Divestiture: What Happened?

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.