Book SummaryThe Deal of the Century, by Steve Coll

1-Page Summary1-Page Book Summary of The Deal of the Century

The details and context of the antitrust lawsuit AT&T faced.

This section delves into the events that precipitated the commencement of an antitrust legal action against AT&T in 1974. AT&T held an exclusive grip on the nation's telephone services for an extended period, a situation that was supported by regulators and politicians; yet, as the 1960s ended, the firm began to encounter challengers from within and beyond its industry.

The move to impose regulations on AT&T was a consequence of its dominant position in the long-distance communication sector.

This part of the text explores the rationale behind AT&T's dominant position in the marketplace. Coll suggests that regulatory bodies have historically viewed the significant costs associated with establishing a telecommunications network that spans the entire country as a sign of a natural monopoly, given the vastness of the project. AT&T's operations, strictly regulated, strove to provide widespread and excellent telephone service at the most economical price. AT&T consented to limitations that prevented it from entering specific sectors, such as computing, to preserve its exclusive control over telephone communications.

The significance of the Kingsbury Commitment in the realm of regulating inherent monopolies.

In 1919, after the Justice Department initiated legal action against AT&T due to its forceful business strategies, an accord termed the Kingsbury Commitment was reached by both entities. In an agreement that allowed its business activities to continue subject to regulatory supervision, AT&T agreed to discontinue practices that guaranteed its sole control over the market. The system operated successfully for a period exceeding thirty years. When it was founded, the agency known as the FCC took on the role of managing the oversight of telephone equipment regulation and the pricing of calls between states, while local service charges were determined by state-level regulatory authorities.

MCI's ascent coincided with substantial transformations within the telecommunications industry.

In the 1960s, the existing regulatory system started to show signs of weakness as new methods of communication like microwaves emerged and the public and lawmakers' confidence in AT&T waned, further strained by deteriorating service quality and the company's apparent arrogance. Companies like MCI saw an opportunity to enter the market for long-distance private lines, and the FCC, eager to assert its independence and manage the growing telephone monopoly, permitted a degree of competition. AT&T argued that competition in the long-distance market was impractical, highlighting its dependence on revenues that subsidized cost-effective local services. The company also reproached MCI for cherry-picking lucrative services and denounced the regulatory approach of the FCC for gradually fostering competition.

The changing political landscape and public opinion toward AT&T

Coll posits that the 1974 lawsuit initiated by the U.S. Justice Department against AT&T was profoundly influenced by a shift in public opinion regarding governmental regulation of major companies. Major companies, among them AT&T, recognized for their immense global presence, were often viewed with a significant degree of skepticism.

The emergence of consumer advocacy has led to increased empowerment for those who buy products and services.

In the 1970s, there was a notable increase in consumer consciousness, fueled by investigative journalism that exposed corporate misconduct and exploitative practices. Public discontent was clearly mirrored by the popularity of the best-selling economic...

The Deal of the Century Summary The initiation of legal proceedings by the government against AT&T was based on allegations of antitrust law breaches.

The section of the book describes the initial legal challenges that emerged with the filing of the antitrust lawsuit in 1974 and continued until the commencement of the trial in 1981. George Saunders and his colleagues at Sidley & Austin viewed the situation as an opportunity to push for postponement, weakening, and ideally, complete impediment of the legal action initiated by the government.

AT&T initially engaged in confrontations and utilized strategies aimed at delaying the legal process.

Once the government suit was filed, AT&T and its lawyers immediately set about to try to get it thrown out of court altogether. The essence of the lawsuit revolved around regulatory disagreements rather than concerns related to antitrust legislation. The Federal Communications Commission granted AT&T permission to enter the competitive market while ensuring that its activities were closely monitored.

Regulatory bodies, as opposed to the courts, were involved.

AT&T contended that it was the responsibility of the FCC, not the courts, to evaluate its potential monopolistic actions, underscoring a major regulatory hurdle in the swiftly growing field of telecommunications. Steve...

The Deal of the Century Summary The secret negotiations and pact that led to the dissolution of AT&T.

This section of the story describes how, in December 1981, Charlie Brown took decisive action leading to the dismantling of the American Telephone & Telegraph Corporation. Upon taking the helm in 1979, Brown was intent on preserving the company's dominant position in the communications industry. He sought to pass laws in Congress that would permit AT&T to actively participate in the computer and telecommunications equipment industries, while also retaining dominion over the nation's essential local telephone networks. By autumn 1981, Brown had determined that the most prudent approach for AT&T was to acquiesce to all of Justice's demands in court.

AT&T faced internal conflicts over how to handle competitive challenges.

Brown's decision was shaped more by the transformative events that took place inside AT&T throughout the 1970s than by worries over losing the legal battle with the U.S. government. Upon John deButts' retirement in 1979, it became clear that his inflexible approach to industry rivalry was counterproductive. Charles Hugel, a key member of the "blue team," noted that the prior generation's leadership in the telecommunication sector failed to understand that...

The Deal of the Century Summary The enduring consequences and subsequent developments following the dissolution of the Bell System.

The division that persisted into 1985 and the subsequent years resulted in AT&T grappling with significant reputational challenges, which stemmed from decisions attributed to Charlie Brown. Before unveiling the deal, the telecommunications firm meticulously orchestrated how it would introduce the news to the public. The portrayal of the division by AT&T as a positive change for consumers led to the rise of doubts about its effects among the customers, legislators, and market experts who had once been in favor of the deal, despite assertions that it would also benefit the company.

The continued survival of the operating companies

Opinions varied on the results of the breakup, with local telephone users and the executives of the operating companies holding different perspectives, the prevailing sentiment being that AT&T had emerged in a stronger position.

Rising expenses for community services and the impact of political factions on state regulatory bodies are causing alarm.

After the announcement on January 8, many leaders of operating firms predicted to the media that the cost for local telephone services was set to rise significantly. Following the dissolution of...