Bell System divestiture
Overview
 
The Bell System divestiture, or the breakup of AT&T, was initiated by the filing in 1974 by the U.S. Department of Justice of an antitrust lawsuit against AT&T
American Telephone & Telegraph
AT&T Corp., originally American Telephone and Telegraph Company, is an American telecommunications company that provides voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agencies. AT&T is the oldest telecommunications company...

. The case, United States v. AT&T
United States v. AT&T
United States v. AT&T was the antitrust case in the United States that led to the 1984 Bell System divestiture, the breakup of the old American Telephone & Telegraph into the new, seven regional Bell operating companies s and the much smaller new AT&T.In the 1970s, the Federal Communications...

, led to a settlement finalized on January 8, 1982, under which "Bell System
Bell System
The Bell System was the American Bell Telephone Company and then, subsequently, AT&T led system which provided telephone services to much of the United States and Canada from 1877 to 1984, at various times as a monopoly. In 1984, the company was broken up into separate companies, by a U.S...

" agreed to divest
Divestment
In finance and economics, divestment or divestiture is the reduction of some kind of asset for either financial or ethical objectives or sale of an existing business by a firm...

 its local exchange service operating companies, in return for a chance to go into the computer business, AT&T Computer Systems
AT&T Computer Systems
AT&T Computer Systems is the generic name for American Telephone & Telegraph's unsuccessful attempt to compete in the computer business. In return for divesting the local Bell Operating Companies , AT&T was allowed to have an unregulated division to sell computer hardware and software.Prior to the...

. Effective January 1, 1984, AT&T's local operations were split into seven independent Regional Holding Companies, also known as Regional Bell Operating Companies (RBOCs), or "Baby Bells".
 
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