AT&T has been battling the US government for more than 100 years – and it doesn't always win
- A federal judge will issue an opinion Tuesday on the government’s attempt to block an $85.4 billion merger between AT&T and Time Warner.
- The rest of the industry is anxiously awaiting the decision.
- AT&T has long been at the center of such antitrust lawsuits.
Federal judge Richard Leon will issue an opinion Tuesday on the US government’s lawsuit to block an $85.4 billion merger between AT&T and Time Warner.
The decision will be closely watched by a telecommunications industry in the midst of mega mergers. Sprint Corp. and T-Mobile US Inc. have a proposed $26 billion merger, and Disney and Comcast are competing for 21st Century Fox.
AT&T is arguing that the deal represents a vertical merger between two related, but noncompeting, companies, and that these kinds of mergers have been permitted in the past.
Its not the first time AT&T sits at the center of industry-reckoning antitrust decisions. In its more than 240 year existence, American Telephone & Telegraph has battled the federal government, splintering, reorganizing, merging anew.
AT&T’s century-long battles with the government are as old as the company itself.
Alexander Graham Bell, a 29-year-old Scot, unveils an invention at an exhibition that shocks and awes attendees. “Watson, come here. I want to see you.” Those eight words, uttered out of the Bell Telephone, gave rise to the largest telecommunications company in the world.
American Telephone & Telegraph Company, a subsidiary of American Bell, is charged with building America’s first long-distance network. The first route opens between New York and Philadelphia.
After a corporate reorganization, AT&T becomes the parent company.
AT&T experiences its first of many antitrust battles with the federal government. The government believed the AT&T operated as a monopoly by refusing to allow independent telephone companies to connect to its network, and buying companies — like Western Union — which gave it broad control over most of the telephone and telegraph industry. Eventually, it strikes a deal called The Kingsbury Commitment with the Department of Justice (DOJ), allowing independent companies to connect to its network and selling off Western Union. The agreement essentially allows AT&T to become a government-sanctioned monopoly.
The government files an antitrust lawsuit to break apart Western Electric from AT&T. Western Electric was a manufacturer that served as AT&T’s primary supplier. The government argued the relationship between the two companies forced customers to pay higher than necessary rates.
After seven years, the two parties settle. AT&T agrees to stay out of the computer industry and sells Western Electric.
The government sues AT&T to break apart its monopoly. Its control over the industry and world is becoming increasingly apparent. By the end of the 1970’s, it is the largest company in the world. It had telephones in nearly every home and business in the US.
After nearly a decade fighting the government, AT&T agrees to break apart its Bell System. AT&T keeps its long-distance business and is allowed to expand into computers and the internet. The Bell System breaks into the “Baby Bells:” Ameritech, Bell Atlantic, BellSouth, NYNEX , Pacific Telesis, Southwestern Bell Corporation, US West.
The 90’s reflect a push for AT&T to move outside the narrow world of telecom and it starts to buy cellular, cable, and computer companies.
AT&T’s business is in decline. Southwestern Bell Corp (SBC) buys its former parent company for $16 billion.
AT&T attempts to buy T-Mobile in a $39 billion deal. Both the DOJ and the Federal Communications Commission (FCC) sued to block the deal. AT&T eventually abandons its plan.
AT&T buys DirecTV for $48.5 billion. The deal creates the largest TV distributor, launching AT&T ahead of Comcast.
The government sues to stop the $85.4 billion merger between AT&T and Time Warner. Federal judge Richard Leon will issue an opinion June 12, 2018.
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