily in concert with mine they have different responsibilities and at first this was a very sensitive thing going out to meet with them these are all people of goodwill that they do have their own objectives and we have ours what's remarkable is that we weren't at one another's throats the degree of civility that prevailed during that two-year period was absolutely incredible work intentions of course there were contentions has it happened without pain in August of 1983 AT&T submitted to judge Greene for his approval a final plan of reorganization built into it was a guiding principle an employee shall follow his work for one one then you get local directory assistance for one one operators have stayed with the local Bell operating companies but dial zero followed by a nine digit number and you get a long-distance operator since 80 kappa the long-distance business 50,000 dial zero operators have followed their work to AT&T communications the new entity created by ATT that will compete against Sprint MCI and others Tony is making the call and billing it to your phone what is your last name sir thank you he's billing it to your phone do you know him these operators and these operators work in the same building in many Bell offices around the country AT&T now leases the space that long-distance operators have always used meaning that few operators had to be physically uprooted but all these operators used to be colleagues now when the 4:1 ones looked across the hall at the dial zeros there's a psychological barrier they work for entirely separate organizations margaret mogul and her mother were split up in this fashion we talked about what kind of different benefits we were both going to receive if we were going to compete against each other eventually she we didn't really know what was gonna happen now she says the two groups of operators are drifting apart and tend to stick to themselves yes even down in the lunchroom basically they stay to one side away standing on it but we talk to each other all right since AT&T now owns the phones we used to lease from our local company 50,000 people who repair and install phones followed their work to AT&T information systems ATT is as it's called is a competitive company trying to sell telephone equipment it's a tough job making a decision AT&T information systems can help but we will be offering these very aggressive marketing is new to most people at AT&T when they were a monopoly they didn't have to compete they were like a public utility now in regular meetings like this one they're trying to reorient themselves obviously as we moved from a utility to a highly competitive organization we had to change the way we focused our business we have thought our business traditionally on goods customer service that hasn't changed I mean the way we deliver that service in a high-technology world it's totally different than it used to be and we need different skills and different sets of requirements that the people have to bring to the table we now sell our products rather than just leased them you know those kind of things are advantages to us that we didn't have before much more flexible as to the type of arrangements we make as far as service and so on and so forth so we can be more competitive for installers and repair men even to ATT is has meant among other things wearing a tie on the job traditional uniform is a two pocket plaid shirt but now with the with the image they want to put outside it's gone completely to Brooks Brothers we have folks on accounts like Squibb and Campbell Soup who are there all the time and it's their account they're responsible for it the change in dress really is just a change in mindset that they're more than just the Installer they're part of an account team that handles the account from soup to nuts no pun intended and we said we would honor every contractor we have existing we've been getting ready for this for four or five years we know this is not the the details in a particular divestiture we're just recently finalized but we've known that something along this line was gonna happen so we've been getting ready for it some people were not ready for it the settlement was kind of shocking between I was disappointed in Charlie Brown I thought that he should have fought it but in retrospect I think he made the right decision Carl voli was a New Jersey Bell engineer for 25 years but when divestiture came he retired for whatever reason I went to work for monopoly 25 years ago and in the last five years or so that monopoly changed from into a very competitive industry and I didn't think that after 25 years I was going to be able to adjust to that very readily now he's building houses with one of his sons I've tried a number of different things and I settled on carpentry because I'm working for my son with my son most of the time and it's kind of a role reversal that we're both enjoying very much he's getting even with me for when he was a teenager really Hans Levin Bach is another early retiree statistical analyst at AT&T in Fast & Rich he's starting his own consulting business it's really a long term dream I've had and I might have done it even if the divestiture never came I've always wanted to run an operation like I have here on my own without reporting to any bosses although I've had a great bosses and this is a really unique opportunity to take advantage of it Hans and Carl took advantage of MIT the management income protection plan under MIT a management level employee could leave the bail system and get one year's salary paid out over two years plus pension benefits mit was a relatively humane way to reduce the size of the workforce and during the divestiture period about 24,000 people nipped out of the system as they say another 330,000 changed companies Barbara Rhaegar for example is a research chemist after a natural disaster she was part of a team at Bell Labs that flew to the scene and assessed the damage to telephone equipment he or she's examining the microchip for signs of chemical contamination in dealing with contamination it's sort of like being a Sherlock Holmes for the bail system and it's