The battle for the long distance market really started on August 13, 1969, when the FCC voted 4 to 3 in favor of granting MCI’s application to construct a microwave radio system between Chicago and St. Louis. At the time of the vote, AT&T had a de facto monopoly on all long distance service in the United States. The vote to grant MCI a construction permit was the first signal of a breach in that monopoly. For the first time since the eve of World War I, AT&T had competition.

The breakup of the Bell System occurred on January 1, 1984, when it entered into a consent decree with the US Department of Justice. The terms of the consent decree prevented the RBOCs from entering the long distance or equipment manufacturing business. The decree also established equal access to the local exchange networks for AT&T and other common carriers such as MCI.

Add a note hereBefore the breakup, state PUCs and the FCC controlled pricing for services based on return on invested capital. Prices for services were highly controlled and generally increased only when justified by a new or improved service resulting from a capital investment. The regulatory framework was based on intrastate services, the domain of the PUC and interstate services under the watchful eye of the FCC. Revenue funneled through the local exchange business just like the telephone calls. Intrastate revenue and interstate revenue funded the monopoly.

Add a note herePart of the breakup was the establishment of more than 200 LATAs to implement the local access provisions of the consent decree. The local exchange companies could only carry traffic within the LATA, effectively maintaining their monopoly. Inter-exchange carriers carried traffic between the LATAs. Intrastate matters remained the domain of the state PUC, while interstate services continued under FCC jurisdiction.
Add a note hereFrom a practical standpoint, this new arrangement took time to understand and get used to. Each inter-exchange carrier established one or sometimes more points of presence (POP) in each LATA. These POPs continue to exist and provide access points in the LATA where they terminate and pick up traffic.

Add a note hereOrdering and provisioning service under the new way of doing business with the telephone company became something of a nightmare. If you were a consumer or small business requiring a single telephone line all of a sudden you were required to order local service from one source—the local exchange service provider who could not offer long distance service—and a long distance service provider who could not offer local service. No more one-stop service and, worse yet, two bills to pay at the end of the month where there used to be only one. Worse yet, those who had never experienced the joy of shopping for a telephone instrument could delay that for a while; however, avoiding paying exorbitant prices in a third monthly bill for equipment was impossible.

Add a note hereThe other extreme represented by large businesses with multiple sites requiring service had the opposite kind of challenge. Before the break-up, many large businesses were served by a centralized group of people, typically located physically close to corporate headquarters and in many cases fully dedicated to serving the account. All of a sudden the former account management group had broken up into multiple groups, one for long distance and anywhere from one to seven or more for local service. Worse yet billing turned into a nightmare. Billing was site-specific. Corporations formerly paying a single bill for combined long distance and local service, covering hundreds and in some cases thousands of locations, had a blizzard of paper to deal with.

Add a note hereAs an example, billing for private line services used in host-to-host or terminal-to-host data communications resulted in three bills: two for the local access or tail circuits and a third for the interexchange facility. Ordering and provisioning private line services now turned into a coordination exercise for anyone requiring such service. The model for present-day service was set to the extent that local service is ordered and provisioned separate from long distance.

Add a note hereA local telephone call originates and terminates in the same LATA. A private line between two points in the same LATA is local service. The same local facility or service configured to terminate in the inter-exchange POP provides access to the inter-exchange carrier. The inter-exchange carrier provides service to the distant or foreign LATA. There it is terminated in a POP and passed to the local exchange carrier providing far end access, sometimes called egress.

Add a note hereThe LATA scheme became the basis for widespread use of the terms access and transport. Functionally, the BOCs provide access facilities, and long distance carriers, also called inter-exchange carriers, provide transport.

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