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Wireless Networking

Ma Bell Stifled Innovation, AT&T May Do the Same 354

Posted by CmdrTaco
from the that's-crazy-talk dept.
An anonymous reader writes "AT&T recently announced it plans to acquire T-Mobile to create the largest wireless network in the US. If the deal is allowed to complete, it will create only three major players in the industry with Verizon being a close second and Sprint being a distant third. Sprint, along with consumer rights groups, have already cried foul. They argue that AT&T's proposed acquisition will stifle competition and innovation."
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Ma Bell Stifled Innovation, AT&T May Do the Same

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  • by Anonymous Coward on Tuesday March 29, 2011 @11:04AM (#35653116)

    Ever heard of "Bell Labs"?

    • Ever heard of "Bell Labs"?

      Apparently not :) The collective memory of many slashdotrati doesn't go further back than the early google/amazon times, and only superficially so. Talk about Altavista and Lycos and that's just the stuff of legend. As for Bell Labs? For the collective fools, the universe didn't even existed back then!

      • by s73v3r (963317)

        Here's the question: Bell Labs did some pretty awesome shit, there's not really any debating that. However, in order to fund some of that shit, AT&T themselves engaged in some very dickish, anti-competitive behavior. Stuff like only being able to use their phones, leased from them at high rates. Now, there's no question in my mind that, given the opportunity, the new AT&T would be more than willing to do more of the same, only in the wireless market. The question is, would we also expect to see a si

    • by Zerth (26112) on Tuesday March 29, 2011 @11:15AM (#35653296)

      Ever try to buy a 3rd party phone back in the day without paying an extra monthly fee for the privilege of hooking it up to the Bell system? Or buy a phone at all, for that matter, instead of leasing it for an exorbitant monthly fee?

      That kind of shenanigans paid for all that innovation.

      • by kenh (9056)

        Bell Labs innovated, AT&T, the Gov't sanctioned monopoly was, uhm, a monopoly. The two are not the same thing, and the ability to buy a third-party phone wasn't that big a deal "at the time". Western Electric made nearly any phone you could want, and they sold "interface boxes" for those you wanted to buy from third-parties (like answering machines, etc.).

        AT&T had a GUARANTEED profit that was calculated off of expenses - that is why they poured so much money into research back in the day, they got a

      • Yeah, and "in the day" everything worked. On the rare times when it didn't if you called for repair it was fixed usually within an hour. I miss that.

        I also miss talking to Ma Bell techs who knew the system from top to bottom. Nowadays when calling for service you get handed off to multiple dunderheads who, while reading from scripted responses, haven't a clue how the system works.

    • Ever heard of "Bell Labs"?

      Yes, I have heard of Lucent Technologies.

      They managed to avoid becoming part of the new AT&T by merging with Alcatel.

    • by travisb828 (1002754) on Tuesday March 29, 2011 @11:49AM (#35653746)
      That AT&T died in 2005 when it was bought by SBC. The new AT&T is SBC with the AT&T name, and Bell Labs was spun off in 1996 by the original AT&T to become Lucent. Lucent was then merged with Alcatel to become Alcatel-Lucent. Meanwhile the Bell Labs Holmdel Complex [wikipedia.org] is sitting vacant.
    • by compro01 (777531)

      Yes, a research division that the US federal government forced AT&T to fund as a condition of being allowed to keep their monopoly.

    • by Anubis IV (1279820) on Tuesday March 29, 2011 @11:56AM (#35653850)

      Just because they produced some innovative ideas (and they did, which I don't want to marginalize) does not mean that they didn't stifle innovation from others through anti-competitive practices. Otherwise, we could make the same argument of any monopoly that has an R&D department, even as they're squashing all of the innovative startups that have ideas which would completely change the game.

    • by mspohr (589790)
      Bell labs (like Xerox PARC) was a fantastic institution which created many advances and some of them actually escaped since they were insanely good.

      However, the old "Ma Bell" was firmly in the "you can have any telephone you want as long as it is black" camp. "We're the phone company, we don't care; we don't have to care".

