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called the “essential facilities” doctrine in antitrust law. If one company—say, AT&T—owned exclusive facilities that were essential to the business of another company—say, MCI—then the first company was required to give access to the second company.
“If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessities of life. If we would not submit to an emperor, we should not submit to an autocrat of trade, with power to prevent competition and to fix the price of any commodity.”
More important was the political furor that erupted during the late 1960s, when AT&T’s service crises in New York and elsewhere, together with the popular suspicions of the period about big corporations, led to an outcry in Congress that the FCC was not doing its job, that the commission was merely AT&T’s servant. Such accusations provoked strong reactions in liberal bureau lawyers like Strassburg, who of course believed that the FCC was a strong and independent agency. To prove he was right, Strassburg put an end to the informal negotiations with the phone company, and the bureau launched
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And while Strassburg still believed that the phone network was a natural monopoly, he saw in limited competition a powerful opportunity to control AT&T and to vindicate the independence of his bureau.
The difference between a private line and an FX line, then, was that rather than connecting two private offices in two cities, an FX line connected one office in one city with all of the phones in a second city.
In exchange for being allowed to keep its giant Western subsidiary, AT&T agreed not to enter the computer business. At the time, it was a modest, even specious, concession; computers were in their infancy, and AT&T was not staking much of its future on them.
Many of the division’s lawyers believed that AT&T had abused its political power, circumvented the legal process, and cheated the American public.
Even AT&T was now unhappy with the deal, for computer technology was advancing with astonishing speed, and so was the interdependence between computers and communications. Because of the 1956 consent decree, AT&T had no choice but to stand on the sidelines while competitors such as IBM and Xerox raced into the future.
the image of a wayward relative—an eccentric uncle who vanishes for long stretches and then reappears at a family reunion brandishing strange carvings for the children, who sits on the porch spinning apocryphal tales of boom and bust in African diamond country until, one morning, he disappears again.
the average American was seven times cheaper than in most European countries, and was less expensive than in any other country in the world. “Our service,” deButts added truthfully, “is better today than it’s ever been by just about any standard you care to use to measure
That realization, and the accompanying anger and embarrassment in Congress and at the FCC, offered deButts an opening. McGowan had built his company by outflanking AT&T in Washington, and it was McGowan who had shifted the field of battle from business to politics and law. With McGowan’s credibility destroyed and his reservoir of political goodwill drained because of Execunet, perhaps now was the time for AT&T to turn the tables on MCI.
The most common and effective method, in the jargon of Capitol Hill, is to “attach a rider.” The company persuades a congressman or senator, usually one who represents an area where the company has a large manufacturing plant employing thousands of voters, to “attach” quietly a special-interest bill as an amendment to completely unrelated and preferably popular legislation, such as a famine relief appropriation or an increase in social security benefits. Once attached, the fates of the two proposals become linked: if the president wants to veto the special corporate tax break, he will find
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More than anything, they require a certain blithe invisibility on the part of the corporation: it is crucially important, long-time Capitol lobbyists know, to let the congressman take credit for “hammering out a compromise,” or “forging complex legislation,” or however else he wants to describe to voters his role in the pork barrel giveaway. To have its way in Congress, a large corporation must walk softly, lose graciously, flatter continuously, and gloat never.
Deregulation was a Capitol Hill buzzword, and the idea was fast gathering force among both Democrats and Republicans. Liberals wanted to deregulate because competition would lead to decentralized ownership and a more diverse economy; conservatives just wanted the government off business’s back. Together, they were an unstoppable coalition: airline, trucking, natural gas, oil, banking, and other industries were all deregulated by Congress during the late 1970s and early 1980s.
“You’re all right when you get hired,” an AT&T employee once observed, “but as the years go by, your head becomes more and more Bell-shaped.”
the Bell Bill said something more along the lines of, “You bastards in Washington have made a mistake: you’ve gotten the phone company mad. Now we’re going to come down to Congress and take what’s ours. Either you’re with us or against us. We’re taking no prisoners.”
Anderson heard Levy out, and then he said, “I’ll tell you one thing. This case is going to be a severed limbs case. We’re going to have severed limbs, AT&T limbs, on the table dripping blood. That’s the way this case is going to be settled. We’re not going to settle this thing with injunctive relief.”
To AT&T, the whole thing seemed like a vicious circle. Each departing Justice lawyer offers a deal to the phone company, and then the deal is nixed by the lawyer’s successor, who thinks that he should be the one to decide on any settlement. When the successor leaves, he offers his own deal, and the cycle begins again.
Baxter argued that no one company should be able to integrate regulated and unregulated divisions of its business, because then it could use the “safe” profits from its regulated side to subsidize the prices of its unregulated products. Such “cross subsidies,” Baxter wrote, skewed the otherwise pristine mechanisms of a free-market economy.
The political appointees at the Commerce department, for example, liked to say that Baxter thought there were two kinds of people in the world: those who agreed with him, and those who were stupid.
The trick to reading any legal document is to begin at the back, and so the lawyers quickly turned to page seventy-three and the start of a section labeled “Conclusion.”
Irving Kristol, the former socialist turned neoconservative editor of The Public Interest, once commented that U.S. v. AT&T was less a conventional antitrust case than a “modern day variant on classical Marxist class warfare theories,” because it was fundamentally a struggle for power between a class of bureaucrats in the government—lawyers and technocrats in the Justice department, the FCC’s common carrier bureau, and in Congress—and the class of bureaucrats who ran the nation’s phone system, the one million employees of AT&T.
Thus it should come as no surprise, as Ken Robinson and Dr. Paul MacAvoy, dean of Rochester University’s graduate school of management, have pointed out, that the “result of the settlement was not to facilitate deregulation,” as the academic ideologue Bill Baxter said it would be, “but was rather to reduce AT&T to more regulatable dimensions.”
