Baby Bell

Any of the seven regional telephone companies created in 1984 when AT&T was ordered to divest itself of its local telephone service operations.

[From (Ma) Bell, nickname for Bell Telephone Company, after Alexander Graham BELL.]

The nickname given to the regional Bell operating companies after Divestiture in 1984. See Bell System and RBOC.

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A common nickname given to the U.S. regional telephone companies that were formed from the breakup of AT&T in 1984, which was done to create more competition within the industry.

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Upon the initial breakup of AT&T, the Baby Bells included Nynex in New York and New England; Bell Atlantic, BellSouth and Ameritech in the Midwest; and Southwestern Bell, U.S. West and Pacific Telesis in California and Nevada. Over time, however, these companies have gone through several more corporate changes, such as acquisitions and mergers. As a result, the industry has been consolidated into a few domestic telephone providers. For example, in 2000, U.S. West was acquired by Qwest Communications.

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The seven regional telephone companies created when AT&T was broken up in 1984. The original consent decree creating the Baby Bells gave them a monopoly over local phone service but banned them from participating in the long-distance or equipment manufacturing business. AT&T was excluded from the local phone business in return. Over time, these distinctions eroded. According to the Telecommunications Act of 1996, the Baby Bells can offer long-distance service, AT&T and other long-distance providers like WorldCom-MCI and Sprint can offer local service. The original seven Baby Bells were: NYNEX in the Northeast; Bell Atlantic in the Mid-Atlantic states; BELLSOUTH in the South; SBC (Southwestern Bell Corp.) in the Southwest; Ameritech in the Midwest; U.S. West in the Rocky Mountain States; and Pacific Telesis in the West. After numerous mergers and name changes, including the November 2004 acquisition by SBC Corp. Of AT&T itself (then renamed AT&T Corp.), there were three Baby Bells in early 2006: Bell South, Qwest, and Verizon.

One of the regional telephone companies spun off by the Justice Department's breakup of American Telephone and Telegraph (derived from the AT&T nickname, ‘Ma Bell').

In response to efforts by the U.S. Department of Justice to split up the company, American Telephone and Telegraph (AT&T) signed a consent decree in 1984 divesting itself of seven regional telecommunications companies. These companies included Bell Atlantic, Bell South, NYNEX, Pacific Telesis, Southwestern Bell, Ameritech, and U.S. West, collectively known as the Baby Bells. The Baby Bells were restricted from offering long distance services, and were required to offer customers equal access to all long distance providers. Passage of the Telecommunications Act of 1996 removed these impediments. Now any company can offer local or long distance service. The breakup of AT&T is credited with reducing long-distance phone rates and fostering more competition on the local level. For the Baby Bells, the transition to long distance carriers was relatively smooth. They managed to provide relatively inexpensive service and maintain both a trained work force and a loyal customer base. Despite the inroads they made into the long distance market, estimated to yield $68 billion in annual profits, the Baby Bells encountered difficulties in the closing years of the 1990s. Through various acquisitions and mergers, four new Baby Bells emerged. Qwest was formed in 1999 by a merger of U.S. West and Qwest Communications. Verizon was formed when Bell Atlantic (which had previously merged with GTE) merged with NYNEX in 1999, a $21 billion merger, the second largest in U.S. history; this merger created the nation's second largest telecommunications company, behind only AT&T itself. SBC Communications was formed from a merger between SBC and Ameritech in 2000. This left Bell South Communications as the only original Baby Bell. Although the Baby Bells operate in a regulated industry, matters were complicated by complaints of price gouging, poor service, and refusal to work with smaller local and long distance companies. The companies have frequently resorted to lawsuits to protect their interests. An analysis of local Bell phone markets published in U.S. News during 1996 showed the consumer-complaint rate had climbed 20 percent since 1991 and reached a five-year high in 1995. Officials in a number of states are responding to the service problems by hitting local phone companies with fines and penalties. At one point, the Baby Bells appeared ready to jump into the long distance and data businesses with little threat to their local residential markets. But competition for customers in local markets was so great, particularly as the Baby Bells found themselves contesting with AT&T and other broadband cable companies such as Comcast and Cox, that business suffered. During the fourth quarter of 2001, for example, the cable industry added nearly 923,000 broadband subscribers, nearly twice as many as the 540,000 customers who opted for the Bells' comparable high-speed digital subscriber line (DSL) Internet service. In addition, the Baby Bells also faced increasing competition from cable companies that now offer local telephone services. Finally, they must come to terms with the problem of wireless communications that are eroding traditional local phone service. According to a study published in 2002, approximately 3 percent of Americans have already disconnected their traditional phone service and rely entirely on cellular phones. The study predicted the use of wireless phones would nearly double by 2005. By contrast, the study forecasts that traditional wireline minutes will drop by 22 percent. The Baby Bells have tried to meet the challenge by forming their own wireless companies such as Verizon Wireless, a joint venture of Verizon and the European mobile phone company Vodafone, and Cingular, which is a partnership between SBC and Bell South.

