The American Telephone and Telegraph Company (AT&T) was set up in 1885 to create a private national telephone service in the US. Rapid growth, plus its acquisition of all major rivals, gave AT&T a monopoly over long-distance telephone calls. It also controlled many local phone companies.
As a result, in 1913, regulators launched an antitrust (competition) suit. To avoid breakup or intervention, AT&T settled out of court. The Kingsbury Commitment saw AT&T continue in return for allowing local firms to connect to the national network.
While the deal slowed AT&T's expansion, it did not stop it. By the 1920s, AT&T had bought out all but three of the independent firms. By 1934, the government gave up trying to introduce competition, and imposed direct price regulation via the Federal Communications Commission.
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However, the agreement started to break down in the late 1960s. A number of rival firms, who tried to take advantage of the agreement allowing them to connect to the national network, were either refused service or quoted artificially high prices.
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So in 1974, the government launched another antitrust suit, seeking to break up AT&T. AT&T argued that its monopoly allowed consumers to take advantage of economies of scale. The long-running dispute wasn't settled until 1984. AT&T sold all its local services, which split into seven companies ("Baby Bells") and retained its national service and various subsidiaries.
AT&T was bought by South Western Bell Corp (one of its "Baby Bells") for $16bn in 2005. The merged firm, still known as AT&T, today has a market cap of $200bn.