    • by josepha48 (13953)
      Wasn't there a reason that AT&T was broke up in the first place?
    • I worked for AT&T labs (some of the old bellcore guys) and at least as of 10 yrs ago, they were broken up for all intents and purposes. no more hires, reqs went away and people just plain left. huge brain drain.

      bell labs does not exist in any real sense anymore. hasn't for well over a decade or even more.

      telcos are NOT innovating anymore. well, unless you mean stealing money from us for 'texting' which costs them exactly $0.00.

      oh and the spying. they are highly into DPI. perhaps that's a 'kind of

    • by ChiRaven (800537)
      Or maybe the cellular telephone? I served briefly on the product team that introduced cellular telephony to this country, at Illinois Bell, back in the 1970's.
  • by rolfwind (528248) on Tuesday March 29, 2011 @11:05AM (#35653132)

    That it's even an open question shows how far from actual trustbusting we have gone.

    Even as a libertarian, I see this, just as all democracies (as opposed to republics) devolve, so does uncheck capitalism - always in the direction of corporate socialism (rent-seeking, bailouts, etc.)

    • That it's even an open question shows how far from actual trustbusting we have gone.

      Maybe the problem is too much trustmaking (restricted licensing, monopoly granting, etc.)

    • Capitalism is great, but when you give corporations too much power (over individuals - see also "Corporate Personhood") the fundamental premise that people can be greedy equally falls apart. The roll of government in the economy should be to maintain competition, rather than to grant monopolies (patents, etc).
    • by arth1 (260657)

      It is easy enough to reason and conclude that the natural end product of a free market always will be a monopoly.
      That the people on the right are both in favour of big corporations and against regulation should come as no surprise.

      The only way a free market can work in favour of the consumer is if the free market is heavily regulated, and prevented from anti-competitive behaviour, including eating your smaller peers, subsidizing parts of your business to outcompete someone who can't afford the same, or give

      • by Americano (920576)

        It is easy enough to reason and conclude that the natural end product of a free market always will be a monopoly.

        No, it's not easy enough to reason & conclude this, please walk us through your reasoning. I fail to see how the inevitable "natural result of a free market will always be a monopoly."

        • by arth1 (260657)

          What prevents a big company from either buying a smaller one, or using its greater resources to artificially lower prices until the competition is gone?
          The most profitable company is one that has cornered the market and can set the price as high as they want, not one that has competition. So it's becomes a natural race to reduce competition. At first through cartels and oligopolies, later by swallowing up the competition.

          When I lived in Europe, there wasn't a free market, so I had choice. I had 100/10 Mb

  • on the other hand (Score:4, Interesting)

    by cinnamon colbert (732724) on Tuesday March 29, 2011 @11:06AM (#35653152) Journal
    Stuff never broke, you knew that your neighbor wasn't getting a better deal, and you didn't have to worry about sevrice or dropped calls; ma bells team of engineers and workers kept stuff running smoothly
    And, as anyone who travels abroad knows, the supposed "benefits" of competition don't seem so good: in those awful socialist countrys like france, they have, and have had for many years, superior telecoms.
    Of course, when the CEO of Verizon makes 18 or 20 million dollars a year, he has an incentive to hire (on Verizon's nickel) economists and journalists to tell the world how great competition and the unbridled capitlism are...
  • Monopoly? (Score:5, Interesting)

    by WonderingAround (2007742) on Tuesday March 29, 2011 @11:07AM (#35653154) Journal
    In Canada you have a lot more choice in providers, most of the American companies are available as well as Rogers and Bell, i guess it's just better, like our healthcare...
  • "Argue" (Score:5, Insightful)

    by unity100 (970058) on Tuesday March 29, 2011 @11:07AM (#35653156) Homepage Journal
    Whats there to be argue. if there is a SINGLE provider monopoly in a nation, more than innovation is stifled. Not even right wing economists argue against that anymore.
    • by geekoid (135745)

      Of course, the innovation done at Ma Bell shows that argument to not be an absolute. You like all the modern features on a phone? Ma Bell had them first. I mean, Magnetic tape was invented at Ma Bell.

      • by Unkyjar (1148699)

        I think your facts might be slightly off. Quick check on the Wiki page says that:

        Magnetic tape was invented for recording sound by Fritz Pfleumer in 1928 in Germany...This invention was further developed by the German electronics company AEG, which manufactured the recording machines and BASF, which manufactured the tape.

        The article linked in the story says

        In 1934, a scientist for the company [Ma Bell] named Clarence Hickman built a voice answering machine that could record a callers audio message on a magnetic tape.