Bibliography

Elstrom, Peter. "Will the Baby Bells Crack Too?" Business Week (June 18, 2001), p. 112–114.

Kushnick, Bruce A. The Unauthorized Biography of the Baby Bells & Info-Scandal. New York: New Networks Institute, 1998.

Stone, Alan. Wrong Number: The Breakup of AT&T. New York: Basic Books, 1989.

—Meg Greene Malvasi

"Baby Bell" redirects here. For Babybel cheese, see Babybel.

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Map of the original and current companies.

The Regional Bell Operating Companies (RBOC) are the result of the U.S. Department of Justice antitrust suit against the former American Telephone & Telegraph Company (later known as AT&T Corp.)

Contents 1 History 1.1 Shared trademarks 1.2 Original 1984 Regional Holding Company logos 2 Mergers 2.1 AT&T Inc. 2.2 Verizon Communications 2.3 Qwest 2.4 Cincinnati Bell 2.5 Bell Canada 3 Notes 4 See also 5 References 6 External links

History

On January 8, 1982, AT&T Corp. settled the suit and agreed to divest ("spin off") its local exchange service operating companies. Effective January 1, 1984, AT&T Corp.'s local operations were split into seven independent Regional Bell Operating Companies known as "Baby Bells." RBOCs were originally known as Regional Holding Companies, or RHCs ^[1].

After the Modification of Final Judgment, the resulting Baby Bells were originally:

• Ameritech — (acquired by SBC in 1999)
• Bell Atlantic — (acquired GTE in 2000 and changed its name to Verizon)
• BellSouth — (acquired by AT&T Inc. in 2006)
• NYNEX — (acquired by Bell Atlantic in 1996)
• Pacific Telesis — (acquired by SBC in 1997)
• Southwestern Bell — (changed its name to SBC in 1995; acquired AT&T Corp. in 2005 and changed its name to AT&T Inc.)
• U S West — (acquired by Qwest in 2000)

Prior to 1984, AT&T Corp. also held investments in two smaller and otherwise independent companies, Cincinnati Bell and Southern New England Telephone (SNET). Following the 1984 breakup, these became fully independent as well. All nine local-exchange companies were assigned a share of the rights to the Bell trademark. Additionally, there was one comparably-sized independent (non-Bell) company, GTE.

A Verizon payphone with the Bell logo located at a Sheetz location in New Castle, Pennsylvania.

Shared trademarks

After divestiture AT&T Corp. was prohibited from using the Bell name or logo (with the notable exception of AT&T's Bell Laboratories), and those trademarks would be shared by the RBOCs. Since the BellSouth acquisition, Cincinnati Bell has been the only former AT&T company still carrying the "Bell" name. (Additionally, Bell Canada, which was separated from AT&T starting in 1956 and completed in 1975, continues to use the "Bell" trademark, which it owns outright in Canada.)