fun work Barbara's work was mainly for the operating companies so the best that sure meant her job would be shifting to a brand new entity created by the 7 regional companies to serve as their version of Bell Labs to follow her work she'd have to be willing to transfer to that company her first concern was simple and straightforward where would she be in the beginning we really had no idea a move would be involved I live in southern Jersey and we didn't know if there would be a southern location and if there was one would I be there would I be having to move to another location and that's concerned when you're married and you have children she also had to consider the career implications of the move what would she lose by leaving Bell Labs often called the world's leading industrial research facility for an unknown company that until this year didn't even have a name could we actually do as competent and job as we now do would we have the freedom to then go out and publish information to the world and participate in outside organizations as we have with Bell Laboratories and since that time we've learned that we would be able to do all these things that we will be participating as a research organization as good as Bell Laboratories Barbara made her decision and she won't have to move the new company has four new buildings under construction one of them near Barbara's home after that the only hard part was the paperwork everything has to change everything is changing names and I'd probably signed my name a thousand times now on everything that that is happening Bell Labs where Barbara used to work is really a story unto itself it began in Greenwich Village in 1921 and has been awarded on average more than one patent per day ever since its scientists have also won nine Nobel prizes the transistor and the laser were invented here the computer term bit originated here operating out of enormous buildings in three New Jersey towns Bell Labs is like a large University with no students only faculty 25,000 of them before divestiture 18,000 today 2,000 have PhDs the largest concentration of PhDs anywhere divestiture raised serious questions about Bell Labs mainly having to do with whether the science there would somehow be undermined by 18 T's being suddenly thrown into the competitive arena by definition nobody welcomes change but once the change occurs we all realize that it is going to be for the good Kumar Patel a 20-year veteran of Bell Labs is the inventor of the carbon dioxide laser used in manufacturing and cancer treatment he also supervises 280 physicists engaged in pure research if you talk about research that idea about getting there first has always been there in researcher competition is that is the fundamental principle by which we live competition is there all the time because in research being second has zero value you have to be there first but we're too much pressure people on the scientist now nobody who is responsible for near-term profitability or producing a product tomorrow is going to tell us or is interested in telling us what what to do because AT&T over the years has clearly recognized that one has to make a separation between the people who provide the funding and people who make the decisions about where the next advance will occur from I'm convinced that we have nothing to worry about a Bell Labs engineer we spoke to expressed similar optimism if you ask me from a consumers point of view I would say that I was probably better served I can say definitely I was better served by the vertically integrated companies based on my understanding of the network and understanding of how those network of companies worked well together we I was better served as a consumer if you ask me as a professional engineer and a developer of equipment is that I've been greatly helped by divestiture from their point of view is that are now not restricted in terms of what products I can go out and develop to compete in the marketplace and and that creates a lot of opportunities for engineers like myself whatever comes out of Bell Labs will be part of a new wave of technological wonders that the best that you're supposed to bring about at least that's the argument is not only going to drive down costs it's going to increase the value and variety of services and we've already seen it you're getting a dazzling growing variety of kinds of things that you can attach to your telephone set telephone instruments that thinks telephone instruments that process data well I think I'm as confident today as I was 10 years ago that the public would benefit from this very significant reorganization of the company in the meantime divestiture has left casualties Western electrics phone repair plant in Union New Jersey it is February 3rd one month into the new era 48 workers have just been given layoff notices and 71 others have been downgraded across the street from the plant at Parker's restaurant union members grab a quick lunch and tend the hastily arranged meeting I don't really think they know as you're sipping their cocktails are screwing up they don't really care you know you're talking about putting 10 years of service at least into this company to Senate or the Congress doesn't step in and try to stop some of this now Weinberger told that was gonna hurt the defense the United States why didn't they step in that like I said before it's a system that worked 400 years why break up something that's good they always came in with the impression that no one will lose their jobs because it's the best insurer here you see 48 of my friends here getting laid off upon being annexed lay off 10 members of the Davis family worked at the plant and two of them received layoff notices another said he'd be next how do you know that you're you're next in line for a ladies I saw a seniority list is that how they're doing it by seniority yes 10 years doesn't count as much ten years OB do you think no I got two daughters in college did you did you get any bad news yeah come over getting laid off this morning they don't even try to place these people in the system it's a big system a million 42 the government