        So it seems that Ma Bell had one of their researchers build such a machine, but I can't see anyone crediting him with inventing the device.

        And of course the article goes on to state:

        After coming to this conclusion, Ma Bell shut down all research in magnetic recording tapes, concealed Hickmanâ(TM)s research, and actively discouraged the use and development of this technology by others.

        I don't know how accurate that is, but it does appear that Ma Bell has at least worked against the development of magnetic media and their associated devices.

    • I'm not sure what "right wing economists" ever said that the market should be closed to more than one provider. TFA missed out on the cause and effect.

      From 1877 to 1984, Ma Bell had a monopoly in the US telephone industry. During this time, it stifled innovation.

      Ma Bell didn't stifle innovation, the Federal government did. I know this because Ma Bell didn't pass any laws that restricted entry into the phone market. The government gave the entire market to Ma Bell, so they are the ones that stifled innovation and competition. They made some product choices that we can now ridicule, but half of slashdot readers have r

    • by guruevi (827432)

      In the US, the single monopoly was forced to fund innovation by government regulation and gave a lot of jobs to a lot of people. Now they broke up and formed their own little monopolies without government regulation, they are for all intents and purposes a monopoly without government regulation by giving the appearance that they're not colluding at the top to keep prices high and the markets closed.

      The breakup was not to grant innovation and create jobs, it was done to avoid regulation, remove jobs and get

  • Just less of the technical sort, and more of the "how can we take your money" sort.
  • i remember the days when we had a dozen cell carriers in the US. expensive service, crappy reception almost everywhere you went. as the competition dried up we've had prices drop and better phones come out. 10 years ago when i got my first cell phone in the US i paid $40 a month for 450 minutes. these days the same $40 buys you 450 minutes but the night/weekend minutes and anyone on the same carrier is free minutes. and with some plans you can call any mobile number and not use up your minutess

    and 10 years

    • by JLennox (942693)

      >> i remember the days when we had a dozen cell carriers in the US. expensive service, crappy reception almost everywhere you went. as the competition dried up we've had prices drop and better phones come out.

      My first computer ran Doom like a slide show and cost $3,000. I bought an iPod Video for $40 recently, with hacked firmware it runs Doom smoothly. This is the result of technology progressing, not with removal of competition.

      I had Comcast cable internet for around 5 years because there was nothin

      • by hedwards (940851)

        The problem is that most urban areas in the US have at least 2 choices of ISP, the problem is that they've figured out that they don't have to compete, they just can't discuss it or make it formal. Any competition you see is going to be pretty superficial. Around here we've got Qwest and Comcast. I suppose you could include Clear and Hughes, but nobody does as the latency is even worse.

        But, they've figured out that they don't have to compete with each other which means that we're now in the situation where

    • by hedwards (940851)

      I don't think that's a fair comparison to make. The main reason why coverage is better now than it was in the 80s and early 90s is because technology has advanced that much and there are more towers, there's absolutely no reason why we couldn't have a dozen or more cell phone carriers all jacked into the same network, that's managed either collectively or by another company that bids to provide the service on a regular basis for whatever region.

    • by geekoid (135745)

      All that is do to manufacturing and technology innovation done outside of the phone companies.

      Of course, what do you mean by worse? is price the only factor? phone quality has gone down. meaning how people sound.

      Doubling contract length is no little thing either.

      Here is the biggy for my: It's fragmenting. Phone service being offered by Apple aren't compatible with other devices and this is extremely bad.

      20 years ago, if you introduced a phone whose featured could only be shared with people who bought the sa

  • I am an AT&T Wireless customer as they have good coverage in my area. Mobile to mobile and roll over keep me "loyal." I was initially against this merger, however I read some articles that changed my mind. First T-Mobile has no 4G Spectrum. All the 4G spectrum was sold to Verizon, Sprint and AT&T who acquired theirs from Nextel. The monopoly is created by the spectrum requirements, not the companies themselves. The government messed this up and T-mobile has no opportunity to continue competing.

    • by bryan1945 (301828)

      Doesn't T-Mobile have a bunch of 4G commercials? Ones where they trash AT&T for only having 3G? Either I'm misremembering or that's an 'interesting' set of commercials.