Verizon continues to use the Bell logo on its payphones (including former GTE payphones), hard hats, trucks, and buildings. As well, Malheur Bell, an autonomous local phone company owned by Qwest, uses the Bell name and logo. In both cases, these are likely intended to display continued use in order to maintain the companies' respective trademark rights.

On the other hand, excluding historical documents and residual usage on the former BellSouth website, AT&T Inc. does not presently make any active use of the Bell marks.

Original 1984 Regional Holding Company logos

NYNEX	Bell Atlantic	BellSouth	Ameritech
Southwestern Bell	US West	Pacific Telesis	AT&T (shown for comparison)

Mergers

Many of these companies have since merged, leaving only 3 regional telephone companies in the United States. After the 1984 breakup, part of AT&T Corp.'s Bell Labs was split off into Bellcore, which would serve as an R&D and standards body for the seven Baby Bells. In 1997, Bellcore was acquired by Science Applications International Corporation where it became a wholly owned subsidiary and was renamed Telcordia.^[1]

AT&T Inc.

Southwestern Bell Corporation, which changed its name to SBC Communications in 1995, acquired Pacific Telesis in 1997, SNET (a former independent Bell System franchise not part of divestiture) in 1998, and Ameritech in 1999. In February 2005, SBC announced its plans to acquire former parent company AT&T Corp. for over $16 billion. SBC took on the AT&T name upon merger closure on November 18, 2005. SBC began trading as AT&T Inc. on December 1, 2005 but began re-branding as early as November 21. On March 5, 2006, it was announced that AT&T Inc. would purchase BellSouth for $67 billion U.S., in an all-stock deal. On December 29, 2006, the FCC approved the merger, worth $86 billion US. [1]

Verizon Communications

In 1997, NYNEX was acquired by Bell Atlantic (taking the Bell Atlantic name), which later, in 2000, merged with GTE, the largest independent telephone company, to form Verizon. In 2005, following a protracted bidding war with rival RBOC Qwest, Verizon announced that it would acquire long distance company MCI. The Verizon and MCI merger closed on January 6, 2006.

On January 16, 2007, Verizon announced that it would split off Verizon New England operations in Maine, New Hampshire, and Vermont into a separate operating company, which then will be spun off and merged with FairPoint Communications. The deal was completed on March 31, 2008.

Qwest

In 2000, US West was merged into Qwest, a Denver-based fiber optics long-distance company. Also provides internet, wireless, and local telephone services.^[2]

Cincinnati Bell

• The former independent Bell System franchise Cincinnati Bell, which was not part of the 1984 divestiture because AT&T only held a minority stake in the company, remains independent of the RBOCs.

Bell Canada

• Bell Canada was divested from AT&T Corp. starting in 1956 and completed in 1975, and was not part of the 1984 agreement.

Notes

1. The acronym RHC for Regional Holding Company is also sometimes seen.

See also

• Incumbent local exchange carrier (ILEC)
• Competitive local exchange carrier (CLEC)
• Bellcore (now known as Telcordia)
• Local access and transport area (LATA)
• Bell System Divestiture

References

1. ^ Dr. J. Robert Beyster with Peter Economy, The SAIC Solution: How We Built an $8 Billion Employee-Owned Technology Company, John Wiley & Sons (2007) p.73
2. ^ "Qwest Homepage". Qwest Communications International Inc.. http://www.qwest.com. Retrieved on 2008-01-20. 

External links

• Pre-divestiture RBOC map (from Bell System Memorial)
• Table of RBOC changes (from Bell System Memorial)
• Qwest Communications
• AT&T Inc.
• Verizon Communications
• Cincinnati Bell
• Yahoo! Finance Article on AT&T's purchase of BellSouth
• Boston.com - FairPoint-Verizon deal comes to a close on Monday

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