TELECOM Digest OnLine - Sorted: Internet With an Undivested Bell System

Internet With an Undivested Bell System

Lisa Hancock (
Tue, 14 Jun 2005 18:00:00 EDT

TELECOM Digest Editor posted a question to the group: What would the
internet be like today if Bell System had not been divested. Would it
all or most of it, be run by the telephone company? I will discuss
this more later in this message.

As to the Bell System:

> The telephone system never improved all that much over the years (at
> least, to the perception of the end user) until the Bell companies had
> to compete.

The Bell System was greatly improved over the years. Users had
greater reliability, more service options, and lower costs. While
perhaps a home user didn't see as much change (other than Touch Tone
and ESS features), business users saw many improvements. Long
Distance rates were dropping rapidly before divesture

> Thus, competition played a big role in bringing prices
> down.

I submit that Bell Labs technology and greater economies of scale
bought prices down.

I also note that the initial chief competitor, MCI, got into the
market through lawsuits, and their more recent history of fraud isn't
not exactly nice.

We must also subtract from total net savings the losses from fraud
like Norvergence and others. (Like the horrendous prices charged at
pay phones for collect calls!) That's all part of the new world, too
and must be included. Not everybody did so well from divesture.

Further, costs merely SHIFTED from the phone company to businesses
themselves. That is, stuff the Bell System did for business as part
of the base service now had to be done by the business itself. (Many
Bell System employees took jobs at their clients). Shifted costs are
not saved costs.

Lastly, businesses suffered from finger pointing between equipment
owner, local company, and long distance company. For data senders,
this was a nightmare. Many network adms told me divesture greatly
added to costs from aggravation and finger pointing. In the old days,
they'd call Bell and Bell would fix it. Now, Bell would blame AT&T or
MCI, and MCI would blame the customer's equipment. Add that cost in.

> And the end user got a lot more say so about his/her telephone
> service(s) and got what they wanted at prices they could afford. I
> remember when an answering machine could only be provided and
> installed by the phone company.

Not true. Answering machines were available that used a lever to lift
the handset and speakers to transmit the message in the early 1960s.

Remember the logic technology to control an answering machine's
function wasn't as freely available in those days. Many people
preferred to use a human answering service anyone for better customer
service. And in the early 1960s, Touch Tone was rare so it would've
been hard to access messages remotely.

> Then came Carterphone, thank goodness.

Carterphone was a separate issue than divesture.

> Because everyone was trying to provide something that the other
> carriers didn't provide (to target their niche in the marketplace),
> the technology began to develop and new things were offered. I often
> doubt that we'd have ever seen the Internet if the industry hadn't
> become competitive (or at least not for many more years to come).

You must remember that electronic technology was rapidly growing AT
THE SAME TIME of divesture and that was responsible for the low cost
of many products and services. At the time of divesture, personal
computers, for example, were very expensive yet very limited compared
to today. Newer chips in both CPU and memory kept coming and the
price went down and performance went up. That same growth enabled
telephone products and services to become cheaper. Divesture didn't
inspire cellular telephone service, but cheap enough electronics to do
everything a cell phone and base switching station needs to do. How
much would a computer with today's RAM, disk space, and CPU horsepower
cost in 1980? I don't know. But I do know memory and disk space were
a lot more expensive in those days.

The Bell System utilized the same technology as everyone else. It
sounds like you expect the Bell System to have had today's cheap
electronics back in 1970. Not realistic.

The cheap electronics also reduced the cost of long distance
by increasing media capacity and the cost of the terminal units
and that helped lower long distance pricing.

> He published yours even though he took issue with your position,
> didn't he, Lisa?

I agree that Pat does a good job.

> [TELECOM Digest Editor's Note: Here is a question for the collected
> readership: _If_ Bell had not gotten divested, and was still in
> charge of most everything relating to telecommunications, what would
> the internet be like today? Would it all be run by 'the telephone
> company'? Would we be getting all our attachments and peripherals from
> the telephone company? I suggest that might be the case. What do the
> rest of you think? PAT]

Undoubtedly the Bell System would've continued to improve the
technology and price/performance of its network and customer
equipment. It was doing so already.

"Divesture" was specifically the break up of AT&T owning the local
phone companies. The customer ownership of equipment didn't have to
come along with it, or it could've come along separately.

I understand the Bell System was looking to dump the old system anyway
since the cost to them of having men ready to go out at 2am to fix an
extension set in a home no longer was cost justified. I think they
realized the cost of building a telephone set to last 50 years was not
justified either.

The IBM Corp went through a tremendous turmoil in the 1990s and even
without divesture AT&T would have, too. IBM is a very different
company today, though it actually has returned to its roots of selling
service. I don't know how the Bell System would've evolved--unlike
IBM, much depended on the regulators.

Remember too that AT&T (like IBM) was forbidden to enter many markets.
AT&T had hoped at divesture to enter those forbidden markets and make
a lot of money, though it bombed out. IBM got rid of its restrictions
and entered new markets successfully.

I don't know how the Internet would've evolved in a Bell System world.
But I wonder if its random growth and mysterious relay stations (per
our other discussion) would've been better managed.

Pat, what do you think?

[public replies please]

[TELECOM Digest Editor's Note: I will withhold comments on 'Internet
in an Undivested Bell System World' until we get a few more responses.
For now I want to comment only briefly on one statement of Lisa's:

fatkinson said: > he published your's even with disagreements. replied: > Pat does a good job.

But PAT says: Not everyone would agree with you, Lisa. If we go back
to the middle 1980's when I inherited this assignment from Jon
Solomon, _many_ of the old-line netters (meaning, in context, netters
who had been around from the 1970's and early 1980's) were definitly
_NOT_ pleased to see me move into their playground. Now, a
quarter-century later, some of them are still around and still as
hostile as they were 'way back when'. You see, I did not come from
the same sort of background as most of them. Instead of a university
background with a god-given right to connectivity, as they presumed
they had, and a very generous and liberal employer who allowed them to
spend considerable time each day on their .arpa and Usenet newsgroups,
which they took for granted, I came from the original non-university
ISP to gain admission to the net, a company named Portal Communications,
out of the San Francisco Bay area, in Cupertino, CA I think. Prior to
that, I 'did' a couple BBS's locally in Chicago, such as the Chicago
Public Library BBS, and was active on Ward Christianson and Randy
Suess' CBBS system in Chicago. Many guys looked down their noses at me
from 'that sort of background' and others, just on the general
principal so prevalent in those days about 'allowing outsiders'
(meaning non university [that they approved of] users in their
playground.) That was long, long before AOL or any other ISP had any
connections here at all. No Google, no Yahoo, no AOL, no Compuserve,
no Panix, nothing; just .edu this and .edu that.

They were all afraid that by letting in non (approved of) university
users, they would inherit a bunch of idiots. I started posting
messages here in telecom when I was a user at Portal Communications.
Jon Solomon said to me one day that "the reason 'they' (meaning the
old-guard on the net in those days) decided to allow Portal Com to
come on the net was because 'Townson is not _as much of an asshole_ as
most of _those people_'. " Everything is relative I guess. And there
are other participants who do not care for my more 'activist' position
on many issues. They feel a moderator should be seen, but not heard, I

I still feel like somewhat of an outsider on the net. And Bill
Pfieffer was more of an outsider than myself, by anyone's definition,
but I trained him and got him and his Usenet group r.r.b. (that's all
we had in those days) started while the old-guard sat around with
their jaws hanging open at his (Pfieffer) and my audacity at saying we
would play in the same playground with or without their cooperation or
help or friendship. Some are still hostile for that reason, but that
is their loss, not mine. PAT]

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