      • by donny77 (891484)
        Their 4G is not LTE. It is HSDPA+. They can only call it 4G due to the regulations changing to throughput instead of technology. This is fine right now, but once LTE is readily available, their "4G" will be clearly inferior due to technological limitations.
      • by tepples (727027)

        Doesn't T-Mobile have a bunch of 4G commercials?

        The fine print on T-Mobile's "4G" commercials states that T-Mobile's 4G is HSPA+ [wikipedia.org].

    • I agree with your last point but the "T-mobile has no 4G spectrum" is just a PR talking point from the merger slides. T-mobile does have extra spectrum and was providing HSPA+ on it which was faster than most of the competitors and had potential for 42Mbps -- clearly fast enough to compete. 4G/3G (now marketing terms) doesnt (in general) require specific frequency either AFAIK (other than not overlapping other frequencies/and providing a large enough band). So there is no specific "4G spectrum" rather t
  • ... if this deal goes through, I'll probably switch to Verizon whenever my current phone is obsoleted or dies.
    All companies are evil, but AT&T has a track record of having really crappy Android handsets while T-Mobile has a track record of having the best.

  • by querist (97166) on Tuesday March 29, 2011 @11:13AM (#35653260) Homepage
    T-Mobile is the only provider that I've found in the USA that does not truncate the high bit on text messages. I can send text messages in Chinese and Japanese with my unlocked iPhone on T-Mobile. AT&T and Sprint clip the high bit. I hope AT&T won't screw up T-Mobile's network.
  • Yes, it seems that the old AT&T is back. Instead of spending the billions they're putting up for T-Mobile in network improvements, they're just going to buy out the competition. AT&T's Wireless Network sucks, their wired service sucks (I deal with their business units all the time) and it's not like you have a lot of choice out there.

    I'm sorry, but I remember having to spend $800/month for a 300 Baud Modem back in the 70s. You could only get it from AT&T and you could only lease it. For th

    • by hedwards (940851)

      You could at least link to credible sources if you're going to bother. The Cato institute is a well known conservative think tank that openly advocates for conservative policies, whether or not there's any basis in fact for doing so.

      The problem with monopolies is that while most of them were created intentionally through government action, that's no longer the case, most of them form from the failure of the government to step in and break them up. In fact the DoJ under Bush didn't even acknowledge that corp

      • by darjen (879890)

        The problem with monopolies is that while most of them were created intentionally through government action, that's no longer the case, most of them form from the failure of the government to step in and break them up.

        I'm not so sure that is true. Please name some specific examples.

    • by iluvcapra (782887) on Tuesday March 29, 2011 @12:25PM (#35654282)

      The assertion that the Bell System was an "unnatural" monopoly is a bit of a straw man, nobody claims that AT&T came to run the whole system on its own. What's remarkable is that between Teddy and Franklin Roosevelt most of the progressive/populist pressure on the government was to nationalize the telephone system, as has been done in just about every other jurisdiction of the Earth. FDR rejected this, ironically considering his reputation today, and instead chose the cartel solution, such that there was still a nominal "private" company running the phone system for a profit, while it was protected from competition enough to do all the things the nationalized carriers were doing, like undertaking huge capital expenditures on undersea cables and trunks, and expanding telephony to rural areas where wired telephone service has never been profitable.

      Where all of these critiques fall flat is in the rigid line drawing around acts of corporations and the acts of state. A sufficiently influential company possesses statelike powers in any real-world society, and will always try to meld government policy to its design; any government powerful enough to defend property rights will perforce have the power to decide what is and what is not ownable, and this power will always be drawing arbitrary lines protecting business plan X from business plan Y. This is unavoidable and arguing as if this is "unnatural" is a bit of a con.

      • by darjen (879890)

        As it was explained in those papers, they did nationalize the telephone system during WW1.

        Companies that possesses statelike powers in real-world society ultimately come from being cozy with the state itself. Not from the economic excuse given as so-called "natural" monopoly. That is why they are calling it an unnatural monopoly.

        From the second paper:

        The telephone monopoly, however, has been anything but natural. Overlooked in the textbooks is the extent to which federal and state governmental actions throu

    • by dkleinsc (563838)

      Your first link states, without citation, something that's just plain misleading:

      There is no evidence of the "natural monopoly" story ever having been carried out- of one producer achieving lower long-run average total costs than everyone else in the industry and thereby establishing a permanent monopoly.

