Switching Technology

The PSTN we have been describing has a star configuration, Local loops (usually one per subscriber) terminate in a CO. This CO completes connections from one local loop to another local loop, or from one local loop to a trunk that terminates on some other CO. This CO has gone through a number of fundamental technological changes.

scribers (e.g., long-distance users, business subscribers, subscribers in locations where telephone service can be provided with relative ease, etc.) will pay more than true costs, and other groups of subscribers (e.g., subscribers in rural and other high-cost locations) will pay less man true costs.

In 1949 the Justice Department again filed suit against AT& T, claiming that Western Electric charged inordinately high prices from their customers (i.e., the operating telephone companies owned by AT& T), thus making it possible for the operating telephone companies to charge their subscribers inappropriately high rates. The suit dragged on, and a consent decree was reached in 1956. AT& T won; Western Electric need not be di­vested from AT& T, the Bell System would be engaged only in telecommunications business, and nonexclusive licenses would be granted to any applicant on fair terms. This was the final judgment. The eventual breakup of the Bell System in 1984 was accomplished through a modi­fication of this final judgment hence the modification of final judgment (MFJ).

Although the Bell System appeared to be the win­ner in this 1956 suit, over the next two decades it would lose battles, one at a time. There was the Hush-A-Phone case in 1955; the Carterfone case in 1968; MCI's " above 890" case in 1959, and the MCI case dealing with a long-distance route from Chicago to St. Louis in 1969. In November, 1974, the Justice Department once again filed suit to break up the Bell System. The case trudged on until 1978, when • Judge Harold Greene took over. He moved things quickly, and on January 4, 1982, a terse announcement was issued by the Justice Department and AT& T saying that negotiations had been reopened.

Then, on January 8, 1982, the news broke; AT& T had agreed to break up its $136.8 billion empire. It was agreed that AT& T would divest the local parts of the Bell operating telephone companies. It would keep its manufacturing facilities and its long-distance network. The agreement would take effect on January 1, 1984.

The 22 regional Bell operating companies (RBOCs) agreed to form 7 regional holding companies (Bell Atlantic, NYNEX BellSouth, Ameritech, US WEST, Pacific Telesis, and Southwestern Bell). The agreement also said that the Bell operating companies would not be allowed to manufacture nor would they be allowed to get in the long-distance business within their territories. AT& T would not be allowed to get in the lo­cal-exchange business nor to acquire; the stock or assets of any RBOC.

That remained the state of affairs until the passage of the 1996 Telecommunications Act. This Act threw most of the rules established in 1984 but the window and left the implementation of the Act to the FCC. There have been problems ever since. What did the Congress mean by " promote competition'? " Should AT& T be al­lowed to get in the local-exchange business? (Answer: yes.) Should the RBOCs be allowed to get in the long-distance business? (Answer yes, but only after passing a 14-point checklist.) What did; " 'expanded universal ser­vice" mean? Should the RBOCs be allowed to merge? Answer: yes. Bell Atlantic has merged with NYNEX; Southwestern Bell [SBC] has merged with Pacific Telesis and is planning to merge with Ameritech. Bell Atlantic intends to merge with GTE. If all of there are ultimately approved, there will remain four RBCOs. Today many questions remain, and there is no assurance that they will be answers in the foreseeable future.

Task 1