Its early control over broadcasting was broken up, however, by the Federal Trade Commission's objections to the apparent growing monopoly power in radio. In 1926 a new structure was created to answer monopoly charges against AT&T, relegating the phone company to a role in transmission only while other companies involved in radio (General Electric, Westinghouse, and RCA) formed the National Broadcasting Company and developed programming and an audience-oriented service.

     AT&T, then the United States' regulated, dominant national telephone carrier, operated as the transmission system for networked broadcasting for several decades, conveying first radio and later television signals across the country, thereby enabling the formation of national networks through its long-distance links. The carriage fees it accumulated from broadcasters were enormous, and as the sanctioned, monopoly interstate common carrier, AT&T had the business to itself even though that monopoly role was at times contested. The company's first serious setbacks in the form of competition from other carriers did not occur until the mid- 1970s.

In the 1970s regulatory liberalization in two realms undermined AT&T's control of transmission services essential to television. First, communication satellites,  an  outgrowth  of  the  U.S.  space  program, provided new,  efficient  and  economical  ways  to transmit  mes­sages or signals over long distances. Although AT&T retained a major role for itself in international satellite communication through provisions in the 1962 Communication Satellite Act (it was a partner in the public corporation Comsat, designated to operate U.S. satellite communications within the international satellite network Intelsat), that Act set the stage for other companies to enter into domestic satellite services. The so­-called "open skies" policy adopted in 1972 by the Federal Trade Commission's successor in the realm of broadcasting, the Federal Communications Commission (FCC), allowed financially qualified carriers to provide domestic satellite communications, opening a new market and method for interstate transmissions. Ultimately, this development provided crucial alternatives to television's (and cable television's) continued reliance on AT&T for transmission. In particular, telephone companies were unable to control domestic satellite services, which became the preferred and cost-effective method for broadcast and cable television networks to deliver their signals, thus ending their dependence on AT&T for interconnection. The successful launch of HBO nationwide on RCA's Satcom satellite in 1975 bypassed AT&T and illustrated a future for cable television independent of the telcos. The Public Broadcasting Service moved to satellite distribution of its signal in 1978, followed by the major television networks' migration from AT&T to satellites controlled by other carriers in the mid-1980s.

     The second realm concerned the cable industry. Skirmishes between telcos and the young cable television industry prompted the FCC and Congress to limit telcos' ability to own and operate cable television systems. Because early cable systems relied on retransmitted broadcast fare, it seemed logical for a carrier such as AT&T to establish cable systems using its lines to transmit content from broadcasters to subscribers. However, the FCC ruled in 1970 that telcos could operate systems only in small, rural populations. As well, in 1978, affirming that AT&T had abused its power in overcharging companies that wished to use its poles to establish cable television service, Congress enacted the Pole Attachment Act authorizing the FCC to "regulate the rates and conditions for pole attachments," effectively removing the telcos' control over a key access and right-of-way issue and allowing cable television to expand under more favorable terms. It was clear that the FCC intended to restrain the telcos' ability to enter into or otherwise control this new television medium. The cable television industry's insistence on this restraint is in part reflected in a section of the later 1984 Cable Communications Act that reiterated the 1970 telco-cable cross-ownership ban and explicitly forbade telephone companies from offering cable television services.

     However, telephone companies' interest in video services never died. If the aforementioned two new communication technologies ultimately underscored telcos' limited hold on an expanding set of services, they also can be counted among the causes of a massive restructuring of the U.S. telephone system under the 1982 Modification of Final Judgment (MFJ), a federal court ruling that broke up AT&T's monopoly telephone service in the United States. The result of a long-standing inquiry into AT&T's vertical integration and possible abuse of power under antitrust laws, the MFJ separated long-distance (interexchange) service from local telephone service, determining that the former would be a new competitive marketplace while the latter would be relegated to continuing monopoly service. AT&T restructured, spinning off the "Baby Bells" (regional companies that were restricted to the provision of a local telephone service) and moving into the newly competitive long-distance service market. Both sets of companies, AT&T and other long-distance service providers (interexchange carriers), as well as the local service providers, again eyed the provision of video services as one among a number of future competitive possibilities.

     The MFJ put several restrictions on AT&T, the most notable being a seven-year restriction on entering into "electronic publishing." Nevertheless, by the late 1980s and 1990s AT&T, as well as several other telcos, had constructed a number of strategic liaisons with cable television, computer, software, and even movie companies in order to position themselves for new video and multimedia services. Such liaisons built on the telephone companies' long standing interest in new media as well as their abortive history of attempting to provide teletext or videotext services in conjunction with publishers.

     In the 1980s and 1990s, notions of media competition were shifting, and many industries, analysts and policymakers foresaw a future in which various media platforms could provide services that cut across traditional industry definitions. Amid the deregulatory fever of the 1980s initiated by the AT&T divestiture, the FCC recommended lifting the cable-telco cross­ ownership ban in 1988, but the requisite Congressional action was not forthcoming. Nevertheless, continued restructuring of telecommunications industries proceeded, ultimately facilitating the convergence of what had been conceived originally as quite separate video, voice, and data services.

