AT & T: Twenty Years of Change

I.

Summary
AT & T is the largest long-distance telephone company in the United States. It

started in 1875 when Alexander Graham Bell received funding from a two bankers to
complete his telephone invention and in the following year he succeeded and patent it.
The first telephone exchange opened in New Haven under license from Bell Telephone
and it started the implementation of monopoly strategy. The telephone exchanges with
license from the company were set up in most major cities and towns in the United
States within 3 years and during those years they acquired majority interest in the
Western Electric Company and also acquired most of its license in the United States
that resulting the company became well known as Ma bell or Bell System. AT & T
became the parent company of the Bell System. AT & T had an agreement called as
Kingsburry commitment in 1913 wherein the past years while the new areas are getting
wired the competition is rapidly increasing as well as the number of telephones is
increased it caused no interconnection to all subscribers of different companies could
not call each other so that they agreed to connect with competitors to long distance
network and sell the shares of Western union stock. In 1974, US government filed an
antitrust lawsuit believes that a monopoly is valid in local exchanges but no longer in
long distance, it was settled in 1982 and agreed to divest itself of the wholly owned Bell
operating companies that provided the local exchange services that creates 7 baby
bells. The spinoff of lucent technologies was necessary, its include telecom network and

transmission of equipment business that cause the absence of synergies and

emergence of new competitors. The spinoff of NCR shows that the company strategy
was failing.
II.

Time of context/period
1984-1997

Mission
AT & T hoped that the restructuring would attract new investors and provide cash
to reduce the enormous debt load that accumulated through various acquisitions.
Vision
, Transforming AT&T from a long distance company to an any distance
company. From a company that handles mostly a voice call to a company that connect
you to information in any form that is useful to you voice, data and video from a
primary domestic company to a truly global company.
III.

IV.

Objective/s
To operate long distance calls
To target the convergence between communication and computers
To improve telephony and automatic switching
Central problem
The baby bells phase analysis (1984-1997). The divestitureAT&T and the

regional bell operating companies and the AT&T strategy after the divestiture
V.

Areas of Consideration (SWOT Analysis)

Strength

1. Still owned great technology

2. Going out of mature

Weakness
competition

segments
3. Advanced technological assets

1. Lost its ability to reach almost every

consumer
2. Corporate culture needed re-invention to
match the new competitive environment.
3. Became a firm without a local network

into offices and homes

Opportunities

Threats

1. No longer restricted to the regulated

1. Long

business of national telephone and

become

government work.
2. Continued generating enormous positive

distance

telephone

competitive

services

(market

share

dropped from 90% in 1984 to 50% in

1996)
2. Telecommunication act of 1996, allowing

cash flows
3. Emerging technologies

baby bells and other competitors to

compete in long distance
3. Had to keep up with emerging
technologies

VI.

Alternative courses of action

ACA

Advantage

1. Creating seven baby

bells
2. Diversification strategy

Build great technological

Personal strength
Became more complex and
global
Increased market share

3. Acquisition strategy

VII.

Disadvantage
Competition
Decreased market share
Having
insight
into
competitors plans
Resources are shared

Recommendation/Strategy formulation
I therefore conclude that the best solution to the problem is the alternative course

of action # 3 because in the acquisition strategy could help the company to increase
their market share and also to fast growing their wireless communication.
VIII.
Plan of Action

the

Activity

Person

Time frame

Responsible

Meeting with

President of the

the other

AT&T

company
Build

Spokesperson

Budget

Objective

Requirement
1-2 weeks

$350

To communicate
proposals

1-2 weeks

$1,000

To communicate

harmonious

with other

relationship

company

with other
company

IX.

X.

Potential problem
1. What if the consumer's has no ability to purchase phones outright?
2. What if there is no diversification occurred after the division of regional
bells?
3. What if the monopoly strategy did not fall?
Contingency plan
1. Needs work force flexibility in order to profit in the increasingly competitive
telecommunications marketplace.
2. Obligate to do more research for new design
3. Hire more researcher for the development