Page 141 - Communication Commerce and Power The Political Economy of America and the Direct Broadcast Satellite

6 Exporting Liberalization

and the Ascendancy of

Trade

The term commonly used to characterize US communication policy in
the 1980s- 'deregulation'- is a misnomer. In any regulatory regime,
the practices or behavior of most private sector entities are, to varying
degrees, monitored by state officials .. Corporate activities also can be
regulated through the structural constraints present in the market-
place itself. The former more hands-on type of regulation has been
called 'behavioral regulation' and the latter, less direct form, 'struc-
tural regulation.' With this distinction in mind, deregulation essen-
1
tially involves a shift away from behavioral regulation and toward the
assumed constraints of inter-corporate and supply-and-demand rela-
tions. Deregulation thus constitutes a shift in regulatory emphasis
rather than some kind of absolute 'freeing-up.'
One of the most significant steps toward structural regulation and
away from behavioral regulation emerged as a result of a US
Department of Justice (DoJ) antitrust suit filed against AT&T and
implemented through federal courts. Although this action was
initiated in 1974, it was not until 1982 that a negotiated settlement
was reached. AT&T officials agreed to divest its twenty-two Bell
operating companies. In return, AT&T was allowed to retain its
2
long-distance services, its manufacturing subsidiary (Western Electric)
and its research wing (Bell Labs). More importantly, AT&T was
allowed to expand into new business ventures. 3 Judge Harold
H. Greene, who presided over the divestiture, approved the
settlement, which included a plan by AT&T executives to reorganize
the Bell operating companies under the umbrellas of seven regional
holding companies (RBOCs). In effect, the AT&T divestiture con-
4
stituted both the release of the world's largest telecommunications
company into international markets and a promotion of domestic
long-distance competition. The related surge in domestic telecommu-
nications activity compounded state policy problems in that more
public and private sector participants and increased foreign
participation in the US market perpetuated the inability of existing

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