      While technically true, the primary reason why the permanent monopoly has never happened is that governments have stepped in to break up the monopoly. For instance, Standard Oil was at 88% market share and climbing when antitrust suits started heading its way. Or Intel, who is extremely close to eliminating its only major competitor, AMD.

      Or, in this instance, what happened to the Baby Bells - shortly after the breakup, they sta

  • by hey! (33014) on Tuesday March 29, 2011 @11:31AM (#35653512) Homepage Journal

    The article claims that Bell stifled innovation by choosing not to bring an invention made by a company employee to market, in this case magnetic tape audio recording. That's such an overblown reading of the event that it's laughable. Companies create ideas all the time they decide not to productize because they're not really in their core business, because they fear (rightly or wrongly) that they'll will have a negative impact on that core business. In this case it was both.

    In any case, magnetic audio tape was invented in Germany in the prior decade, and magnetic wire recording technology had existed since the 1890s and was widely commercialized in the 1920s.

    On the other hand, in Ma Bell's tenure we had the development of Unix, computer networking, and satellite telephony, in which the company paid key roles. The break-up of the Bell System was motivated in part by the hypothesis that competition would bring new technologies like digital telephony (in this case ISDN) to market faster. While nobody can say what would have happened without the break up, on that goal at least the break up could not be called a success.

    The result of the break-up wasn't rapid technological innovation; it was price competition. That was a good thing. By in large the AT&T monopoly worked very well, within the expected limitations of any such regulated monopoly. We had *excellent* telephone service for the era, but it was much more expensive than it might have been. Under the covers it was quite technologically advanced. Ma Bell designed the multiplexed digital transmission system (the T Carrier system) that is still used in North America today back in the 1950s, and did early deployments as early as 1961. The commercial adoption of the Internet occurred a decade after the break up of the Bell System in 1984, but it was based on the T Carrier system and its refinements, all designed and implemented by the Bell system in the 60s and 70s, *before* the break-up.

    Which is not to say that monopolies are necessarily a good thing. It was good that the break up lowered long distance prices. Nor are such monopolies always technical successes (BT comes to mind). It is even possible that the columnist is right, and that the Bell System *did* somehow stifle innovation, despite the historical fact of all the innovations it brought to market as a monopoly. The problem is his argument, which is pure, ignorant BS.

    • by Virtucon (127420)

      The result of the break-up wasn't rapid technological innovation; it was price competition. That was a good thing. By in large the AT&T monopoly worked very well, within the expected limitations of any such regulated monopoly. We had *excellent* telephone service for the era, but it was much more expensive than it might have been. Under the covers it was quite technologically advanced. .

      Without doubt AT&T did have advanced technology but it was "their technology" and a lot of it was beyond patent age, meaning others could innovate or improve upon it. It wasn't also just price competition it was access. For example, after the AT&T ruling you could actually get access to AT&T telephone poles to hang your own fiber optic cables, Something Sprint was barred from. You see AT&T using public rights of way put up telephone poles. Well, they took exception if "their poles on pu

    • by amper (33785) on Tuesday March 29, 2011 @12:08PM (#35654054) Journal

      As someone who did a lot of work in the early-mid 1990's helping to commercialize the Internet, I have to say that I must respectfully disagree.

      AT&T, as they were constituted, had a very long history of secrecy and obstruction of technological innovations reaching the general marketplace. Let me ask you this, have you ever seem any non-Ma Bell publicly available books prior to the 90's describing how T circuits work? No, you haven't, because they didn't exist. This information was guarded very carefully by AT&T as proprietary information and as trade secrets. Very, very few people understood how these things worked back then, and most of those were former AT&T and Baby Bell employees.

      Did Bell Labs create new things? Sure they did, just the same as Xerox's Palo Alto Research Center created things, and IBM's T.J. Watson Research Center created things. The difference was, AT&T had a government protected monopoly and used their monopoly power to stifle competition, so they kept all these things in-house. The other guys only dropped stuff that they didn't feel had commercial potential, and they weren't monopolies, anyway. It wouldn't have mattered if other companies came up with technological innovations in telecommunications, unless they thought they could sell them to AT&T, because they wouldn't have be able to commercialize them with AT&T controlling the market. The real advantage of the break up was not price competition, but that AT&T had to start sharing the market with other companies, and because of that, they were forced to let other companies know how to make their systems interoperable with the existing infrastructure.

