The International Handbook of Telecommunications Economics, Volume III
Edited by Gary Madden
8. Sprint – GTE’s lost opportunity James H. Alleman and Lawrence Cole INTRODUCTION This chapter explores the development of GTE as a leading telecommunications company by focusing on its dynamic period of growth, the late 1970s and early 1980s. During this period the telecommunications industry was undergoing unprecedented change. Competition was expanded to ever widening areas due to judicial and Federal Communications Commission (FCC) decisions – private lines (FCC, 1959), customer premise equipment (FCC, 1969), private microwave systems (FCC, 1969), domestic satellites (FCC, 1972) and public switched telephone networks (PSTN) (FCC, 1976, 1978). Technology innovation proceeded apace with cellular mobile service implemented, after many years of regulatory debate, and the nascent Internet was being developed. Market structure was also undergoing change. The most radical change was the 1984 divestiture of the Bell System to settle an antitrust lawsuit. Further, new interexchange carriers were gaining market share. Clearly, the traditional monopoly structure dominated by the Bell System and mimicked by GTE and other independent telephone companies, albeit without the longdistance segment, was changing dramatically.1 GTE had a tradition of exchange carriage and equipment manufacture (through its Automatic Electric subsidiary), but provided only limited international telephone service. Although GTE had 33 state exchange telephone operations they did not comprise a network since GTE had no mechanism, as did AT&T Long Lines, to interconnect its operations. Rather, GTE had a symbiotic relationship with AT&T, both in the regulatory arena and the longdistance market.2 In the long-distance market, AT&T was both GTE’s largest...
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