     Moving toward the landmark 1996 Telecommunications Act, in 1992 the FCC issued its "Video Dialtone" order allowing telcos (such as the "Baby Bells" or other local exchange companies) to provide the technological platforms for video services to subscribers. Essentially this also allowed them to enter the video services business, albeit without permitting them directly to own programming. One year later, in response to separate suits brought by telcos, several district courts began lifting the cable-telco cross­ ownership ban. The first such suit was brought in 1993 (Chesapeake and Potomac Telephone Co. of Virginia v. U.S., 830 F. Supp. 909) by Bell Atlantic, a telco that, in the same year, proposed a merger with the largest cable company in the United States, TCI, a deal which later collapsed. Additionally, in the mid- 1990s several telcos announced plans to provide video services as cable companies which would allow them to own programming rather than as telephone companies operating a video dial tone platform. Full-scale telco competition with cable companies and their broad entry into the video programming marketplace seemed imminent.

     The desire of telephone companies to enter new markets, especially those providing video programming, was one major impetus behind the 1996 legislation that restructured American media industries. The 1996 Telecommunications Act authorized telephone and cable companies to enter each other's businesses, and also allowed then-monopoly local-exchange phone companies, the Baby Bells, to compete with long­-distance companies (and vice versa), and to move into various other businesses as well. The act prompted major new initiatives and restructuring across the telecommunications industries. However, in spite of Congress's anticipation of the emergence of a far more competitive framework for delivering video programming, the cable-telco struggle did not materialize. Instead, wholesale mergers and acquisitions ensued in numerous communications industries, resulting in a new corporate and organizational profile for radio, broadcasting, cable, and telephony providers, and the newer service of providing Internet access. Because the Act coincided with a burst of services dependent on fast, packet­ switched networks and growing computer penetration in homes and businesses, organizational restructuring was accompanied by the emergence of new services that once again depended heavily on existing transmission providers and the networks operated by telephone companies.

     The raft of mergers among telephone companies accompanied new service opportunities. The industry shrank to many fewer companies within a few years of the 1996 act. For example, by 2001 the seven Baby Bells had become four: Southwestern Bell purchased PacTel (serving the west coast) and Ameritech (serving the Midwest), and later renamed itself SBC; Bell Atlantic (eastern seaboard) merged with NYNEX (New York region), and later merged again with the large independent phone company GTE to become Verizon; US West, serving 14 western states, was bought by long-distance carrier Qwest. Only Bell South made no major, comparable acquisition. However, even as their numbers shrank, the companies themselves took on more extensive services, including providing both dial-up and broadband Internet connections, wireless telephony, backbone Internet transmission (Qwest and Sprint in particular) and local and long-distance voice communications.

     On the long-distance company front, AT&T's old competitor MCI was purchased by upstart long­-distance company Worldcom in 1997, only for that company to be distressed under accounting scandals (filing for bankruptcy in 2002). AT&T was split into several different companies since its divestiture, and the 1996 act catalyzed its merger with the large cable Multiple System Operators MediaOne, and later TCI, in March 1999, making AT&T the largest cable company in the country. As part of that merger it acquired the substantial programming resources of Liberty Media, a holding company controlling numerous cable programming networks that AT&T spun off in August 2001. AT&T Broadband later merged with Comcast, yet another large cable operator.

     What  was  common  to all  the telecommunications companies was the recognition that the networks­ particularly new, digital, fiber-based  networks-were, in the emerging age of the Internet, of renewed importance. Some, such as Sprint and Qwest, invested large sums of money in constructing digital nationwide packet-switched networks in order to be ready for an environment dependent on Internet protocol modes. Qwest also began to offer video programming over its telephone lines in a handful of markets using fiber­ based, very high-speed digital subscriber lines (DSLs). The Baby Bells, which experienced relatively little erosion of their customer base to competition within the first five years after the 1996 Act, focused more on achieving the ability to offer long-distance telephone services  within  their territories and on readying  their networks in metropolitan regions for offering broadband ISP connections. Such services, based on digital subscriber-line technology that conventionally utilizes the already in-place copper wires, accelerated among the telcos when cable companies offered broadband cable modem services. The telecom' DSL services had the advantage of using already existing connections to homes to support phone and Internet access services simultaneously. At the same time, cable systems upgraded their regional infrastructure to hybrid fiber­ coaxial cable physical plant to enable digital programming delivery as well as fast Internet access using cable modems. The cable companies were finally competing with the telephone companies, but in the unanticipated service area of providing high-speed Internet connectivity.

     A significant development barely glimpsed at the time of the 1996 Telecommunications Act-the growing significance of the Internet and its future role in providing audio and video content-has reshaped the business plans of telephone companies alongside those of all other media businesses. Competition between cable operators and telephone companies primarily has focused on Internet services in the first years of the new century, each industry using its own enhanced infrastructure rather than building entirely new networks. However, the telephone companies are poised to make that investment in the new plant, as packet-switched networks become mandatory for services dependent on Internet protocols. For example, Voice over Internet Protocol or VoIP is one such service that enables inexpensive long-distance calling using packet-switched networks. Additionally, some telephone companies are offering cable-style television services over their broadband networks. Enabling high­ speed connections to subscribers and cost-efficient connections to the national Internet backbones are far higher priorities in the early 21st century than could have been anticipated in 1996, and entirely new services are probably not far behind.

     With new emphasis on creating an information in­frastructure providing multiple services, the role of telephone companies, in providing digital video programming and Internet-based audio and video media, seems certain. Deregulating telcos and other communications industries has set the stage for creating a new generation of digital services as well as an entirely new set of corporate powers. A new tier of services will join voice and data transmission as key elements in the telephone business, and television is likely to be one of them.