Divestiture: What Happened? (January, 1986) ------------------------------------------- It's been two years now since they broke up the telephone company, and if you ask around, most people seem to believe it was a bad idea. In the past, you received only one phone bill and you never had to worry about how to place your calls. It seemed so much simpler then. For phone phreaks, though, the last two years have meant an increasing number of toys to play with: new pay phones, new long-distance companies, new ways of doing what could only be done one way before. While many of us miss the days of that single formidable opponent (Ma Bell), we manage to have fun by figuring out all of the jargonese and being looked upon as the only people who still understand how to make a phone call. This is meant to be a brief guide to just what has happened because of the divestiture and what the ramifications may be. We're not going to compare rates of the many companies like all of the newspapers are doing and we're not going to complain about how difficult it is to cope with phones these days like all of the columnists are doing. In plain English, we'll simply try and figure out what the hell is going on. The Way It Used to Be Let's look at the way things were. Except for some independent local companies, your local phone company was a part of the nationwide Bell System. It all tied together nicely - if you wanted to call long distance, you'd place the call through your local company and they would bill you for it, and that was it. What you most likely didn't know (or care about) was that your local company had hooked into the national company and they in turn had hooked into the local company on the other end. As far as we were all concerned, the local company did it all. Under this system, things worked fairly well. It was simple for customers, all of the companies benefited (the local companies could keep their rates lower because the national company would pay them and the national company got a monopoly on every long-distance call placed), and there were no real problems. But it wasn't fair. In nearly all countries, the phone company is run by the government and that's it. But here, the phone company was being run by private enterprise, yet there was no competition. It was inevitable that this would be challenged, especially when it started becoming economically feasible for alternative companies to offer similar services. Signs of Trouble In the late sixties, MCI became the first company to challenge the Bell monopoly. Slowly the rules were changing. As the years passed, more companies appeared and began to cry foul. Consumer services were offered for the first time. As technology got bigger, it became obvious that one phone company simply shouldn't do it all. And one day, the government agreed. First off, the nationwide network had to be dismantled. So it was split into seven parts, none of which are supposed to be related to each other (however, we suspect they still see each other socially). They are: Pacific Telesis, U.S. West, Southwestern Bell, Ameritech, BellSouth, Bell Atlantic, and NYNEX. Each of these companies has a fleet of local operating companies under its control, in much the same way as Ma Bell had nearly all of the local operating companies under its wing - in fact these seven new companies have been dubbed "Baby Bells." But the nationwide network was not completely eliminated, because AT&T still exists. Instead of tying together all of the local companies, AT&T is now just another long-distance company, with no connection to any of the local companies or the seven regional companies. Of course, having constructed the network in the first place, AT&T has tremendous advantages in the long distance market. Equal Access Clearly, the emerging long-distance companies have to be protected against AT&T, so that they can have a fighting chance. If AT&T were to lower its rates, everyone would use them. Because of AT&T's position, it's much easier for them to do this, and reestablish a monopoly. This is prevented by the divestiture agreement, which regulates AT&T more than the other companies. In a weird way, it's kind of like affirmative action. Another way of protecting the new companies is to give them equal access to the network that AT&T built. What good is it to be allowed to compete for long-distance customers if by the time the customer gets to your dial tone, it sounds like it's on another planet? Not to mention the fact that to use your service, the customer has to use a touch-tone phone and key in a whole lot of extra numbers to identify himself, since your company isn't able to identify him as soon as he picks up the phone, like AT&T can. In all fairness, shouldn't your dial tone come in as loud and clear as AT&T's? The answer is of course. But how can this be accomplished? There was no easy way, but it had to be done. And so, "equal access" was developed. In the early stages, the most that could be done under equal access was to provide a clear connection to an alternate long-distance service. In addition, this connection had to be toll-free since quite a few customers were being lost because they had to pay for a phone call to the dial tone of the company they chose, whether or not the call they were making in the first place ever got through. It couldn't be an 800 number because of technical and administrative reasons, not to mention the fact that an extra area code (800) would have to be dialed. So the 950 exchange was created. This is an exchange which is nearly the same everywhere in the country. It doesn't really exist in any one place; it's a theoretical exchange within local central offices. Calling 950 plus four digits, which are different for each long-distance company, connects you with their dial tone with no ringing and with a very clear connection. For instance, 950-1022 gets you MCI anywhere in the country, 950-1088 gets you Skyline, etc. There are still drawbacks, though. Primitive local companies sometimes insist on charging for these calls, as do some hotels. Then there is also the matter of still having to input your authorization code and being forced to use a touch-tone phone. But it represents a start. The next and most significant step towards achieving equal access was to actually make it possible for somebody to pick up their phone and make a long-distance call using whatever company they wanted without dialing any extra numbers. So at last it would be just as simple to make a call using Sprint or Western Union as it was using AT&T. All the customer had to do was tell his local company (when the time came) which long-distance company he/she wanted. This is the point where something interesting began to happen. Phone companies all around the country started to realize that there are a great number of people who really don't care which long-distance company offers what they just want to be left alone. Some of these folks never make long-distance calls in the first place and others don't have the time or inclination to try and figure out which company is economically advantageous to them. But last year a new twist was added. If you don't choose a long-distance company, one will be assigned to you at random! In other words, if you close your ears to all of this divestiture talk, you could find yourself subscribing to a company that charges a $15 monthly minimum, which is a bit of an affront to someone who only makes local calls. Yet, this is what's currently being done. It's true you will be writing more than one check when it comes time to pay the phone bill. Many long-distance companies still don't go through your local phone company's billing office like AT&T used to (and still does), so they must bill you separately. Then, you could choose to make some calls with one long-distance company and others with another. Then again, you could make calls using Visa or American Express and get billed that way. There are so many different ways to make a telephone call these days, so naturally there will be at least as many ways to be billed. You could also wind up paying AT&T for equipment rental, if you're wary of owning your own phone equipment. So that's another check to write. Then there are pay phones, which are starting to be deregulated. You may see two totally different phones that charge totally different rates to call the same place. This will be confusing to most people, because they were never trained to think about the phones they use. But for phone phreaks, this represents more ways to have fun. What the Future Holds In theory, what we have today is the beginning of total equality. Unfortunately, it's also total mayhem, but that will undoubtedly clear up in time, as everyone slowly gets used to the new system. Many mistakes are being made and it's fun to find them. Skyline has a page in their bill that says, "Retain for your records," in much the same fashion as other telephone bills. The difference here is that there is no information on this page at all except your name and the month of the bill. The amount owed appears on another page. Why would someone want to retain this useless data? Then there's U.S. Tel, who supposedly has a new credit card system - you dial a number, then enter your credit card number, which is something like 14 digits long. Miraculously enough, we've been told, any series of numbers at all allows the call to go through! But mistakes aren't the only thing we'll be seeing. Since Bell Labs is now able to compete openly, we'll see a great number of the projects they've been working on secretly for Ma Bell. This will be of great benefit to us. At the same time, it may get a lot harder for authorities and spies to keep tabs on certain people, since there's no longer a guarantee that a person will use a certain phone or even a certain network. Diversity is good for the individual. All of this is only the beginning. Many more changes are on the horizon and technological enthusiasts will have quite a time. For the average person who doesn't care, things may be unpleasant, especially if the explanations aren't as plentiful as the changes. Hopefully though, these folks will be comforted by the knowledge that it's all fair.