my son was later upon a lot of year ago no help at all the government it seems like when you're number one your bed this big company never is this government Corp and he did a lot for this country the name judge green came up history next about a dick Donald really broke up the best system in the world you know I think Mike will hit it real good what he said to judge this black groves could drop dead judge green on a drug he screwed the American people screaming is he that smart the bottom line of the whole thing is they've been better off leaving well enough alone I feel very bad too because I've been there 15 years you know and then all of a sudden you know get a drop you know I get down breathing how much money do you lose if I might ask good maybe about twenty or thirty dollars a weekend thing and all of a sudden they just come up to you and you down later why do you think it's related to divestiture well everything was going along before that they stepped in with that this is a paper that they passed down AT&T consumer products challenge it says divestiture brings new opportunities for AT&T consumer product service centers which means us to Ventures has brought nothing but seems like heartaches nothing more new challenges what is that a new challenge this was passed out only yesterday that was passed out yesterday yesterday in the Western Electric Company there was 30 service centers just like the one across the street that controlled the 50 states some control one or two states as a repair center since the divestiture they've closed five service centers on a spur of the moment four weeks later management announced that this service center would close by the end of the year the plant manager said don't blame divestiture blame technological progress and competition throughout our research for this report we kept hearing one name over and over Charlie Brown it had been his decision to settle the antitrust suit he was the one who'd given assurances to employees and to the public we asked to see mr. Brown and he was amenable we met early one morning up there on the 26th floor let me take you back two years and ask you how you came to the decision to settle the antitrust suit well you have to realize that the job of anybody in a in a position like this is to make sure the company adapts itself to what the public expects of it and the big job is to look around to see what it is the public expects and recognize it and do it no company can live outside that public expectation it was clear to me that the political decision to do something to change the industry structure was inevitable Brown said the company was being challenged in three forums the Congress the FCC and the courts through the antitrust suit he said the company was also anxious to shake free from the 1956 agreement with the government that was keeping it out of the data processing business our problem was that we were restricted to what we could do with their own technology everybody else could come into our business but we couldn't go in anybody else's business and so that that kind of restriction was very very difficult on us was there a moment of decision were you shaving one morning looked in the mirror and said yeah we've got to settle this loss know our business decisions generally aren't made that way at least not by me we considered a number of options over a long period of time and and came to a conclusion which made sense from the analysis of those options people speak of it as your decision however was it your decision well that's where the buck stops right here the Board of Directors of course were in the matter from way back they they were constantly with me and with the other officers in the business and deciding what we ought to do based on the alternatives we saw but eventually it stops here one officer of a regional holding company speaking on your behalf said I'm sure Charlie Brown didn't join the bail system in order someday to preside over its dissolution it must have been a very tough decision for him and the officers how tough a decision well is it very very difficult very emotionally difficult very physically difficult I come from a family where my father and my mother and my sister all worked for the business I have a great respect for its history and for its accomplishments and it was a very difficult decision for me to make you started out in the system laying cable underground yes that's right climbing poles and I've been with it all my working life deep down you must be proud of what you've done I imagine you are anyway well I don't think Friday's got much to do with it I did what I had to do I did what I felt was correct and I don't lose any sleep once I've made a decision like that let me ask you for a brief answer to an enormous question is this whole thing going to be good for the country I've had the conviction and taken the position in more than one forum that the country in the long run will be sorry and I think that that it it's very clear that people feel in the short run that it's the wrong thing to have done it was a working system which was the envy of the world yet it has yet to be decided that a fragmented telephone system has ever worked anywhere as well as one which is controlled or the parameters of which are set from one place be it a government Bureau or whether it be a private situation such as exists here I find it difficulty to believe that's difficult to believe that things will work as well in in the future as they have worked in the past from the standpoint of the of the coordinated telephone system the advantages of course are those attributed in most circumstances to competition where different ideas and different people will come in and offer the customer a variety of choices I think it remains to be seen which of these advantages would predominate I think it's academic now and I don't spend very much time worrying about it but I I think the Bell System was doing a very good job I think it was a mistake to to have before the for the country to have decided that based on us know Shiva that competition is always good to break up something as as competent