      • by hey! (33014)

        And you expect a non-monopoly to be more open about its technology?

  • but Ma Bell did a HELL OF A LOT of innovating. All thjose service you take for granted? pretty much invented by Me Bell.
    Call forwarding - yep.
    Call waiting - yep
    Central voice mail - yep
    star 69 - yep
    answering machine - yep
    magnetic storage tape - yep
    insulated telephone wires - yep
    and I could go on and on.

    Ma Bell also gave it's Scientist a ton of freedom to innovate.

    Ma Bells problem was in customer service. If they had spent more money in getting rid of the multi hour lines, and creating good call in phone serv

    • by hedwards (940851)

      Admittedly it's impossible to answer, but the question really ought to be whether Ma Bell was more or less innovative than the number of companies that would have done the work otherwise in trying to elbow each other out of the market.

    • by compro01 (777531)

      Yeah, it's not like the government forced AT&T to fund Bell labs as a condition of keeping their monopoly or anything.

  • Nit (Score:5, Informative)

    by iluvcapra (782887) on Tuesday March 29, 2011 @11:58AM (#35653872)
    The company called "AT&T" is not, was not, and has only a tenuous relationship with the entity "Ma Bell," American Telephone a Telegraph. The company called AT&T is actually the old SBC, Southwestern Bell Communications, one of the RBOCs, that took over AT&Ts name and trademarks after buying the AT&T Corporation in 2005.
  • The FTC uses the Herfindahl index [wikipedia.org] to evaluate market competitiveness. Using just the top 5 carriers (the big four and Tracfone), the current index is 1810 (market share data from here [afterdawn.com]).

    'According to the DOJ-FTC 2010 Horizontal Merger Guidelines, the agencies will regard a market in which the post-merger HHI is below 1500 as "unconcentrated," between 1500 and 2500 as "moderately concentrated," and above 2500 as "highly concentrated." A merger potentially raises "significant competitive concerns" if it pr
  • by sneakyimp (1161443) on Tuesday March 29, 2011 @12:00PM (#35653906)

    I'm a T-mobile customer with a Nexus S phone that I bought 2 weeks ago. I have learned that my phone won't work on the AT&T network -- at least not for data. That phone cost me over $600 with tax and accessories. It's supposed to take awhile for regulatory review and there's supposed to be some phase out period blah blah blah but I'm losing roughly half of the useful life of my phone -- and I'm the kind of guy that hangs onto my gadgets for a long time so this pisses me off. I cannot switch to another provider in the US because there will be no other GSM provider. If I choose a CDMA provider then my phone won't work abroad.

    More importantly, my bill right now for unlimited minutes and 5GB of data per month (one GB more than AT&T's top-of-the-line data plan) plus 400 text messages is a mere $95 per month -- and that's the whole bill taxes and all. I'm not sure how much that'll go up because when I called AT&T to inquire about rates, the poor girl on the phone couldn't figure it out due to the byzantine service options/restrictions imposed by management. From the information I did get, I believe I can expect this to increase to anywhere between $125 and $150 *before* taxes.

    T-Mobile is the low cost leader in our phone market. They provide excellent customer service. The were the first to offer an Android phone. AT&T was the last. For those who moan about big government hampering business, I invite you to prepare yourself to deal with the bureaucratic nightmare that AT&T will become. When you are only one of 130 million customers, dealing with your phone company is going to make a trip to the DMV feel like a vacation.

    And by the way, I've been to AT&T's headquarters in New Jersey. I attended a business meeting there in the mid 90's as a management consultant. The building was in the middle of a *private golf course* left over from the monopoly days when a long distance call cost around a dollar a minute. The so-called strategists that we met with had no clue what the Internet was all about. In those days, the only reason AT&T was making money was because they had millions of aging customers who didn't realize that they could switch to a different long distance provider and slash their bill by roughly 75%.

    This merger sucks for all of us except the fat cats at the top of AT&T and T-Mobile.

  • Cue the horde of libertarians who think that it's Ma Bell's *right* to stifle innovation and how dare anyone criticise them!

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