as a bail system the promise being held out to us is that competition Spurs innovation and this great technological horn of plenty is going to spill out all these goodies over the next 20 or 30 years do you buy that you know you think your own Bell Labs would have poured the same goodies out anyway most of the innovations in telephony and in the last 50 years have come out of the Bell Laboratories we intend to feed the labs we intend to keep their their ingenuity and their initiative hi I'm not saying that others can't produce innovative but the idea that there's been some sort of a plug in that horn of plenty because of a monopoly is just foolish Brown said the toughest part of divestiture was the technical problem of pulling apart the system but then we talked about the human dislocations I think the worst part of it when people had to do with the indecision about where their job was going to be they knew that the jobs are going to split open they knew the AT&T for example as General Headquarters which supplied services for all the bail companies was going to be broken up and some people would have to go one place and others another place we did not know early on who was going where or how many people would be going in different direction so we laid major ground rules abroad ground rules such as the people go with the work that's all right on a macro basis but for an individual he wants to know where I'm going and what am I going to be doing and I think that was the toughest and then it remains one of the more difficult things in this divestiture do you think there are some people who fell through the cracks well I I in and I'm something as massive as this I suppose one could say yes to that question although we certainly tried to do it by individuals and had people working on it by individuals as opposed to - by mass did you ever promise to the employees of the bail system that nobody would be hurt by divestiture that nobody would lose their jobs I I said we don't expect anybody to lose their job because of divestiture now I suppose I could be argued with from the standpoint that when you create new organizations and consolidate then and and remove staff jobs you can trace that all the way back to divestiture but but that was not the intent of what I said in other words the divestiture itself did not cause loss of jobs and if there in loss of jobs in say Western Electric for example it's because of competition and those jobs might well have been lost anyway oh you know the Western Electric thing is an entirely different matter here we have factories which were built in the early part of the century for for the purpose of building electromechanical devices and you have vast acreages of floors with iron work and millions of relays currently the way the technology has moved in a very very short time is that the business done by relays and acres of floors is now done by tiny chips the size of your fingernail or done by instead of big copper cable is done by tiny glass fibers that technology is entirely different it works in in rooms built like hospital rooms much cleaner than hospital rooms as a matter of fact and and you cannot attribute factory closings to divestiture in that sense it's entirely different technology and was going on progressively over time at the end of a 25-minute conversation we asked if there was anything Brown wanted the public to know about the bestit sure that we hadn't touched upon well I I so much has been said about to Festa sure that I don't know is it's possible or even desirable to try to to summarize a situation which is as fluid as as this one is I would ask the public for some patience I I realize there's intense confusion here I would suggest that it wasn't our idea to begin with and and what we're trying to do is make the best of it I'm very proud of the way people have done this divestiture inside the bell system considering that both physical and emotional difficulties of it there never has been anything in the business world to approximate this reorganization sation I think we've done it with some skill and some class and I thoroughly believe that that it will come out to the point where we're customers and employees will will settle down to a normal business life it's getting there or so it seems most of us have survived the vestige sure without too much inconvenience you can still call California from the East Coast inside the old Bell System well this winter AT&T moved its corporate headquarters from lower Manhattan where it had been since 1916 and where its neighbors were banks and brokerage houses to midtown Manhattan where its neighbors are the big firms it will be competing against in the new information age the move however was in the works long before anybody knew about divestiture in the spring AT&T unveiled its new computers the product that's been wanting to develop and sell for so many years that critics were impressed if not necessarily wowed the regional phone companies meanwhile seem to be doing fine at least they're making profits but then they should they are still monopolies seven little monopolies in place of the big one we used to know and truncated versions of that big one was it a good thing that all this happened it'll probably be 10 or 20 years before we can answer that question in the meantime I hope we've convinced you that good bad or otherwise it didn't come easy break it up you
Given how many of the broken-up companies have bought one another and congealed back together over the years, the big breakup will eventually have turned out to be only a trial separation.
Really interesting footage, thanks
"Reagan coulda stopped this." Bro, Reagan? That bulwark against deregulation lol
Literally 1984
This is fascinating, thank you for posting
How could a corporation lie to me?
I was around back then. I remember it being a rocky transition, especially when it came to trying to place a long-distance call on the non-AT&T pay phones that were popping up all over the place. (Pay phones were still a big thing.) Say what you will about the original AT&T and monopolies, when AT&T was in control, everything just worked.